Though the budget 2024 is growth-centric, it has populist overtones and addresses concerns of NDA allies
Finance Minister Nirmala Sitharaman presented the first Union Budget for Modi 3.0 government on July 23, 2024, aiming to bolster India’s economic growth while addressing social equity and the interests of the NDA allies. This budget is an exercise in balancing economic growth with political dividends. This budget outlines allocations for infrastructure, green energy initiatives, and the digital economy, reflecting a comprehensive approach to development. The Union Budget 2024-25 focuses on macroeconomic growth and fiscal stability but offers limited welfare for the poor, relying on effective policy implementation for success. While the fiscal deficit has improved to 4.9% of GDP, significant disparities persist, with increased capital expenditure intended to boost private investment but widening rural-urban and income divides. The budget maintains a similar outlay as the interim budget, prioritising agriculture, rural development, housing, and MSMEs to create jobs. New measures include direct payments for first-time employees and incentives for employers to increase hiring. The budget does not adequately address rising inflation, which stands at 5.08%. To support manufacturing, the government has introduced initiatives like the Credit Guarantee Scheme for MSMEs and increased Mudra Loan limits, along with developing industrial parks enhancing agricultural practices through Digital Public Infrastructure (DPI) and increasing support for natural farming. Despite these efforts, the success of the budget depends on effective implementation and addressing broader economic challenges.
The Union Budget 2024 outlines a comprehensive plan to deal with the rising unemployment by increasing the skill set of the youth. It plans to provide skills to 20 lakh youth over five years. As part of this initiative, 1,000 Industrial Training Institutes will be upgraded into hub and spoke arrangements with a focus on outcome orientation. The course content and design will be aligned with the skill needs of the industry. The budget’s positives include the significant investment in infrastructure, expected to create jobs and stimulate economic growth. However, the budget also presents challenges. The ambitious spending plans may widen the fiscal deficit, posing challenges to macroeconomic stability and inflation control. Effective implementation of the proposed schemes and projects remains a critical concern, given historical delays and inefficiencies. The 2024 budget reflects a populist approach, aimed at addressing the concerns of its allies — Nitish Kumar and Chandrababu Naidu and has generously allocated funds for their states. The BJP has learned from its performance in the recent Lok Sabha elections, where it faced criticism for not adequately addressing issues like rural distress, job creation, and social equity. By focusing on infrastructure development, rural welfare, and social sector spending, the budget seeks to win back the support of these crucial demographics.
