Mudra Compass

Budget Day is a highly anticipated occasion in India, with businesses and the public eagerly awaiting the announcement of new schemes and initiatives that could impact them. This year, the presentation of Budget 2024 has been delayed due to the elections, and it is scheduled to be released on February 1.

The finance minister revealed the Final Budget on July 23, 2024, highlighting that the focus for this year’s budget is on employment, skills development, MSMEs, and the middle class. The key priorities outlined in the budget are:

• Enhancing Productivity and Resilience in Agriculture
• Promoting Employment and Skill Development
• Advancing Inclusive Human Resource Development and Social Justice
• Boosting Manufacturing and Services
• Supporting Urban Development
• Ensuring Energy Security
• Developing Infrastructure
• Encouraging Innovation, Research, and Development
• Implementing Next Generation Reforms

The budget also introduced numerous reforms in both Direct and Indirect taxes.

Highlights of Various Sectors

Agriculture

• The government has allocated Rs.1.52 lakh crore for agriculture and related sectors.

• Plans are underway to introduce 109 new high-yielding and climate-resilient varieties of 32 different field and horticulture crops for farmers to cultivate.

• Over the next two years, one crore farmers will be introduced to natural farming, supported by certification and branding. To facilitate this, the government will set up 10,000 bio-input resource centres as needed.

• Efforts will be made to promote Farmer-Producer Organisations, startups, and cooperatives to improve vegetable supply chains, including aspects like storage, collection, and marketing.

• A strategy is being formulated to achieve self-reliance in oilseeds, including groundnut, mustard, soybean, sesame, and sunflower.

• The government will partner with states to implement the Digital Public Infrastructure (DPI) in agriculture over the next three years. This initiative aims to document details of 6 crore farmers and their lands in farmer and land registries, and Kisan Credit Cards will be issued and operationalized in five states through the Jan Samarth platform.
• Financial assistance will be provided to establish a network of Nucleus Breeding Centres for Shrimp Broodstocks.

Employment and Education

• The government will roll out three new schemes under the ‘Employment Linked Incentive’ program based on EPFO enrolment:

• Scheme A: First-Time Employees – This scheme will offer a direct benefit transfer of one month’s salary, up to Rs.15,000, divided into three instalments to first-time employees in the formal sector who are registered with EPFO.

• Scheme B: Job Creation in Manufacturing – An incentive will be provided to both the employee and employer, based on their EPFO contributions, for the first four years of employment in the manufacturing sector.

• Scheme C: Employer Support – Employers will receive reimbursement of up to Rs.3,000 per month for two years for each additional employee, based on their EPFO contributions. This applies to any additional employment with a monthly salary up to Rs.1 lakh.

• A new centrally sponsored skilling scheme will be introduced in collaboration with industry and state governments. This scheme aims to skill 20 lakh youth over a five-year period and upgrade 1,000 Industrial Training Institutes (ITIs) through hub-and-spoke models with a focus on outcomes.

• The Model Skill Loan Scheme will be updated to allow for loans up to Rs.7.5 lakh for students, backed by a guarantee from a government-supported fund.

• The government will provide financial support for loans up to Rs.10 lakh for higher education in domestic institutions. E-vouchers will be distributed to 1 lakh students annually, offering an interest subvention of 3% on the loan amount.

Inclusive Human Resource Development and Social Justice

• The government has allocated Rs.2.66 lakh crore for enhancing rural development and infrastructure.

• A new initiative, Purvodaya, will be developed to promote comprehensive growth in the eastern states of India, including Jharkhand, Bihar, Odisha, West Bengal, and Andhra Pradesh.

• The government will support the development of the industrial node at Gaya, as part of the Amritsar-Kolkata Industrial Corridor, to boost industrial growth in the eastern region.
• Investments will be made in improving road connectivity with projects such as the Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, and spurs to Bodhgaya, Rajgir, Vaishali, and Darbhanga. An additional two-lane bridge over the Ganga at Buxar will also be constructed, with a total expenditure of Rs.26,000 crore.

• New power infrastructure projects will be undertaken, including the establishment of a 2400 MW power plant at Pirpainti, costing Rs.21,400 crore.

• The government is committed to fulfilling the Andhra Pradesh Reorganization Act and will secure special financial assistance through multilateral development agencies, with Rs.15,000 crore allocated for the current fiscal year and more in subsequent years.

• Funding will be provided for the expedited completion of the Polavaram Irrigation Project, as well as essential infrastructure in the Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and the Orvakal node on the Hyderabad-Bengaluru Industrial Corridor.

• An additional three crore houses will be constructed under the PM Awas Yojana in both rural and urban areas.

• Over Rs.3 lakh crore has been designated to advance women-led development and support women and girls.

• A new scheme, Pradhan Mantri Janjatiya Unnat Gram Abhiyan, will be launched to enhance the socio-economic status of tribal communities, benefiting 5 crore tribal people across 63,000 villages.

• To expand banking services, more than 100 new branches of the India Post Payment Bank will be established in the North East region.

Manufacturing and Services

Promotion of MSMEs

• The government will launch a credit guarantee scheme to support MSMEs in acquiring machinery and equipment through term loans without requiring collateral or third-party guarantees. This initiative will involve a self-financing guarantee fund that provides up to Rs.100 crore in guarantee cover for each applicant.

• Public sector banks will develop internal capabilities for evaluating MSMEs for credit, eliminating the need for external assessments. Additionally, they will create or acquire a new credit assessment model that scores the digital footprints of MSMEs.

