By RC Bhargava
The interim budget on February 1 this year had made allocations for several important priorities of the Modi government. Thus, the housing programme was continued with a target set for the next five years. Infrastructure investments were substantially funded.
Clearly, the interim budget was not merely a vote on account to carry on business till a new government was formed, but indicated that the government expected to come back to power and carry forward the objective of making India a developed country.
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Subsequent to the general elections the government has now been formed by the NDA. Modi continues as prime minister and the Budget makes it very apparent that the priorities of the government remain the same. India continues to target high growth, employment creation and inclusive growth. This Budget is a continuation of the interim budget.
One of the hallmarks of the government has been its commitment to financial prudence. The government has not allowed expenditure overruns and has met its targets of fiscal deficit. Even though the interim budget had indicated that the fiscal deficit for 2024-25 could be around 5.1%, the finance minister has now set a target of 4.9%.
The borrowing targets for the year are lower than in 2023-24 and are indicative of the government finances being in a good place. The GST collections have been buoyant and the greater use of technology in all areas of tax management has resulted in better revenue collections with less public dissatisfaction. Hopefully, the revision in income tax would make tax payments even less painful.
The income tax benefits to the salaried class would be welcomed by all and could lead to higher consumer demand for goods and services. The changes in the rates for short- and long-term capital gains were expected and would help to bring different asset classes on a par. The reduction in the corporate tax on foreign companies is aimed at encouraging such companies to come to India. The increase in the STT on F&O transactions is consistent with the recent expression of concern on the possible adverse impact of such transactions.
Manufacturing is one of the priority areas of the government—for creating wealth, increasing exports and generating employment. Various ways of promoting manufacturing growth and creating employment opportunities have been incentivised by the Budget. Skilling of youth is sought to be promoted by upgrading the education given in over a thousand industrial training institutes.
The Model Skill Loan Scheme is being revised. A scheme to encourage the formal sector to increase employment by providing incentives is being introduced. An internship programme with the top 500 companies is to be started and stipends given. The target is one crore youth to be helped over five years. Manufacturing MSMEs are to be helped by a credit guarantee scheme.
Creating world-class infrastructure was identified by the government as essential for making industry competitive and generating large employment opportunities. This programme has been getting increasing amounts of funds and, importantly, the utilisation of funds has been good. In 2024-25, the allocation for infrastructure is Rs 11.11 trillion amounting to 3.4% of GDP. State governments would also be given up to Rs 1.5 trillion as loans for infrastructure development.
A few words about the industry where I work. We would certainly benefit if the economy continues to grow at around 7%, and inflation remains under control. More money in the hands of customers is always welcome. The clean energy development initiatives are very valuable to us.
RC Bhargava is the Chairman of Maruti Suzuki India.
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