A for agri, B for Bihar: The A-Z of Modi 3.0’s first Budget

A – Agriculture 🌽

Among the top priorities of the Budget, agriculture and allied sectors have received an allocation of ₹1.52 trillion. Modernization and productivity were the main themes, with new initiatives like release of 109 high-yielding and climate-resilient varieties of 32 crops, a mission for achieving self-sufficiency in pulses and oilseeds and upgrading vegetable supply chains.

B – Bihar 🛣️

Call it the compulsions of coalition politics. Bihar saw a slew of announcements, including highways, power projects, airports, sports infrastructure and medical colleges. The same goes for Andhra Pradesh, which will receive ₹15,000 crore this year as well as special financial support through multilateral development agencies. Both the states were mentioned five times each in the finance minister’s speech – the highest among states and Union territories.

C – Capex 💰

Belying market expectations, the allocation for capital expenditure was not hiked in the Budget, remaining at ₹11.11 trillion, as outlined in the Interim Budget in February. However, states will be encouraged to provide support of similar scale.

D – Digitalization 👩🏽‍💻

Digital Public Infrastructure (DPI) and other technological tools will be expanded to newer segments like digital crop surveys, land records, credit appraisal for MSMEs, e-commerce, services delivery, and urban governance.

E - Energy ⚡

Energy security and transition have emerged as one of the key focus areas of Modi 3.0. The PM Surya Ghar Muft Bijli Yojana, launched earlier this year to provide free electricity to households through rooftop solar plants, has seen more than 1.28 crore registrations. A policy for promoting pumped electricity storage projects and financial support for MSMEs for shifting to cleaner forms of energy are on the anvil.

F – Fiscal Prudence 💼

Fiscal deficit for 2024-25 is estimated at 4.9% of GDP, and the target is to get it below 4.5% next year and keep the central government debt on a declining path from 2026-27.

The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.01 trillion and ₹11.63 trillion, respectively. Both will be less than that in 2023-24.

G – Gold Duty 🪙

To enhance domestic value addition in gold and precious metal jewellery, the Budget reduced customs duties on gold and silver to 6% and that on platinum to 6.4%. Jewellery stocks like Titan, Senco and PC Jeweller were among the top market gainers.

H – Housing 🏠

Under the PM Awas Yojana Urban 2.0, the government is looking to meet the housing needs of 1 crore urban poor and middle-class families with an investment of ₹10 trillion. This will include central assistance of ₹2.2 trillion in the next 5 years. Besides, rental housing with dormitory type accommodation for industrial workers will be facilitated in public private partnership mode.

I – Infrastructure 🛬

The government will facilitate development of investment-ready “plug and play" industrial parks with complete infrastructure in or near 100 cities, in partnership with the states and private sector. Twelve industrial parks under the National Industrial Corridor Development Programme too will be sanctioned.

J – Jobs 🏢

After its recent electoral setbacks, the Modi 3.0 government has sharpened focus on employment generation. The Budget unveiled Prime Minister’s package of 5 schemes and initiatives to facilitate employment, skilling and other opportunities for 4.1 crore youth over a 5-year period, with total central outlay of ₹2 trillion. These include ‘Employment Linked Incentives’ based on enrolment in the EPFO and support to both employees and employers.

K – Knowledge economy🧑🏽‍🎓

For youngsters who have not been eligible for any benefit under government schemes and policies, the FM announced financial support for loans up to ₹10 lakh for higher education in domestic institutions. E-vouchers for this purpose will be given directly to 1 lakh students every year for annual interest subvention of 3% of the loan amount.

L – Land reforms 🚜

Details of 6 crore farmers and their lands will be brought into the farmer and land registries using Digital Public Infrastructure. In rural areas, all lands will be assigned Unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar. Land records in urban areas will be digitized with GIS mapping.

M – MSMEs 🏭

A credit guarantee scheme will be introduced for facilitating term loans to MSMEs in the manufacturing sector for purchase of machinery and equipment without collateral or third-party guarantee. This scheme will operate on pooling of credit risks of such MSMEs. A separately constituted self-financing guarantee fund will provide guarantee cover of up to ₹100 crore to each applicant, while the loan amount may be larger. The Budget also announced a new mechanism for continuation of bank credit to MSMEs during their stress period.

N – Next Generation Reforms

This was more of an intent than a concrete announcement. The government said it will formulate an Economic Policy Framework to delineate the overarching approach to economic development and set the scope of the next generation of reforms for facilitating employment opportunities and sustaining high growth. These reforms will cover all factors of production -- land, labour, capital and entrepreneurship.

