Editorial: The Sitharaman Scrolls

NEW DELHI: Finance Minister Nirmala Sitharaman unveiled the Union Budget 2024-25 to a nation that was keen to glean the growth trajectory set by Prime Minister Modi’s newly formed government. From the outset, it was evident this would be an exercise, where the shadow of the interim Budget would loom large. Erring on the side of conservative caution, the Budget prioritised deliberate spending with hopes of employment creation and spurring economic growth. Team NDA also had to ensure that members of the ruling coalition were satisfied — Rs 26,000 cr was allocated for Bihar, and Rs 15,000 cr for Andhra Pradesh through various developmental schemes.

The Budget placed the unemployment crisis front and centre in its development agenda. The proposed rollout of skilling schemes and three initiatives for Employment Linked Incentive, were deservedly lauded. Booting out angel tax (a whopping 30%) for all classes of investors was welcomed by entrepreneurs, and it’s being seen as a boost for start-ups. The payment of one-month wage to new entrants in all formal sectors that could benefit as many as 210 lakh youth, and incentivising EPFO contributions for both employers and employees were steps in the right direction. The provision of 12-month paid internship opportunities to one crore youth in the country’s top 500 companies for a five-year period, for which the training cost will be borne by the companies was seen as a positive.

Taxpayers anticipated some goodwill to be directed their way. As part of simplifying the new tax regime, standard deduction for salaried employees will be raised, and so will the deduction on family pension for pensioners. The citizens are aware that what the government gives with one hand, it takes away with the other. Long-term capital gains tax on immovable properties has reduced to 12.5 pc from 20 pc, but the indexation benefits to adjust for inflation have been removed as well.

One presumes that the administration that had burnt its fingers with the farmers’ protests, might treat the agriculture sector with kid gloves. Be that as it may, the farmers didn’t reap a bounty, as the major sectoral announcement was handholding 1 crore farmers into natural farming. A saving grace was the renewed emphasis on agro R&D vis-a-vis developing climate resilient and high yield crop varieties. The government’s focus on urbanisation and modernisation bagged the lion’s share of allocation, with the Centre setting aside Rs 11.11 lakh for infrastructure development, which amounts to 3.4% of the GDP.

Encouraged by a surge in revenues, the government has lowered its fiscal deficit target to 4.9 per cent for the current financial year as against 5.1 per cent estimated in February’s interim Budget. Targeting this figure is indicative of the Centre’s need to maintain a prudent approach to spending and saving. An observation made by an analyst during the Budget coverage was regarding the need for the government to decouple from its transactional relationship with the citizens. People need not look up to the government as a provider, but as an enabler that creates scenarios conducive to the conduct of business and earning of livelihoods. What Viksit Bharat needs is maximum governance, minimum government.