Key Notes on Economic Survey & Union Budget 2024 PDF

***\ *** *Dear Readers* *This Key Notes is a compilation of important aspects of Economic Survey 2023-24 and Union Budget 2024-25 with more emphasis on Banking, economy and finance, which is a small part of our educational series for Bankers and Students apart from our other periodicals. The bookl...

***\ *** *Dear Readers* *This Key Notes is a compilation of important aspects of Economic Survey 2023-24 and Union Budget 2024-25 with more emphasis on Banking, economy and finance, which is a small part of our educational series for Bankers and Students apart from our other periodicals. The booklet may be useful for those who are preparing for various competitive examinations and for Bank promotion examinations.* *This Booklet is a publication by **'The Banking Updates'** who also publish the **Monthly Magazine "The Banking & Financial Updates"** especially for the persons who wants to upgrade their knowledge in Banking and Financial Sector and for various promotional examinations and for knowledge upgradation.* *With Best Wishes*  Dt. 23.07.2024 Contact us on: +91-8261802533 Mail us to : admin\@thebankingupdates.com *[\ ]* *[ECONOMIC SURVEY 2023-24]* ======================================= Union Finance Minister Nirmala Sitharaman on 22^nd^ July 2024 tabled the Economic Survey 2023-24, which **projects a real GDP growth of 6.5 to 7 per cent**. It adds that the Reserve Bank of India expects inflation to be **4.5 per cent in FY 25 and 4.1 per cent in FY26**.The highlights of the survey are follows: ***STATE OF THE ECONOMY:*** --------------------------- - Real GDP growth is projected in the range of **6.5--7 per cent in 2024-25**. The Indian economy recovered swiftly from the pandemic, with its real GDP in FY24 being 20 per cent higher than the pre-COVID (FY20) levels. - **Real GDP grew by 8.2 percent in FY 24**, driven by stable consumption demand and steadily improving investment demand. - On supply side, **Gross value added (GVA) grew by 7.2 per cent in FY24** (at 2011-12 prices) and net taxes at constant prices grew by 19.1 per cent in FY24. - Domestic growth drivers have supported economic growth in FY24 despite uncertain global economic performance. During the decade ending FY20, India grew at an average annual rate of 6.6 per cent, more or less reflecting the long-run growth prospects of the economy. - The shares of the agriculture, industry and services sectors in overall GVA at current prices were 17.7 per cent, 27.6 per cent and 54.7 per cent respectively in FY24. - Within the industrial sector, manufacturing GVA shrugged off a disappointing FY23 and grew by 9.9 per cent in FY24, as manufacturing activities benefitted from reduced input prices while catering to stable domestic demand. Similarly, construction activities displayed increased momentum and registered a growth of 9.9 per cent in FY24 due to the infrastructure build out and buoyant commercial and residential real estate demand. - Gross Fixed Capital Formation (GFCF) continues to emerge as an important driver of growth. GFCF by private non-financial corporations increased by 19.8 per cent in FY23. - After averaging 6.7 per cent in FY23, **retail inflation declined to 5.4 per cent in FY24**, due to the combination of measures undertaken by the Government and the RBI. The Union Government undertook prompt measures such as open market sales, retailing in specified outlets, timely imports, reduced the prices of Liquified Petroleum Gas (LPG) cylinders and implemented a cut in petrol and diesel prices. The RBI raised policy rates by a cumulative 250 bps between May 2022 and February 2023. - The **fiscal deficit** of the Union Government has been brought down from 6.4 per cent of GDP in FY23 to **5.6 per cent of GDP in FY24**, according to provisional actuals (PA) data released by the Office of Controller General of Accounts (CGA). - **Current Account Deficit (CAD) stood at 0.7 per cent of the GDP during FY24**, an improvement from the deficit of 2.0 per cent of GDP in FY23. - The **capital expenditure for FY24 stood at ₹9.5 lakh crore**, an increase of 28.2 per cent on a YoY basis, and was 2.8 times the level of FY20. - Preliminary unaudited estimates of finances for a set of 23 states, published by the Comptroller and Auditor General of India, suggest that the gross fiscal deficit of these 23 states was 8.6 per cent lower than the budgeted figure of ₹9.1 lakh crore. This implies that fiscal deficit as a per cent of GDP for these states came in at 2.8 per cent as against a budgeted 3.1 per cent.  - RBI's Financial Stability Report of June 2024 shows that the asset quality of Scheduled commercials banks has improved, with the Gross NPA ratio declining to 2.8 per cent in March 2024, a 12-year low. - The profitability of SCBs remained steady, with the return on equity and return on assets ratios at 13.8 per cent and 1.3 per cent, respectively, as of March 2024. Macro stress tests also reveal that SCBs would be able to comply with minimum capital requirements even under severe stress scenarios. - India\'s service exports have remained robust, reaching a new high of USD 341.1 billion in FY24. The exports (merchandise and services) in FY24 grew by 0.15 per cent, while the total imports declined by 4.9 per cent stated the survey. - Net private transfers, mostly comprising remittances from abroad, grew to USD 106.6 billion in FY24. As a result, the Current Account Deficit (CAD) stood at 0.7 per cent of the GDP during the year, an improvement from the deficit of 2.0 per cent of GDP in FY23. The net FPI inflows stood at USD 44.1 billion during FY24 against net outflows in the preceding two years. -  External debt as a ratio to GDP stood at a low level of 18.7 per cent as of end-March 2024. The ratio of foreign exchange reserves to total debt stood at 97.4 per cent as of March 2024 as per the Economic Survey 2023- 24. - The Direct Benefit Transfer (DBT) scheme and Jan Dhan Yojana-Aadhaar-Mobile trinity have been boosters of fiscal efficiency and minimization of leakages, **with ₹36.9 lakh crore having been transferred via DBT since its inception in 2013.** - **55% of tax collected accrued from direct taxes** and remaining 45% from indirect taxes. ***Monetary Management and Financial Intermediation:*** ------------------------------------------------------- - RBI Monetary Policy committee (MPC) maintained the status quo on the policy repo rate at 6.5 per cent in FY24. Inflation made to gradually align with its target while supporting growth. - Credit disbursal by Scheduled Commercial Banks stood at **₹164.3 lakh crore**, growing by 20.20% YoY at the end of March 2024. - Credit growth remained robust mainly driven by the lending to **services and personal loans**. - Agriculture and allied activities witnessed double digits growth in credit during FY24. - Industrial credit growth was **8.5 per cent** compared to 5.2 per cent a year ago. - IBC has been recognised as an effective solution for the twin balance sheet problem, in the last 8 years, **31,394 corporate debtors involving a value of Rs 13.9 Lakh Crore** have been disposed off as of March 2024. - The **market capitalisation of the Indian stock market** has seen a remarkable surge, with the market capitalisation to GDP ratio being the **fifth largest in the world**. - Financial inclusion is an enabler for sustainable economic growth, reduction of inequality and elimination of poverty. The next big challenge is Digital Financial Inclusion (DFI). - Indian **microfinance sector emerges** as the **second largest in the world after China**. ***Prices and Inflation:*** --------------------------- - Central Government's timely policy interventions and the Reserve Bank of India's price stability measures helped maintain retail inflation at **5.4 per cent - the lowest level since the pandemic**.  - In August 2023, the price of domestic LPG cylinders was reduced by ₹200 per cylinder across all markets in India. Since then, LPG inflation has been in the deflationary zone. - Further, Centre lowered the prices of petrol and diesel by ₹2 per litre. Consequently, retail inflation in petrol and diesel used in vehicles also moved to the deflationary zone. - Core services inflation eased to a nine-year low in FY24; at the same time, core goods inflation also declined to a four-year low.  - In FY24, core consumer durables inflation declined due to an improved supply of key input materials to industries. - Agriculture sector faced challenges due to extreme weather events, depleted reservoirs, and crop damage, which impacted farm output and food prices. **Food inflation stood at 6.6 per cent in FY23 and increased to 7.5 per cent in FY24.** - Government took appropriate administrative actions, including dynamic stock management, open market operations, subsidised provision of essential food items and trade policy measures, which helping to mitigate food inflation. - **29 States and Union Territories** recorded **inflation below 6 per cent in FY24.** - RBI projects inflation to fall to 4.5 per cent in FY25 and 4.1 per cent in FY26, assuming normal monsoon and no external or policy shocks. - **IMF forecasts inflation of 4.6 per cent in 2024** and 4.2 per cent in 2025 for India. ***External Sector:*** ---------------------- - India's external sector remained strong amidst on-going geopolitical headwinds accompanied by sticky inflation. - India's rank in the World Bank's Logistics Performance Index improved by six places, from 44^th^ in 2018 to **38^th^** in 2023, out of 139 countries. - India is gaining market share in global exports of goods and services. Its share in global goods exports was 1.8 per cent in FY24, against an average of 1.7 per cent during FY16-FY20. - India's services exports grew by 4.9 per cent to USD 341.1 billion in FY24, with growth largely driven by IT/software services and 'other' business services. - India is the **top remittance recipient country globally**, with remittances reaching a milestone of USD 120 billion in 2023. - India's external debt has been sustainable over the years, with the external debt to GDP ratio standing at 18.7 per cent at the end of March 2024. ***Climate Change and Energy Transition*** ------------------------------------------ - A report by the International Finance Corporation recognises India's efforts to achieve committed climate actions, highlighting that it is the **only G20 nation in line with 2-degree centigrade warming.