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Well-focused Budget 2024 with special development thrust: K. M. Subrahmanyam

Submitted by admin on July 23rd, 2024

The Union Budget 2024 can be described as one with a focus towards special development that caters to two big concerns that exist in the economy namely employment and the MSME sector. There is a direct emphasis on the creation of financial flows towards the first employers and employees of companies according to the proportion, which will make it possible to stabilize the growth of hiring even more. This aligns with the signal that the Economic Survey has waved to this issue. The collateral effect will be in a limited way on consumption since consuming capacity is created by more jobs.

In an effort to meet the interests of MSMEs, the credit route has been utilized and a guarantee scheme has been initiated along with this there has been an urge to Banks to come up with their own models of lending which are not collateral-based. This would also feed into job creation, which is liberal. There will be backward linkages for job creation as well as a positive impulse for exports, which are as these units contribute at least 40 per cent of exports.

Scholarships being given for integrated and sustainable development that includes help to states such as Andhra Pradesh, Bihar, Orissa, and Jharkand would be a push being provided to investment in the economy in a roundabout manner.

Another prod being offered to investment in the country are the pressures to housing in both the urban setting and the rural setting. The proposed mechanism based on interest subvention-cum-subsidy that would help the lower income groups to buy homes requisite for a comfortable living will prove beneficial and keep the real estate going in the country.

The direct expenditure through capex has not been altered by the government and the amount is restricted to the Interim Budget level which is quite expected. This sounds practical because with about 8 months to the end of the year it would always be a squeeze to find the capacity to implement higher levels of projects.

These measures will help to stimulate the infra related industries like cement, steel machinery especially the real estate sector has shown revival only at the level of affordable housing. There are prospects for financing, which apply specifically to the banking sector, including those for the development of MSMEs, in addition to housing. At the micro level, the education loans will also experience an increase in the demand.

Fiscal deficit

The total expenses have been redefined and made specific to bring down the total fiscal deficit to 4 percent. nine per cent to five per cent respectively to its worst performers although the nadir only dropped by 3 per cent to 2 per cent respectively. 1 percent aimed during the interim budget and 5 per cent in the regular budget. 2 per cent which was due to lower denominator when the gross domestic product (GDP) figures were released in May earlier this year Hence, a portion of the surplus that has been deriving from the RBI has helped underpin sound fiscal balance.

The ability however has expanded only slightly by about Rs 60,000 crore in terms of the size of the budget. These numbers also signify that the gross credit programme of the government is almost unaltered, may be slightly on the negative side. This should be comforting for the market as from the perspective of liquidity it is, in fact, status quo.

Amendments on the income tax in the next coming Budget 2024

Of course, there has been some comfort given to those who have chosen to go with the new tax system because there is some sort of optimality or favorable progression across the slabs which will give a net gain to every taxpayer and can be availed together with the new standard deduction which has been increased.

This should raise spending power or maintain real buying power. There seen to be no carrot for those that have stuck to the old tax scheme and this can be taken as the signal for moving to the ‘basic’ solution.

The stock market, however, has not been thrilled spirit with the Sensex going below 80,000 at the end of the speech. But then again, one can never know about markets.