O – Oh My God! 📉

This is how the stock markets reacted after the Budget hiked the long-term capital gains tax (LTCG) from 10% to 12.5%, and the short-term capital gains tax (STCG) from 15% to 20%, as was feared by certain participants. Adding salt to the wounds, the Security Transactions Tax (STT) on futures and options was increased to 0.02% and 0.1%, respectively, while income received on buy back of shares will be taxed in the hands of the recipient. The LTCG exemption limit, however, was hiked to ₹1.25 lakh.

The markets managed to recoup most of their losses by the end of trade, but the overall mood remains sombre.

P – Purvodaya ☀️

Sharpening its focus on the Eastern part of the country, the government launched ‘Purvodaya’ for the all-round development of Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh. The political commentariat couldn’t help but notice the inclusion of Andhra Pradesh in a scheme meant for Eastern India.

Q – Quiz Time! ⏱️

Can you name the sector which did not figure in the FM’s Budget speech, but has received the highest allocation? Answer – defence, with an allocation of ₹4.5 trillion. Other top sectors are rural development ( ₹2.6 trillion), agriculture and allied activities ( ₹1.52 trillion), home affairs ( ₹1.5 trillion), education ( ₹1.2 trillion) and IT and telecom ( ₹1.16 trillion).

R – Real Estate 🏗️

While the LTCG on property sales has been slashed from 20% to 12.5%, the removal of indexation benefit came as a shocker for the real estate sector. Sellers can now no longer adjust for inflation the purchase price of their property, which will lead to a higher tax burden on them, especially for older houses.

Nifty Realty was the worst performing sectoral index on Budget Day, diving 2.29%.

S – Social Justice ⚖️

The government reiterated its commitment to all-round development, particularly of farmers, youth, women and poor. It also announced the Pradhan Mantri Janjatiya Unnat Gram Abhiyan, which will be rolled out for improving the socio-economic condition of tribal communities. This will cover 63,000 villages benefitting 5 crore tribal people.

T – Tax Slabs 🧾

The FM tweaked the tax slabs under the new tax regime, with salaried taxpayers falling in the tax bracket of ₹6-7 lakh and ₹9-10 lakh seeing their tax rate decline from 10% to 5%, and from 15% to 10%, respectively.

Besides, the standard deduction has been raised from ₹50,000 to ₹75,000. There was no change in the old tax regime.

U – Urban Development 🌆

This was among the 9 priority areas for the Budget. The government said it will facilitate development of ‘Cities as Growth Hubs’ as well formulate a framework for creative brownfield redevelopment of existing cities. Besides, Transit Oriented Development plans for 14 large cities with a population above 30 lakh will be formulated.

V – Vikas and Virasat

Signifying development in consonance with heritage. Case in point - the Amritsar Kolkata Industrial Corridor, which will support development of an industrial node at Gaya. “This corridor will catalyze industrial development of the eastern region. The industrial node at Gaya will also be a good model for developing our ancient centres of cultural importance into future centres of modern economy," the FM said in her speech.

W - Women 👩🏽

Higher participation of women in the workforce will be facilitated through setting up of working women hostels in collaboration with industry, and establishing creches. In addition, there will be women-specific skilling programmes, and promotion of market access for women SHG enterprises.

The budget carries an allocation of more than ₹3 trillion for schemes benefitting women and girls, signifying their growing importance for policymakers.

X – X Factor ✖️

Apart from the usual announcements on bijli, sadak and pani, the Budget also had a couple of futuristic proposals. These included a venture capital fund of ₹1,000 crore for expanding the space economy, setting up of ‘Bharat Small Reactors’ to harness nuclear energy as well as research and development of ‘Bharat Small Modular Reactors’.

Y – Youth 👧🏽

The emphasis on this crucial demographic was amply evident. The initiatives included a scheme to provide one-month wage to all persons newly entering the workforce in all formal sectors. The direct benefit transfer of one-month salary in 3 instalments to first-time employees, as registered in the EPFO, will be up to ₹15,000. The scheme is expected to benefit 2.10 crore youth. Similarly, in the manufacturing sector, an incentive will be provided at specified scale directly to both the employees and employers with respect to the EPFO contribution of first-time employees in the first 4 years of employment.

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The government will also launch a scheme for providing internship opportunities in 500 top companies to 1 crore youths in 5 years. An internship allowance of ₹5,000 per month along with a one-time assistance of ₹6,000 will be provided. Companies will be expected to bear the training cost and 10% of the internship cost from their CSR funds.

Z - Zero customs duty 🛃

Customs duty on a range of products has been slashed to zero. These include critical minerals like cobalt, copper, tungsten, selenium and silicon, as well as three cancer drugs (Trastuzumab Deruxtecan, Osimertinib and Durvalumab), certain raw materials for the textile and leather sector, some capital goods used in manufacture of solar cells and modules, as well as special-grade stainless steel, titanium alloys, cobalt-chrome alloys, and all types of polyethylene used in manufacture of artificial body parts, among others.