** - As of 31 May 2024, the share of non-fossil sources in the installed electricity generation capacity has reached 45.4 per cent. - Further, the country has reduced the emission intensity of its GDP from 2005 levels by 33 per cent in 2019. - India's GDP between 2005 and 2019 has grown with a Compound Annual Growth Rate (CAGR) of about 7 per cent, whereas the **emissions grew at a CAGR of about 4 per cent**. - The Government has launched several clean coal initiatives, including the Coal Gasification Mission. - Total annual energy savings of 51 million tonnes of oil equivalent translates to a total annual cost savings of ₹1,94,320 Crore and emissions reduction of around 306 million tonnes. - Government issued sovereign green bonds amounting to ₹16,000 Crore in January-February 2023 followed by ₹20,000 Crore in October-December 2023. ***Social Sector:*** -------------------- - The digitisation of healthcare, education and governance has been a force multiplier for every rupee spent on a welfare programme. - Between FY18 and FY24, nominal GDP has grown at a CAGR of around 9.5 per cent while the welfare expenditure has grown at a CAGR of 12.8 per cent. - Gini coefficient, an indicator of inequality, has declined from 0.283 to 0.266 for the rural sector and from 0.363 to 0.314 for the urban sector of the country. - More than 34.7 crore Ayushman Bharat cards have been generated, and the scheme has covered 7.37 crore hospital admissions. - The challenge of ensuring mental health is intrinsically and economically valuable. 22 mental disorders are covered under the Ayushman Bharat -- PMJAY health insurance. - 'Poshan Bhi Padhai Bhi' programme for early childhood education aims to develop the world's largest, universal, high-quality preschool network at Anganwadi Centres. - Vidyanjali initiative played crucial role in enhancing educational experiences of over 1.44 cr. students facilitating community engagement and through volunteer contributions. - The rise in enrolment in higher education has been driven by underprivileged sections such as SC, ST and OBC, with a faster growth in female enrolment across sections, witnessing  31.6 per cent increase since FY15. - India is making rapid progress in R&D, with nearly one lakh patents granted in FY24, compared to less than 25,000 patent grants in FY20. - Under PM-AWAS-Gramin, 2.63 crore houses were constructed for the poor in the last nine years (as of 10 July 2024). - 15.14 lakh km road construction completed under Gram Sadak Yojana since 2014-15 (as of 10 July 2024). ***Employment and Skill Development:*** --------------------------------------- - Indian labour market indicators have improved in the last six years, with the unemployment rate declining to 3.2 per cent in 2022-23. - **More than 45 per cent of the workforce is employed in agriculture**, 11.4 per cent in manufacturing, 28.9 per cent in services, and 13.0 percent is in construction. - From the gender perspective, the female labour force participation rate (FLFPR) has been rising for six years. - During FY15-FY22, the wages per worker in rural areas grew at 6.9 per cent CAGR vis-à-vis a corresponding 6.1 per cent CAGR in urban areas. - Number of factories employing more than 100 workers saw 11.8 per cent growth over FY18 to FY22. - The yearly net payroll additions to the EPFO more than doubled from 61.1 lakh in FY19 to 131.5 lakh in FY24. - Manufacturing sector is less exposed to AI as industrial robots are neither as nimble nor as cost-effective as human labour. - Indian economy needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce. - Compared to 50.7 crore persons in 2022, the country would need to care for 64.7 crore persons in 2050. - Direct public investment equivalent to 2 per cent of GDP has the potential to generate 11 million jobs, nearly 70 per cent of which will go to women. ***Agriculture and Food Management:*** -------------------------------------- - Agriculture and allied sector registered an average annual growth rate of **4.18 per cent** at constant prices over the last five years. - The allied sectors of Indian agriculture are steadily emerging as robust growth centres and promising sources for improving farm incomes. - As of 31 January 2024, the total credit disbursed to agriculture amounted to **₹ 22.84 lakh Crore**. - As of January 31, 2024, banks issued **7.5 crores Kisan Credit Card (KCC)** with a limit of **₹9.4 lakh crores.** - An area of **90.0 lakh hectares** has been covered under micro irrigation in the country under the Per drop more crop (PDMC) from 2015-16 to 2023-24. - It is estimated that for every rupee invested in agricultural research (including education), there is a payoff of ₹ 13.85. ***Industry - Small and Medium Matters:*** ------------------------------------------ - Economic growth of 8.2 per cent in FY24 was supported by an **industrial growth rate of 9.5 per cent**. - Despite disruptions on many fronts, the manufacturing sector achieved an average annual growth rate of 5.2 per cent in the last decade with the major growth drivers being chemicals, wood products and furniture, transport equipment, pharmaceuticals, machinery, and equipment. - Accelerated Coal production over the past five years has helped in reducing import dependence. - India's **pharmaceutical market** stands as **world\'s third largest** by volume with the valuation of USD 50 billion. - India is the world\'s **second-largest clothing manufacturer** and one of the top five exporting nations. - India\'s electronics manufacturing