• A new system will be introduced to ensure the continuation of bank credit to MSMEs during financial difficulties.

• The maximum limit for Mudra loans under the ‘Tarun’ category will be increased from Rs.10 lakh to Rs.20 lakh for entrepreneurs who have successfully repaid previous loans in this category.

• The turnover threshold for mandatory onboarding onto the TReDS platform will be lowered from Rs.500 crore to Rs.250 crore.

• The Small Industries Development Bank of India (SIDBI) will establish new branches to extend its services to key MSME clusters, aiming to provide direct credit to these enterprises within the next three years.

• Financial support will be allocated to create 50 multi-product food irradiation units in the MSME sector, and the establishment of 100 food quality and safety testing labs with NABL accreditation will be facilitated.

• E-Commerce Export Hubs will be set up through public-private partnerships (PPP) to help MSMEs and traditional artisans market their products internationally.

Promotion of Manufacturing and Services

• The government will introduce an extensive scheme aimed at providing internship opportunities to 1 crore youth over the next five years with the top 500 companies. This program will offer a monthly internship allowance of Rs.5,000 and a one-time assistance of Rs.6,000.

• The government will work with states and the private sector to develop “plug and play” industrial parks that are ready for investment.

• Twelve new industrial parks will be established under the National Industrial Corridor Development Programme.

• A Critical Mineral Mission will be launched to focus on recycling critical minerals, enhancing domestic production, and acquiring critical mineral assets internationally.
• The government will initiate the first tranche auction for offshore mining blocks, building on existing exploration efforts.

• An Integrated Technology Platform will be created to enhance outcomes under the Insolvency and Bankruptcy Code (IBC).

• Services of the Centre for Processing Accelerated Corporate Exit (C-PACE) will be extended to facilitate the voluntary closure of Limited Liability Partnerships (LLPs).

• Additional National Company Law Tribunals will be set up to expedite insolvency resolutions, with some tribunals designated to handle cases exclusively under the Companies Act.

• More Debt Recovery Tribunals will be established to accelerate the debt recovery process.

Urban Development

• The government will develop a Transit Oriented Development (TOD) plan for 14 major cities with populations exceeding 30 lakh.

• The PM Awas Yojana Urban 2.0 will address the housing requirements of 1 crore urban middle-class and low-income families, with a total investment of Rs.10 lakh crore. This will include central assistance amounting to Rs.2.2 lakh crore over the next five years.

• State governments and Multilateral Development Banks will support sewage treatment, water supply, and solid waste management projects and services in 100 large cities through bankable projects.

• A new initiative will be launched to facilitate the creation of 100 weekly ‘haats’ or street food hubs in selected cities over the next five years.

• The government will urge states to consider moderating high stamp duty rates and to further reduce duties on properties purchased by women.

Energy Security

• The PM Surya Ghar Muft Bijli Yojana has been introduced to provide 300 units of free electricity per month to 1 crore households through the installation of rooftop solar panels.

• A new policy will be developed to promote pumped storage projects, which are essential for electricity storage and the seamless integration of increasing renewable energy sources.

• The government will collaborate with the private sector to establish Bharat Small Reactors, advance the research and development of Bharat Small Modular Reactors, and explore new technologies in nuclear energy.

• A joint venture between NTPC and BHEL will create a full-scale 800 MW commercial plant utilizing Advanced Ultra Super Critical (AUSC) technology.

• The government will support an investment-grade energy audit for traditional micro and small industries across 60 clusters, offer financial assistance to transition them to cleaner energy sources, and implement measures for improved energy efficiency.

Infrastructure

• The government has allocated Rs.11,11,111 crore for capital expenditure to boost infrastructure development.

• An additional Rs.1.5 lakh crore will be provided in the form of long-term interest-free loans to assist states in their resource management and allocation.

• Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) will be initiated to ensure all-weather road connectivity to 25,000 rural habitations.

• Financial support will be extended through the Accelerated Irrigation Benefit Programme and other sources for projects with a total estimated cost of Rs.11,500 crore. This includes initiatives such as the Kosi-Mechi intra-state link and 20 other ongoing and new schemes focused on river pollution control, barrages, and irrigation infrastructure.

• The government will oversee the comprehensive development of the Vishnupad Temple Corridor and the Mahabodhi Temple Corridor in Rajgir, Nalanda, and Odisha.

Innovation, Research, and Development

• The government plans to establish a system designed to enhance private sector-led research and innovation at a commercial scale, supported by a finance pool of Rs.1 lakh crore.

• The Anusandhan National Research Fund will be launched to support fundamental research and the development of prototypes.

• A venture capital fund of Rs.1,000 crore will be created with the goal of expanding the space economy by fivefold over the next decade.

Next Generation Reforms

• The government plans to collaborate with states to introduce reforms related to land, addressing both rural and urban land issues.

• Integration of the e-Shram portal with other platforms will create a unified solution offering a broad range of services to workers.

• The Shram Suvidha and Samadhan portals will be updated to improve compliance ease for businesses and industries.

• A taxonomy for climate finance will be developed to improve access to funding for climate adaptation and mitigation efforts.

• Regulations governing Foreign Direct Investment (FDI) and Overseas Investments will be simplified to encourage prioritization, boost FDI, and facilitate the use of the Indian Rupee for international investments.

• The government will launch NPS Vatsalya, a scheme allowing parents and guardians to contribute to the National Pension System (NPS) on behalf of minors.

• Efforts are underway to advance the Jan Vishwas Bill 2.0, aimed at enhancing the ‘Ease of Doing Business.’

(Source – India Budget)