Finance Minister Nirmala Sitharaman on Tuesday announced the Union Budget 2024-25. The latest Budget has been welcomed across the board. Experts said the Budget will benefit the working class, women, entrepreneurs and MSMEs, while maintaining the fiscal prudence. However, the Budget raised capital gains tax, which disappointed the markets.
Customs Duty Announcements
Dharmesh Panchal, partner at Price Waterhouse & Co LLP, said, “The finance minister reiterated the commitment to rationalise GST rates and extend GST to other sectors. A comprehensive review of the customs duty rate structure over the next six months is in line with the Make in India strategy. It needs to be seen whether a road map for transition is provided to the domestic industry.”
Gold, Silver Import Duty Cut
The government has cut import duty on gold and silver to 6 per cent, from 15 per cent earlier.
Geetika Shrivastava, executive partner at Tattvam Group, said, “This will boost Indian gems and jewellery sector contributing in economic growth.”
Bhavik Patel, senior commodities analyst, Tradebulls Securities said, “The outlook of Gold looks strong despite import duty cut to 6 per cent as with duty cut, it will make gold cheaper domestically which will increase the demand for physical gold.”
The immediate outlook for gold will primarily depend on path of US dollar and US interest rate. Market has already priced in September’s rate cut and once Fed starts on the path of cutting rates, both gold and silver have no other way but only to go up, added Patel.
Skills, Capex, Fiscal Deficit Announcements
Abheek Barua, chief economist and executive vice-president at HDFC Bank, said, “The central focus of this budget has been on employment and associated issues like skill formation. The government’s efforts to reap India’s demographic dividend is visible in its push towards labour intensive production, its skilling initiative, incentivising formal job creation and increasing participation of women in the workforce. The budget estimate that these measures will help create 8 million jobs per year — which is line with the employment requirement that has been set out in the economic survey.”
The government made no compromise on its capex plans despite the increased allocation to some of its allies. The commitment towards fiscal consolidation with a reduction in the fiscal deficit to 4.9 per cent of GDP in FY25 is a positive for medium-term debt sustainability, he added.
Capital Gains Tax
Shravan Shetty, managing director at Primus Partners, said, “The increase in long-term capital gain will have a negative while the intent to reduce the euphoria in the market is right. But we believe increasing the long term capital gain by 25% to 12.5% will lead to investments move towards unproductive assets like gold and real estate. For a growing economy like India increasing penetration of capital markets is critical and this measure will reduce the acceleration seen in this direction over last few years.”
Startups
Mahankali Srinivas Rao, CEO of T-Hub, said, “The Budget 2024 marks a significant milestone for the Indian startup ecosystem, with initiatives that will undeniably foster innovation and growth. The abolition of the angel tax for all classes of investors is a pivotal move that will create a more supportive environment for angel investments, ultimately benefiting startups and paving the way for India to become a global innovation hub. The establishment of a Rs 1,000 crore venture capital fund dedicated to boosting the space sector is another forward-thinking initiative. This substantial investment will propel growth in the space economy by supporting innovative startups and groundbreaking research, positioning India at the forefront of space technology and exploration.”
Moreover, the introduction of the Anusandhan National Research Fund and a financing pool of Rs 1 lakh crore to spur private sector-driven research and innovation is a game-changer. This fund will power basic research and prototype development, driving commercial-scale innovation and enabling startups to bring cutting-edge solutions to the market, he added.
Real Estate
Pradeep Aggarwal, founder & chairman of Signature Global (India), said, “This Budget can be termed as prudent and holistic in each aspect
the government’s decision to allocate Rs 10 lakh crore under the PMAY Urban Scheme, targeting 3 crore houses and key focus on rationalising stamp duty for Home byers especially for women, underscores a robust vision for urban development and will help homebuyers would save the significant amounts, making home ownership more accessible.”
At macro level sustained infrastructure impetus, reflected in the Rs 11.11 lakh crore Capex allocation, we anticipate all these would create a multiplier impact and significant boost in the overall housing sector, he added.
“Additionally, a focus on rental housing in industrial parks via the PPP model, digitizing land records in cities will greatly improve transparency and ease property transactions,” Aggarwal added.
Aditya Kushwaha, CEO and director of Axis Ecorp, said, “We welcome the progressive, forward-thinking and comprehensive Budget 2024. The allocation of ₹11.11 lakh crore for capital expenditure, representing 3.4% of India’s GDP, clearly reflects the government’s robust commitment to infrastructure enhancement. The focus on the PM Awas Yojana-Urban, with a substantial ₹10 lakh crore earmarked to meet the housing needs of one crore poor and middle-class families, is particularly praiseworthy. Govt’s move to encouraging states to moderate high stamp duty rates will make housing more accessible and affordable. By simplifying the FDI norms, govt has given a window to promote the use of the Rupee for overseas investments. These comprehensive measures will invigorate the real estate sector, drive demand, and foster a more resilient economic environment.”
MSMEs
Rahul Garg, CEO & founder of Moglix, said, “MSMEs will benefit significantly from the credit guarantee scheme, new assessment models by PSU banks, and increased Mudra loan limits. The substantial allocation of ₹11 lakh crore for infrastructure especially nature resilient is crucial for building a Viksit Bharat. The strategic shift towards nuclear energy as a major power source is visionary. Finally, the emphasis on cultural heritage through the development of the Vishnupad, Mahabodhi temple corridors, Rajgir, and Nalanda is a welcome addition.”
Fiscal Prudence
Ranen Banerjee, partner and leader economic advisory, PwC India, said, “Fiscal prudence is the highlight of the full Union Budget 2024-25. The government has gone with realistic projections on its revenue and expenditure estimates and refrained from announcing overly populist measures. The majority of the allocations, including the capex allocation, are as outlined in the interim budget, thus providing continuity. The capex being kept at Rs 11.11 lakh crore was expected, given that the ability to consume this allocation is limited due to disruption from the elections in the first quarter and the second quarter being typically slowed down by the monsoons. The urgency around skilling requirements has been rightly reflected through announcements related to skilling loans, interest subvention on higher education loans and incentives to corporates for providing internship opportunities.”
The budget has also announced a focus on ‘Purvodaya’ or development of the eastern states, which is an imperative given that incomes and opportunities have been lagging in many of these states. This will provide a fillip to these states to bridge the income gap with other states while also helping to achieve the goal of inclusive development, he added.