sector accounts for an estimated 3.7 per cent of the global market share in FY22. - PLI schemes attracted over ₹1.28 Lakh Crore of investment until May 2024, which has led to production/sales of ₹10.8 Lakh Crore and employment generation (direct & indirect) of over ₹8.5 Lakh. ***Services - Fuelling Growth Opportunities:*** ----------------------------------------------- - Services sector contribution to the overall Gross Value Added (GVA) has now reached to the level prior to pandemic i.e. about 55%. - The services sector has the highest number of active companies (65 per cent). A total number of 16,91,495 active companies exist in India as of 31 March 2024. - Globally, India's services exports constituted 4.4 per cent of the world\'s commercial services exports in 2022. - **Computer services** and business services exports accounted for about **73 per cent of India's services exports** and witnessed a 9.6 per cent growth YoY in FY24. - The aviation sector in India has grown substantially, with a 15 per cent YoY increase in total air passengers handled at Indian airports in FY24. - FY24 ended with an outstanding services sector credit of ₹45.9 lakh crore in March 2024, with a YoY growth of 22.9 per cent. - Tourism industry witnessed over 92 lakh foreign tourist arrivals in 2023, implying a YoY increase of 43.5 per cent. - In 2023, residential real estate sales in India were at their highest since 2013, witnessing a 33 per cent YoY growth, with a total sale of 4.1 lakh units in the top eight cities. - The Indian e-commerce industry is expected to cross USD 350 billion by 2030. - The overall tele-density (number of telephones per 100 population) in India increased from 75.2 per cent in March 2014 to 85.7 per cent in March 2024. The internet density also increased to 68.2 per cent in March 2024. - As of 31 March, 2024, 6,83,175 kilometers of Optical Fibre Cable (OFC) has been laid, connecting a total of 2,06,709 Gram Panchayats (GPs) by OFC in the BharatNet phase I & II. ***Infrastructure -- Lifting Potential Growth:*** ------------------------------------------------- - Buoyant public sector investment has had a pivotal role in funding large-scale infrastructure projects in the recent years. - The average pace of NH construction increased by nearly 3 times from 11.7 km per day in FY14 to around 34 km per day by FY24. - Capital expenditure on Railways has increased by 77 percent in the past 5 years, with significant investments in the construction of new lines, gauge conversion and doubling. - Indian Railways to introduce Vande metro trainset coaches in FY 25.  - India's rank in the International Shipments category in the World Bank Logistics Performance Index has improved to 22nd in 2023 from 44th in 2014. ***Climate Change and India:*** ------------------------------- - Current global strategies for climate change are flawed and not universally applicable. - The Western approach does not seek to address the root of the problem, i.e. overconsumption, but rather chooses to substitute the means to achieve overconsumption. - A one-size-fits-all approach will not work, and developing countries need to be free to choose their own pathways. - India's ethos emphasizes a harmonious relationship with nature, in contrast to the culture of over consumption in other parts of the developed world. - Shift towards the 'traditional multi-generational households' would create the pathway towards sustainable housing. - **"Mission LiFE"** focuses on human-nature harmony promoting mindful consumption than over consumption that lies at the root of global climate change problem. ***Other measures/outcomes:*** ------------------------------ - **Economic Survey makes a case for FDI from China despite ban:** India's quest to become a global manufacturing hub hinges on attracting Chinese businesses to set up factories and boost exports, according to the nation\'s top economic adviser. This strategy requires the government to ease its current restrictions on Chinese investments, a move that could significantly enhance India\'s manufacturing sector. In its annual Economic Survey report released on Monday, the office of the chief economic adviser outlined two paths for India: increasing imports from China or attracting more foreign direct investment (FDI) from the country. The latter is deemed more beneficial, given India's substantial trade deficit with China. Encouraging Chinese investments would not only help reduce this deficit but also foster domestic technical expertise. - **Economic Survey flags misselling, claims issue in insurance sector:** Product misselling is rampant in the insurance sector and can\'t be dismissed as a few rogue agents, the Economic Survey 2024 said while emphasising on the need for prompt and reasonable claim settlements and a lower rejection rate to boost insurance penetration. While referring to financial products misselling, the survey said that misselling and misrepresentation need acknowledgment, with firms compensating for consequential losses. This practice is important for stockbroking, fund management, banking, and insurance firms, the survey said. - **Threshold-based relief for MSMEs must have sunset clauses:** The threshold-based concessions and exemptions for the micro, small, and medium enterprises (MSME) sector create the unintended