Gainers & Losers: What the Budget has for you

The first budget of Modi 3.0, as anticipated, generated significant expectations. Finance minister Nirmala Sitharaman has endeavoured to balance various interests, providing substantial benefits to some while offering moderate relief to others. Here’s a quick look at who gains from the Inion Budget 2024-25:

Youth

Youth emerge as the biggest beneficiaries, with the budget's strong focus on jobs and future economic needs through skilling programs. Five schemes with an outlay of ₹2 trillion have been launched to educate, employ, and skill youth entering the workforce, benefiting over 41 million individuals in the next five years.

Of these, three schemes focus on employment-linked incentives.

The first scheme targets first-time employees, offering one month’s wage, capped at ₹15,000, for workers earning up to ₹1 lakh entering the formal workforce for the first time and enrolled with the Employee Provident Fund Organisation (EPFO). This initiative is expected to benefit 21 million youth.

Another scheme incentivizes additional employment in manufacturing by supporting both first-time employees and employers regarding their EPFO contributions in the first four years of employment, benefiting 3.0 million youth.

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The third scheme reimburses employers up to ₹3,000 per month for two years towards their EPFO contribution for each additional employee earning ₹1 lakh or less, benefiting 5.0 million individuals.

The fourth schemes focusses on skilling in collaboration with state governments and industry. About 2.0 million youth will get skilled over a 5-year period.

The fifth scheme offers comprehensive 12-month internship opportunities in 500 top companies for 1 crore youth over five years. Interns will get an allowance of ₹5,000 per month and a one-time assistance of ₹6,000.

Medium, Small and Micro Enterprises (MSMEs)

The informal economy, comprising largely of MSMEs, hit hard by challenges like demonetization, GST rollout, and the pandemic, receive increased support in this budget:

A credit guarantee scheme will facilitate term loans for plant and machinery purchases without collateral or third-party guarantees.

MSMEs under stress for reasons beyond their control will continue to receive credit support.

The limit for Mudra loans has been increased from ₹10 lakh to ₹20 lakh.

The threshold for mandatory onboarding of buyers on the TReDS platform has been reduced from ₹500 crore to ₹250 crore, allowing MSMEs to convert more trade receivables into cash and ease their working capital situation.

Individual tax payers

The long-standing demand for a reduction in individual income tax rates became a reality in this budget.

The finance minister increased the standard deduction from ₹50,000 to ₹75,000, and also tweaked the income tax rates.

This is likely to benefit over 40 million salaried individuals by ₹17,500 each.

Investors

Investors, particularly those in stock markets, face mixed outcomes:

Both short-term and long-term capital gains taxes have been increased, with short-term capital gains on certain financial assets rising from 15% to 20%, and long-term gains on both financial and non-financial assets increasing from 10% to 12.5%.

However, the exemption limit for capital gains has increased from ₹1 lakh to ₹1.25 lakh, benefiting small investors.

The securities transactions tax (STT) on futures and options have been increased sharply to 0.02% and 0.1% respectively.

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Proceeds of buy-back schemes will now be taxed in the hands of the investor

Rural India

The government took a conscious effort to address the rural distress. Higher spend will create more rural jobs and revive the rural economy.

It allocated ₹1.52 trillion for agriculture and allied services

It has also increased allocation to rural affordable housing scheme and has announced plans to build 30 million more houses. Allocation has also been made for building rural roads in 25,000 rural habitats.

Farmers

Farmers receive support through various initiatives:

To improve production, the Centre is planning to launch 109 new climate resistant variety of 32 crops.

It wants farmers to embrace natural farming with proper institutional support.

A mission will be launched for pulses and oil seeds. This will hopefully make India self-sufficient in them. The government will also set up storage facilities and create a vegetable supply chain.

Companies

Firms saw see limited benefits from the budget, but notable changes include:

Corporate tax on foreign companies was reduced from 40% to 35%. This has been done to attract foreign capital for India’s developmental needs. 

India Inc has been allowed to use Corporate Social Responsibility funds to undertake employee training and internship costs

Consumers

The budget reduced prices of a few articles and they now have more money in their pockets thanks to income tax cuts. Will they spend?

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Mobile phones, gold, silver and platinum are set to become cheaper.

Lithium-ion batteries, too, will become cheaper, and this could bring down the cost of electric vehicles. 

Telecom equipment, non-biodegradable plastics will, however, become more expensive.