With India marching forward to its dream of “Viksit Bharat” by 2047, the Union Budget 2024-25 is likely to be a path-breaking document for the country. Presented as the strategy in the middle of global economic instability, the budget sketches a picture of stability, development and integration. However, under the optimistic message of the sectors such as agriculture, infrastructure, and youth employment, there is a clear social divide that critics claim serves the purpose of the rich while leaving the middle class with unfulfilled promises and rising costs.
On paper, there is much to like with the budget and its story. India which has been experiencing global economic fluctuations is expected to sustain stable economic growth and a stable inflation rate. The government has identified nine focus areas from productivity in agriculture to the post-2012 reforms to make the economy more competitive in the face of global developments. However, as you go further there is a shift of balance.
Expenditure of the Indian Government (Key features of the Union Budget)
The much-touted tax slab changes are a small hike in the standard deduction from ₹50,000 to ₹75,000 which is a small consolation for the salaried employees. Though this is a positive development, it is relatively small especially given the increasing cost of living, soaring health costs and stagnated wages. The deduction limits on health insurance premium under section 80D have not been revised for the last ten years while the medical inflation has been increasing constantly. The opponents state that this budget ignores the middle class with some morsels to be given in a world where the expenses are growing. (https://economictimes.indiatimes.com/news/economy/policy/budget-2024-highlights-india-nirmala-sitharaman-capex-fiscal-deficit-tax-slab-key-announcement-in-union-budget-2024-25/articleshow/111942707.cms)
However, what is surprising about this budget is that the middle class is left with very little to cheer about while the rich seem to be given a helping hand. Stringent measures such as lowering down the surcharge from 37% to 25% for the ultra-rich have created a lot of controversy. The government says that it is doing it in an effort to encourage investment and economic development, but critics say it only serves to deepen the divide between the rich and the poor. The super-rich will benefit from a huge tax cut while the rest of the population and especially the middle class will benefit little. This leads to the question; Is this an inclusive budget or is it simply the case of the ‘have more’ getting even more? Let’s talk numbers. A massive ₹1,50,000+ crore has been earmarked for the agricultural sector in order to boost productivity and sustainability and the amount has been set at 52 lakh crore. Besides, in order to modernize agriculture, the government intends to use drones to map crops across 400 districts.
While these initiatives are indeed impressive, one can’t help but wonder: are those reforms to the benefit of small and marginal farmers or are the benefits going to be reaped mostly by large scale farmers and agri-business conglomerates? The Kisan Credit Cards linked to Jan Samarth will aid the cause of the digital public infrastructure for agriculture, but there is a digital gap that many of the rural farmers may not be able to cross.
At the same time, the government has envisaged the goal of achieving 4 percent of the gross domestic product of the country from the renewable energy sources. One crore jobs in the next five years with a ₹ 2 lakh crore package which is expected to create employment. New employees in the organisation will get wages up to ₹15,000 per month through wage incentives, while employers will get financial assistance in the form of Employees' Provident Fund (EPF) contributions for the new employees. This is a move that is in line with the opposition proposals, and it marks a new form of approach by the government to issues to do with youth unemployment. But how long-lasting are these jobs?
Allocation of Expenditure to Major Resources (Key Highlights of the Union Budget)
In the skilling domain, it plans to train 20 lakh youth in five years in vocational training, which is a sectoral requirement. The government will enhance the capacity of 1,000 ITIs on the hub-and-spoke model aimed at providing training that is outcomes-focused and trade-related. But here again, while skilling initiatives are a welcome development, there is still doubt on the quality of jobs that are being generated. Is our current approach to the education of the youths preparing them for stable, high-paid jobs, or are we just doling them out of insecurity? (https://www.thehindu.com/business/budget/watch-union-budget-2024-25-key-highlights/article68438877.ece)The government’s interest in infrastructure development is significant with INR 11 lakh crore allocated to projects in highways, railways, ports and urban infrastructure (capital expenditure). One can’t but notice the scope of work here—be it connecting 25,000 rural habitations with all-weather roads or advancing the PM Awas Yojana to meet the housing requirements of 1 crore urban poor and middle-class population.
The government’s efforts to focus on the construction of Bharat Small Reactors, providing energy audits to small industries and developing Advanced Ultra-Super Critical thermal power plants for energy independence are appreciable. This renewed emphasis on the infrastructure will no doubt bolster the country’s logistical and industrial framework, but to what end?
The middle class will not necessarily benefit from large-scale infrastructural development, especially given that they are experiencing stagnant wages and higher costs of living. Yet, the initiatives in the energy sector such as the pumped storage policies and cooperation with the private sector in nuclear energy have been on the right track for future direction; the everyday consumer still struggles with basic electricity and fuel prices.
As for innovation and the next-generation reforms, the government’s intentions look particularly encouraging. A ₹1,000 crore venture capital fund for India’s space economy is also, such as the pumped storage policies and cooperation with the private sector in nuclear energy. The government also pledges the implementation of the Anusandhan National Research Fund for basic research and prototyping. These initiatives put India right on the map of innovation. While the corporate sector claps, emerging startups and small businesses could struggle to penetrate the market, particularly if they do not have capital and a variety of resources. (https://cleartax.in/s/budget-2024-highlights)
It is also important to note that with its simplifications in FDI rules, the budget seeks to encourage more foreign investment. The corporate tax rate for foreign companies has been lowered from 40% to 35%, which is another step towards encouraging investment. But this once again raises the question: does this budget favour the big businesses and the rich at the expense of the middle-income earners and small businesses? (https://www.bbc.com/news/articles/c51yj90jdgzo)
The ambitious goals set out for agriculture, employment, skilling, and infrastructure are commendable, but the benefits appear skewed towards the upper echelons of society. For the middle class, the lack of substantial relief, combined with rising inflation and stagnant wages, leaves much to be desired. The government’s focus on creating jobs, modernizing agriculture, and promoting energy security is necessary, but it must be more inclusive if it hopes to build a truly "Viksit Bharat."
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