The budget’s push for job creation is crucial to our development dreams

The Union budget for financial year 2024-25, presented by finance minister Nirmala Sitharaman on Tuesday, charts a strategic course for India, emphasizing job creation, fiscal consolidation and infrastructure development. 

It underscores the government’s commitment to fostering a robust economic environment that facilitates growth across various sectors, ensuring India remains resilient amid global uncertainties. 

It also provides a detailed road-map that highlights nine major priorities over the next five years, focusing on the poor, women, youth and farmers. These priorities aim to uplift all sections of society while promoting economic growth.

A significant highlight of the budget is its focus on job creation. Recognizing the critical role of the private sector, the budget encourages its participation alongside the government in creating employment opportunities. 

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Measures such as a one-month wage grant (up to ₹15,000) on a recruit’s first salary, internships offered at India’s top 500 companies, reimbursements of provident fund contributions and other measures aimed at higher participation of women in the workforce are expected to drive job creation substantially.

The budget also aims to establish India as a leading startup nation. Key provisions include relief on the ‘angel tax’ and increasing the Mudra loan scheme’s limit from ₹10 lakh to ₹20 lakh per borrower. These initiatives are designed to spur entrepreneurship and support startups, fostering an environment conducive to innovation and economic growth.

Skill development emerges as a cornerstone of the budget, viewed as essential for job creation. Innovative approaches are employed to ensure skill enhancement at all levels, including the entry-level, of the workforce and for special groups. This focus on skill development is complemented by sustained infrastructure investment.

In order to leverage India’s demographic dividend, the budget places a strong emphasis on increasing female participation in the labour force. The measures outlined include establishing working women’s hostels, creches, etc. These initiatives are expected to further enhance the economic contribution of young women, aiding in the overall development of the country.

The budget prioritizes infrastructure development, which has been a core aim of the Narendra Modi government over the past 10 years and is crucial for sustained economic growth. It includes a comprehensive plan for urban and rural development, aiming to turn cities into growth hubs and ensure the all-round development of rural areas. 

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Major infrastructure projects span various sectors, including roads, railways and other forms of transport, as well as housing, water supply and sewage treatment.

The government’s capital expenditure outlay is retained at a record-high level of ₹11.1 trillion, which is 3.4% of GDP—the highest in 26 years. This investment underscores the government’s commitment to infrastructure development.

Fiscal consolidation has been a central theme of the budget over the last 10 years and remains so this year. The fiscal deficit target for 2024-25 has been brought down to 4.9%, a notable improvement from the 5.1% target of the interim budget, with a projected glide path to under 4.5% in 2025-26. 

This disciplined approach aligns with a broader strategy to reduce the Centre’s debt-to-GDP ratio over the coming years. This fiscal discipline has been achieved without altering India’s direct or indirect tax structures much, thereby providing a relatively stable tax environment that could improve India’s long-term credit rating.

Several steps have been taken to streamline taxation further, both direct and indirect. Incremental benefits have been provided under the new tax regime via a higher standard deduction and wider slabs with lower rates. 

Changes in indirect taxes have been proposed to promote domestic production, remove rate inversions and simplify taxation. The capital gains tax structure has been revised.

The budget emphasizes sustainability and climate financing, recognizing the importance of addressing environmental challenges. Initiatives in these areas are seen as vital steps forward, ensuring that economic growth does not come at the expense of environmental sustainability. 

Technology continues to be the underlying driver for all major government initiatives, highlighting the role of innovation in achieving sustainable development goals.

The 2024-25 budget places India on a strong footing, balancing economic growth with fiscal prudence and social welfare. The budget’s comprehensive approach and commitment to policy continuity offer us a solid foundation for sustained economic development.

Also read: Budget 2024: Government announces special support for MSMEs

The initiatives outlined are poised to play a crucial role in shaping India’s economic landscape in the years to come, ensuring resilience and growth amid global uncertainties. 

By fostering job creation, enhancing infrastructure and maintaining fiscal discipline, the budget aims to steer India towards achieving the objective of Viksit Bharat, a developed India, by 2047.

These are the author’s personal views.

The author is managing director and chief executive officer, NSE.