effect of incentivising enterprises to cap their sizes below the thresholds and therefore, must have sunset clauses, the Economic Survey 2023-24 said. An enterprise is classified as an MSME based on a set of criteria. A micro enterprise is where an investment in plant and machinery or equipment does not exceed Rs 1 crore and turnover does not surpass Rs 5 crore. A small enterprise is where the investment in plant and machinery or equipment does not exceed Rs 10 crore, and turnover does not exceed Rs 50 crore. And, in a medium enterprise, the investment in plant and machinery or equipment must not exceed Rs 50 crore, and turnover should not surpass Rs 250 crore. The Survey said that MSMEs face extensive regulation, compliance requirements and significant bottlenecks with access to affordable and timely funding being some of the core concerns. "Licensing, inspection and compliance requirements that MSMEs have to deal with, imposed particularly by sub-national governments, hold them back from growing to their potential and being job creators of substance," said the survey. \*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\*\* *[UNION BUDGET 2024-25]* ==================================== Union Finance Minister Nirmala Sitharaman on 23rd July 2024 tabled the Union Budget 2024-25. While presenting the Union Budget 2024-25 in Parliament, she said that India's inflation continues to be low, stable and moving towards the 4 per cent target. Core inflation (non-food, non-fuel) currently is 3.1 per cent and steps are being taken to ensure supplies of perishable goods reach market adequately. As mentioned in the interim budget, the **focus is on 4 major castes, namely 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth) and 'Annadata' (Farmer).** ***BUDGET ESTIMATES:*** ----------------------- - For the year 2024-25, the **total receipts** other than borrowings and the **total expenditure** are estimated at **₹32.07 lakh crore and ₹48.21 lakh crore respectively**. - The net tax receipts are estimated at ₹25.83 lakh crore and the **fiscal deficit is estimated at 4.9 per cent of GDP.** Government aims to reach a deficit below **4.5 per cent** next year. - The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.01 lakh crore and ₹11.63 lakh crore respectively. ***INDICATORS & MAJOR ALLOCATIONS*** RUPEE COMES FROM RUPEE GOES TO ---------------------------------- --------------- --------------------- ---------------------------------------- ------------- --------------------- **2024-25** 2023-24 projections **2024-25** 2023-24 projections Borrowings and Other Liabilities **27%** 34% States\' Share of Taxes and Duties **21%** 18% GST & Other taxes **18%** 17% Interest Payments **19%** 20% Corporation Tax **17%** 15% Central Sector Schemes **16%** 17% Income Tax **19%** 15% Finance Commission and other transfers **9%** 9% Non Tax revenue **9%** 6% Other Expenditure **9%** 8% Union Excise Duties **5%** 7% Centrally Sponsored Schemes **8%** 9% Non Debt Capital Receipts **1%** 2% Defence **8%** 8% Customs **4%** 4% Subsidies **6%** 7% ***RECEIPTS & EXPENDITURE* \[Rs. In Lakh Crores\]** 2022-23 Actuals 2023-24 BE 2023-24 RE 2024-25 BE --------------------- ----------------- ------------ ------------ ------------ Revenue Receipt **23.80** **26.30** **27.00** 31.30 Capital Receipt 18.10 18.70 17.90 **16.90** Total Receipt 41.90 45.00 44.90 48.20 Revenue Expenditure 34.50 35.00 35.40 **37.10** Capital Expenditure 10.50 13.70 12.70 **15.00** Total Expenditure 45.00 48.70 48.10 52.10 Revenue Deficit 10.70 8.70 8.40 5.80 ***[EXPENDITURE IN MAJOR ITEMS ]*** ***ALLOCATION TO MAJOR SCHEMES (Rs in crores)*** ------------------------------------------------ SCHEME BE 2023-24 BE 2024-25 --------------------------------------------------------- ------------ ------------ MGNREGA 60,000 86,000 Research & Development Projects 840 1,200 Nuclear Power Projects 442 2,228 PLI for Pharmaceutical Industry 1,200 2,143 Development of Semiconductors and display manufacturing 3,000 6,903 Solar Power (Grid) 4,970 10,000 Direct Benefit transfer (LPG) 180 1,500 Lines of Credit under IDEA scheme 1,300 3,849 ***BUDGET PRIORITIES:*** ------------------------ The Finance Minister said, for pursuit of 'Viksit Bharat', the budget envisages sustained efforts on the following **9 priorities** for generating ample opportunities for all.. 1. Productivity and resilience in Agriculture. 2. Employment & Skilling 3. Inclusive Human Resource Development and Social Justice 4. Manufacturing & Services 5. Urban Development 6. Energy Security 7. Infrastructure 8. Innovation, Research & Development and 9. Next Generation Reforms ***Productivity and resilience in Agriculture:*** ------------------------------------------------- - Government has made a provision of **₹1.52 lakh crore for agriculture and allied sector** this year. - The Government will undertake a comprehensive review of the agriculture research setup to bring the focus on raising productivity. New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation by farmers. - In the next two years, **1 crore farmers** across the country will be initiated into **natural farming** supported by certification and branding. - **10,000** need-based bio-input resource centres will be established. - Government, in partnership with the