Editorial: The Sitharaman Roles

NEW DELHI: Finance Minister Nirmala Sitharaman presented the Union Budget 2024-25 to a nation eager to see the growth trajectory of the newly formed government of Prime Minister Modi. From the outset, it was clear that this would be an exercise in which the shadow of the interim budget would loom large. The budget, which erred on the side of conservative caution, prioritised purposeful spending with the hope of creating employment and spurring economic growth. Team NDA also had to ensure that the ruling coalition members were happy – Rs 26,000 cr was allocated to Bihar and Rs 15,000 cr to Andhra Pradesh through various development schemes.

The Budget placed the unemployment crisis at the heart of the development agenda. The proposed rollout of skill schemes and three Employment Linked Incentive initiatives were rightly praised. The abolition of angel tax (a staggering 30%) for all types of investors was welcomed by entrepreneurs and is seen as a boost for start-ups. The payment of one month’s salary to new entrants in all formal sectors, which could benefit as many as 210 lakh youths, and the incentive of EPFO ​​contributions for both employers and employees were steps in the right direction. The provision of 12-month paid internship opportunities to one crore youths in the country’s top 500 companies for a period of five years, with the training costs borne by the companies, was seen as positive.

Taxpayers expected some goodwill to come their way. As part of the simplification of the new tax system, the standard deduction for salaried employees will be increased, as will the deduction on family pensions for pensioners. Citizens are aware that what the government gives with one hand, it takes away with the other. The long-term capital gains tax on real estate has been reduced from 20 to 12.5 percent, but the indexation benefits to take inflation into account have also been abolished.

One might assume that the government, which had its fingers burnt by the farmers’ protests, would treat the agriculture sector with kid gloves. Be that as it may, the farmers have not reaped any loot, as the sector’s major announcement was to assist 1 crore farmers towards natural farming. One saving grace was the renewed emphasis on agro-R&D towards developing climate-resilient and high-yielding crop varieties. The government’s focus on urbanisation and modernisation garnered the lion’s share of the allocation, with the Centre setting aside Rs 11.11 lakh for infrastructure development, amounting to 3.4% of GDP.

Buoyed by a surge in revenues, the government has lowered its fiscal deficit target to 4.9 per cent for the current fiscal year, from 5.1 per cent estimated in the February interim budget. Targeting this figure is an indication of the Centre’s need to maintain a prudent approach to spending and savings. A comment made by an analyst during the budget briefing was about the need for the government to move away from its transactional relationship with the people. People need not look up to the government as a provider but as a facilitator that creates scenarios conducive to doing business and earning livelihoods. What Viksit Bharat needs is maximum governance, minimum governance.