The Union Budget 2024-25 reaffirms the Govt’s dedication to long-term growth. India is well-positioned to harness its immense potential for rapid development
In a pivotal move aimed at strengthening India’s economic prowess, the Union Budget for the fiscal year 2024-25 has made significant strides in assuring continuity of progressive reforms. There is cheer in the MSME, E-commerce and start-up worlds, which have been extended additional support as the country progresses on the road towards a Viksit Bharat. The Finance Minister made various announcements to empower the Garib, Mahila, Yuva and Kissan. The announcements made under this budget are timely and set to propel the Indian economy to new heights during the Amrit Kaal, enhancing its resilience in an ever-evolving global landscape.
A booster for MSMEs
The budget rightfully supports the bottom of the industrial pyramid by offering much-needed ease of credit for the MSME segment. India has 633.9 lakh MSMEs, where over 99% of them qualify as micro-enterprises that make up 630.5 lakh enterprises. One of the critical reasons why micro enterprises (with investments up to INR 10 million) do not graduate to being small or medium enterprises is the lack of access to formal credit. By doubling the MUDRA loan amounts and setting up new SIDBI branches, credit will now be more accessible to these organizations. Other steps (mandatory Trade Receivables Discounting System) have improved liquidity, while Industrial parks will provide the much-needed digital support that MSMEs usually cannot afford for growth. Additionally, the new credit guarantee scheme for MSMEs offers term loans without collateral or third-party guarantees, significantly easing the financial burden on small business owners and fostering entrepreneurship. Such positive support for this crucial sector is bound to give it the confidence to shed its risk-averse nature and grow with ambition on the road to 2047.
Skilling and Job Creation
With this budget, the Government has responded positively to the need for job opportunities and skill development among youth in our country. The continued emphasis on skilling will allow training institutions and large corporations to participate in creating a pool of professionally trained manpower that would be readily absorbed by them and the larger MSME ecosystem, which is often strained for funds for training purposes. Meticulous implementation will, however, be key to setting the ball rolling in the right direction of creating jobs.
Rural Economy
The rural economy continued to receive support from the government, as strengthening this segment will be crucial for the sustained economic growth of the country. Budget 2024 had some big announcements for them that would increase productivity and food security in grains and oilseeds. Such measures will go a long way in creating new economic clusters that will support sustained growth.
With 1 crore farmers to be trained in natural farming, marketing, certification, and branding, organic farming is all set to receive a big stimulus. The focus on addressing the impact of climate on our food basket showcases the government's long-term vision towards building resilience in the ecosystem.’
Start-ups and E-Commerce
There is general cheer in the start-up ecosystem across India over the abolition of the angle tax, proposed in the budget.
Angel tax, introduced in 2012, was imposed on the capital raised by unlisted companies through the issue of shares to Indian investors if the share price exceeded the fair market value (FMV) of the company. Traders and artisans using e-commerce sites got a lift up in this budget when TDS was not just reduced but TDS delays were decriminalized.
E-commerce exports, $2 billion now, are expected to be $350 billion by 2030. With revised custom duties, the Government hopes to give the required fillip to these artisans/traders who sell their wares using websites, in line with its Make in India strategy.
Energy security
India is a fast-developing economy and our energy needs are rising rapidly. By encouraging private investment in setting up small nuclear energy reactors and encouraging R&D into newer forms of nuclear energy, the budget aims to achieve India’s goals of energy security.
With regular energy audits across clusters, larger commercial thermal plants and a pumped storage policy, the budget aims to help India cope with the rising demand without missing a step. However, our green economy targets are very ambitious and much more needs to be done to ensure our transition to green fuels.
Digitization of Land Records
This one step is perhaps the most impactful step the budget has outlined for the growth of India’s economy. Vast tracts of our land, especially in rural India, are often embroiled in disputes with no proper documentation. This is a key hurdle in land acquisition for major projects. By digitising these records across India, the Government will end middlemen and reduce the number of land cases in the legal system. Overall, the Union Budget 2024-25 reinforces the Government’s commitment to sustained long-term growth.
With strategic investments and forward-looking policies, India is poised to navigate global challenges while harnessing its immense potential for socio-economic development. The road towards Viksit Bharat could have its set of challenges, especially given the global dynamics, but the sustained vision and progressive policy support will help realise the dream of a Viksit Bharat.
(The writer is secretary general of ASSOCHEM; views expressed are personal)