states, will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in 3 years. - Financing for Shrimp farming, processing and export will be facilitated through NABARD. - Issuance of Jan Samarth based Kisan Credit Cards. ***Employment & Skilling:*** ---------------------------- - The Government will implement **3 schemes for 'Employment Linked Incentive'**, as part of the Prime Minister's package. These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers. - Government will also facilitate higher participation of women in the workforce through setting up of working women hostels in collaboration with industry, and establishing creches. - The Finance Minister announced a new centrally sponsored scheme, as the 4th scheme under the Prime Minister's package, for skilling in collaboration with state governments and Industry. **20 lakh youth will be skilled over a 5-year period and 1,000 Industrial Training Institutes will be upgraded** in hub and spoke arrangements with outcome orientation. - The Model **Skill Loan Scheme** will be revised to facilitate **loans up to ₹7.5 lakh** with a guarantee from a government promoted Fund, which is expected to help 25,000 students every year. - For helping the youth, who have not been eligible for any benefit under government schemes and policies, the finance minister announced a financial support for **loans upto ₹10 lakh for higher education in domestic institutions.** E-vouchers for this purpose will be given directly to 1 lakh students every year for **annual interest subvention of 3 per cent of the loan amount**. **[Package of PM's five schemes for Employment and Skilling]:** Prime Minister's Package of 5 Schemes and Initiatives for employment, skilling and other opportunities for 4.1 crore youth over a 5-year period. 1. **Scheme A - First Timers:** One-month salary of **up to Rs.15,000** to be provided in 3 installments to **first-time employees**, as registered in the EPFO. 2. **Scheme B - Job Creation in manufacturing:** Incentive to be provided at specified scale directly, both employee and employer, with respect to their **EPFO contribution in the first 4 years** of employment. 3. **Scheme C - Support to employers:** Government to reimburse up to **Rs.3,000 per month for 2 years** towards EPFO contribution of employers, for each additional employee. 4. **New centrally sponsored scheme for Skilling:** 20 lakh youth to be skilled over a 5-year period. 1,000 Industrial Training Institutes to be upgraded in hub and spoke arrangements. 5. **New Scheme for Internship** in 500 Top Companies to 1 crore youth in 5 years ***Inclusive Human Resource Development and Social Justice:*** -------------------------------------------------------------- - Implementation of schemes meant for supporting economic activities by craftsmen, artisans, self-help groups, scheduled caste, schedule tribe and women entrepreneurs, and street vendors, such as PM Vishwakarma, PM SVANidhi, National Livelihood Missions, and Stand-Up India will be stepped up. - Government will formulate a **plan, Purvodaya,** for the all-round development of the eastern region of the country covering **Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh**. Industrial node at Gaya to be developed along the Amritsar-Kolkata Industrial Corridor. Power projects, including new 2400 MW power plant at Pirpainti, to be taken up at a cost of Rs.21,400 crore. - **Andhra Pradesh Reorganization Act:** Special financial support through multilateral development agencies of **Rs.15,000 crore** in the current financial year. - Government will launch the Pradhan Mantri Janjatiya Unnat Gram Abhiyan by adopting saturation coverage for tribal families in tribal-majority villages and aspirational districts covering 63,000 villages and benefitting 5 crore tribal people. - **More than 100 branches of India Post Payment Bank** will be set up in the **North East region** to expand the banking services. - A provision of ₹2.66 lakh crore for rural development including rural infrastructure was made this year. - Total allocation of more than **Rs. 3 lakh crore** for schemes benefitting women and girls. ***Manufacturing & Services:*** ------------------------------- - This budget provides special attention to MSMEs and manufacturing, particularly labour-intensive manufacturing. A **separately constituted self-financing guarantee** fund will provide, to each applicant, **guarantee cover up to ₹100 crore**, while the loan amount may be larger. Similarly, **Public sector banks will build their in-house capability to assess MSMEs for credit**, instead of relying on external assessment. - The limit of **Mudra loans will be enhanced to ₹ 20 lakh** from the current ₹10 lakh for those entrepreneurs who have availed and successfully **repaid previous loans under the 'Tarun' category**. - Financial support for setting up of 50 multi-product food irradiation units in the MSME sector will be provided. Setting up of 100 food quality and safety testing labs with NABL accreditation will also be facilitated. To enable MSMEs and traditional artisans to sell their products in international markets, E-Commerce Export Hubs will be set up in public-private-partnership (PPP) mode. - **Turnover threshold** of buyers for mandatory onboarding on the **TReDS platform** to be **reduced from Rs.500 crore to Rs.250 crore.