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What Should the Government Do in Budget 2024 to Boost the Economy

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Ms. Nirmala Sitharaman, the Union Finance Minister is to present the Budget 2024-25 in the Lok Sabha on July 23. Some of the crucial developments in the upcoming budget include:

  1. Possible income tax relief 

  2. Expectations of tax holidays and GST exemptions in various industries

  3. Possibly increase in the budget allocation for welfare schemes 

  4. Startups hope for the removal of the angel tax

  5. Health tech sector hopes for increased funding

  6. Possible investment in urban infrastructure to support co-living spaces and as an extension supporting sustainable practices. 

  7. Enhancing export initiatives in support of the IT industry

  8. Strong policy support for the renewable energy sector

Key Economic Challenges

Some of the major economic challenges that the country has faced in the past five years and continue to deal with include:

  1. The National Statistical Office’s (NSO) Periodic Labour Force Survey (PLFS) report for the year 2021-22 stated that the unemployment rate stood at 4.1%.in that period

  2. The Economic Survey 2022-23 stated that the agriculture and allied sectors experienced an average annual growth rate of 4.6% for the past six years falling short of the growth rate required to benefit the farmers' incomes

  3. Due to high levels of income inequality, deterioration in consumption demand is also taking place.

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Strategic Investments and Infrastructure Development

When it comes to investments and infrastructure development, here are a few things the government should try to address to boost the economy:  

  • For a successful Public-Private Partnership or PPP to improve the country’s infrastructure, the banking sector needs to be smarter, more efficient and mature

  • The government should also look into offering better and higher spending capacity to the middle class and consumers

  • With PPP, there has been an increase in participation in the railway sector with private companies taking up railway bogie manufacturing, but this needs to be expanded further

  • The government should also look into decreasing the Interest burden on infrastructure projects

Tax Reforms and Incentives

Some of the tax reforms and incentives that the budget 2024 implementation could include to help with the economic growth of the country can be:

  • Better production-linked incentives or PLIs for the consumer industry, particularly wearables, toys, furniture, etc. could promote export competitiveness, increasing chances of international success

  • The introduction of policies like tax incentives in the mutual funds sector will help boost investor confidence

  • Financial inclusivity of underserved sectors can be enhanced with schemes and incentives that promote the expansion of fintech companies

  • Increase in the export incentives to help with the budget 2024 implementation of comprehensive socio-economic reforms

Sectoral Focus Areas

Some of the initiatives by the government, sector-wise to boost economy should include:

  1. Renewable Energy: Possible revision of GST on renewable energy components from 18% to 5% leading to increased affordability and attractiveness of renewable energy investments.

  2. Export Market: Reconsideration of the ban on exports of white rice has led to an increase in economic strain.

  3. Energy Industry: Possible subsidies and initiatives to reduce high production costs can also help increase investments.

  4. MSME Sector: Possible initiatives to develop the workforce in the sector and create more jobs. These initiatives should also help with reskilling and upskilling the workforce in AI, data analytics etc.

Social Welfare and Inclusive Growth Measures

When it comes to the possible measures the government can take under the budget 2024 implementation for social welfare and inclusive growth, here is a list

  1. Possible initiatives to increase cash handouts to farmers and focus on enhancing and increasing rural housing subsidies.

  2. Possibility of insurance for unorganised workers like taxi, truck, and three-wheeler drivers.

  3. Increase in the introduction and adoption of state-sponsored welfare schemes and incentives

  4. Inclusion of welfare schemes to focus on rebuilding public confidence, raising overall income levels and boosting rural consumption

  5. Including welfare schemes that focus on the welfare of women and the youth

  6. Possible inclusion of incentives that help the unemployed sector of the country.

Conclusion

In conclusion, the budget 2024’s focus spans across various sectors in the country to boost the economy.  Certain budget 2024 implementations could include:

  1. Development of the workforce and increased job creation in the MSME sector

  2. Continued focus on renewable energy, to meet its Net Zero goal by 2070 by increasing domestic manufacturing capacities of various renewable energy components

  3. Decrease in GST rates across sectors to reduce the tax burden and help the sectors grow. 

  4. Welfare schemes that focus on farmers, the unorganised sector, women, youth and the unemployed. 

  5. Possible subsidies and initiatives to reduce high production costs and increase investments in the energy sector

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

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Frequently Asked Questions

What are the key priorities for boosting economic growth in Budget 2024-25?

Answer Field

Some of the key priorities include:

  • Growth of the MSME sector

  • Focus on renewable energy

  • Reduction of GST rates across sectors

  • Focus on unemployment alleviation

How can infrastructure spending in Budget 2024-25 impact economic growth?

Answer Field

With spending on the infrastructure in the budget 2024-25, specifically in sectors like renewable energy, logistics and transportation,  aspects like job creation and overall connectivity will increase, thus furthering economic growth.

What tax reforms are expected in Budget 2024-25 to encourage investment?

Answer Field

Some of these tax reformers expected are:

  • Tax incentives in the mutual funds sector to boost investor confidence

  • Financial inclusivity of underserved sectors to promote the expansion of fintech companies

  • Better PLIs for the consumer industry, in wearables, toys, furniture, etc. to promote export competitiveness, increasing chances of international success

How does the budget address challenges facing different sectors of the economy?

Answer Field

Here’s a sector-wise list of the possible initiatives that the government mighty include to address the challenges of different sectors:

  • Renewable Energy: Possible revision of GST on renewable energy components18% to 5% leading to increased affordability and attractiveness of renewable energy investments.

  • Export Market: Reconsideration of the ban on exports of white rice has led to an increase in economic strain.

  • Energy Industry: Possible subsidies and initiatives to reduce high production costs can also help increase investments.

  • MSME Sector: Possible initiatives to develop the workforce in the sector and create more jobs. These initiatives should also help with reskilling and upskilling the workforce in AI, data analytics etc.

What social welfare initiatives are likely to be included in Budget 2024-25?

Answer Field

Social welfare initiatives that focus on rural housing subsidies, unorganized workers, farmers, women, youth and the unemployed are expected from the government in the budget 2024-2025.

How can Budget 2024-25 support small businesses and startups?

Answer Field

With an increase in the threshold of the composition scheme offered by the government, small businesses and startups could benefit from the simplification of the tax compliance process while decreasing their tax liabilities as well.

What role does Budget 2024-25 play in achieving sustainable and equitable economic growth?

Answer Field

What role does Budget 2024-25 play in achieving sustainable and equitable economic growth?

What role does Budget 2024-25 play in achieving sustainable and equitable economic growth?

Answer Field

With its focus on every sector in the country, the government is expected to introduce initiatives that will help them all grow together thus helping achieve a more sustainable and equitable economic growth.

 

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