** - **Internship in Top Companies:** The Finance Minister said that as the 5th scheme under the Prime Minister's package, government will launch a comprehensive scheme for providing internship opportunities in 500 top companies to 1 crore youth in 5 years. ***Urban Development:*** ------------------------ - **Urban Housing:** Under the PM Awas Yojana Urban 2.0, **housing needs of 1 crore urban poor** and middle-class families will be addressed with an investment of **₹ 10 lakh crore**. This will include the central assistance of ₹ 2.2 lakh crore in the next 5 years. - **Water supply and Sanitation:** In partnership with the State Governments and Multilateral Development Banks, government will promote water supply, sewage treatment and solid waste management projects and services for 100 large cities through bankable projects. - **PM SVANidhi:** Building on the success of PM SVANidhi Scheme in transforming the lives of street vendors, Government envisions a scheme to support each year, over the next five years, the development of **100 weekly 'haats' or street food hubs in select cities**. - Encouraging **states to lower stamp duties** for properties purchased **by women**. - **Transit Oriented Development plans** for **14 large cities** with a **population above 30 lakh** proposed. ***Energy Security:*** ---------------------- - PM Surya Ghar Muft Bijli Yojana has been launched to install rooftop solar plants to enable 1 crore households obtain free electricity up to 300 units every month. The scheme has generated remarkable response with more than 1.28 crore registrations and 14 lakh applications. - Nuclear energy is expected to form a very significant part of the energy mix for Viksit Bharat. ***Infrastructure:*** --------------------- - The Finance Minister underlined that significant investment the Central Government has made over the years in building and improving infrastructure has had a strong multiplier effect on the economy. Government will endeavour to maintain strong fiscal support for infrastructure over the next 5 years, in conjunction with imperatives of other priorities and fiscal consolidation. **₹11,11,111 crore for capital expenditure has been allocated this year, which is 3.4 per cent of our GDP.** - Pradhan Mantri Gram SadakYojana (PMGSY): Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations which have become eligible in view of their population increase. - For Irrigation and Flood Mitigation in Bihar, through the Accelerated Irrigation Benefit Programme and other sources, government will provide financial support for projects with estimated cost of ₹11,500 crore such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes including barrages, river pollution abatement and irrigation projects. Government will also provide assistance to Assam, Himachal Pradesh, Uttarakhand and Sikkim for flood management, landslides and related projects. ***Innovation, Research & Development:*** ----------------------------------------- - The government will operationalize the **Anusandhan National Research Fund** for basic research and prototype development and set up a mechanism for spurring private sector-driven research and innovation at commercial scale with a financing pool of ₹1 lakh crore in line with the announcement in the interim budget. - Continues emphasis on expanding the space economy by 5 times in the next 10 years, a venture capital fund of ₹1,000 crore will be set up. ***Next Generation Reforms:*** ------------------------------ - Government will facilitate the provision of a wide array of services to labour, including those for employment and skilling. A comprehensive integration of e-shram portal with other portals will facilitate such one-stop solution. Shram Suvidha and Samadhan portals will be revamped to enhance ease of compliance for industry and trade. - Government will develop taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. - The rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified to (1) facilitate foreign direct investments, (2) nudge prioritization, and (3) promote opportunities for using Indian Rupee as a currency for overseas investments. - **NPS-Vatsalya**, a **plan for contribution by parents and guardians for minors** will be started. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account. ***DIRECT TAX:*** ----------------- - **Standard deduction** of salaried employees increased from ₹ 50,000/- to **₹ 75,000/-** for those opting for **new tax regime**. - Similarly, **deduction on family pension** for pensioners enhanced from ₹ 15,000/- to **₹ 25,000/-** - Assessments now, can be **reopened beyond three years up to 5 years** from end of year of assessment, only if, the escaped income is **more than ₹ 50 Lakh**. - The new tax regime rate structure is also revised to give a salaried employee benefits up to ₹ 17,500/- in income tax. - The Tax slab under the new tax regime are as follows **Income Slabs** **Tax Rate** ---------------------- -------------- 0 -- 3 Lakh rupees NIL 3 -- 7 Lakh rupees 5 per cent 7 -- 10 Lakh rupees 10 per cent 10 -- 12 Lakh rupees 15 per cent 12 -- 15 Lakh rupees 20 per cent Above 15 Lakh rupees 30 per cent - Budget has given boost to entrepreneurial spirit and start-up ecosystem, **abolishing angel tax for all classes of investors.** - **Corporate tax rate on foreign companies** **reduced from 40 to 35 per cent** to attract foreign capital. - Budget further simplified the direct tax regime for charities, TDS rate structure and capital gains taxation. The two tax exemption regimes for charities will be merged into one. **5 per cent TDS on many payments to be merged into 2 per cent** TDS and **20 per cent TDS on repurchase of units by mutual funds or UTI stands withdrawn.** - **TDS rate on e-commerce** operators reduced from 1 per cent to **0.1 per cent**. - Now credit of TCS will be given on TDS deducted from salary. - Budget decriminalized delay of payment of TDS up to the due date of filing of TDS statement. - On Capital gains, **short term gains shall henceforth attract a rate of 20 per cent** on certain financial assets. **Long term gains on all financial and non-financial assets to attract 12.5 per cent rate**. Limit of exemption of capital gains has been increased to **₹1.25 Lakh per year**. - Listed financial assets held for more than a year and unlisted assets (financial and non-financial) held for more than two years to be classified as long term assets. Unlisted bonds and debentures, debt mutual funds and market linked debentures will continue to attract applicable capital gains tax. ***IN-DIRECT TAX:*** -------------------- - Custom duties have been revised to rationalize and revise them for ease of trade and reduction of disputes. Giving relief to cancer patients, Budget fully exempted three more cancer treating medicines from custom duties, namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab. - There will be reduction in Basic Customs Duty (BCD) on X-ray machines tubes and flat panel detectors. BCD on mobile phones, Printed Circuit Board Assembly (PCBA) and mobile chargers reduced to **15 per cent**. - To give a fillip to processing and refining of critical minerals, Budget fully exempted custom duties on 25 rare earth minerals like lithium and reduced BCD on two of them. Budget proposed to exempt capital goods for manufacturing of solar panels. - To **boost India's seafood exports**, BCD on broodstock, polychaete worms, shrimps and fish feed reduced **to 5 per cent**. - Budget will foster competitiveness of Indian leather and textiles articles of export. BCD reduced from 7.5 per cent to 5 per cent in Methylene Diphenyl Diisocyanate (MDI) used for manufacture of spandex yarn. - **Custom duties on gold and silver reduced to 6 per cent and on platinum to 6.4 per ce**nt. BCD on ferro nickel and blister copper removed, while, BCD on ammonium nitrate increased from 7.5 to 10 per cent to support existing and new capacities in pipeline. Similarly, BCD on PVC flex banners increased from 10 to 25 per cent considering the hazard to environment. - For dispute resolution and dispose-off backlogs, Union Finance Minister proposed Vivad se Vishwas Scheme, 2024 for resolsution of certain income tax disputes pending in appeal. - The monetary limits for **filing appeals** related to direct taxes, excise and service tax in High Courts, Supreme Courts and tribunals has been increased to **₹60Lakh, ₹2Crore and ₹5Crore**, respectively. ***MORE INSIGHTS & IMPACT ANALYSIS ON CERTAIN SECTORS:*** --------------------------------------------------------- ***PLI FOR TOYS, LEATHER AND FOOTWEAR GETS NOD, RS 6,000 OUTLAY SEEN FOR SCHEME TILL FY32:*** The government will introduce the production-linked incentive (PLI) scheme for the toys and leather and footwear sectors, with a total outlay of over Rs 6,000 crore. Both schemes are set to run until 2031-32.The PLI for toys will have an outlay of Rs 3,489 crore, while the footwear and leather sector will receive Rs 2,600 crore. These schemes are pending cabinet approval, with a token allocation provided for this year. Currently, PLI schemes for 14 sectors, with an outlay of Rs 1.97 trillion, are operational. Adding the two new sectors will increase the allocation for the scheme launched in 2020. Of the total allocation, only 5% of the funds have been disbursed as incentives to beneficiaries. This financial year, the incentive outgo is expected to reach Rs 14,182 crore, up from Rs 8,000 crore in FY24. In FY23, the incentive payout under the scheme was Rs 2,900 crore. ***MORE TAX PAYABLE ON OLDER PROPERTY SALE AS FM REMOVES INDEXATION***: Capital gains tax on sale of real estate assets like homes would be higher for most owners. In the Budget 2024-25, the Finance Minister has removed the indexation benefit for homeowners. To simplify the process, the FM has announced removal of indexation clause completely on real estate assets, and brought down the long-term capital gains tax (LTCG) rate to **12.5%** from 20%. As result, effective tax incidence on LTCG against real estate assets would be higher for most owners, especially for those who are holding the property for more than five years. **FM CHECKMATES F&O SURGE WITH STT:** As anticipated by the market, the Union Budget hiked the securities transaction tax (STT) on futures and options (F&O). The move is to arrest the rising participation of retail investors in this market, which the Economic Survey dubbed as 'gambling.' "It is proposed to increase the rates of STT on sale of an option in securities from 0.0625% to 0.1% of the option premium, and on sale of a futures in securities from 0.0125% to 0.02% of the price at which such futures are traded.