On July 23, Finance Minister Nirmala Sitharaman presented the Union Budget 2024–25, focusing on agriculture, employment programs, MSME sector support, infrastructure investment, and targeting a fiscal deficit reduction from 4.9% to 4.5%.
Dhwani Mehta praises government boost for MSMEs
Opportune HR’s founder and director, Dhwani Mehta, expressed happiness with the government’s support for MSMEs in the current budget. MSMEs will gain a great deal from the Finance Minister’s major efforts, which include raising the Mudra loan ceilings to ₹20 lakh for borrowers who have paid back prior loans. A thorough framework for promoting MSMEs’ resilience and growth can also be found in public sector banks’ implementation of a forward-looking digital credit evaluation methodology.
The government’s pledge of ₹11.11 lakh crore for key infrastructure projects and capital expenditures over the next five years will provide MSMEs with the opportunity to flourish in a business-friendly atmosphere. MSMEs are further empowered to broaden their worldwide market reach through initiatives such as the establishment of e-commerce export hubs and the creation of 24 new SIDBI branches in MSME clusters.
Additionally, Moreover, Under the new tax system, salaried workers can save up to ₹17,500 in taxes every year. The family pension cap would rise from ₹15,000 to ₹25,000, and the standard deduction for salaried personnel would increase from ₹50,000 to ₹75,000. Employees of MSME’s will save more money if the tax slabs are revised. Mehta also praised the National Pension Scheme’s 10% to 14% rise in company and employee contributions.
Chakravarthy V. comments on STT and capital gains tax hikes
With effect from October 1st, 2024, the STT on options will increase from 0.062% to 0.1% and on futures from 0.0125% to 0.02%, according to Chakravarthy V., cofounder and director of Prime Wealth Finserv Pvt Ltd. Furthermore, as of today, July 23, the short-term capital gains tax increased from 15% to 20%, and the long-term capital gains tax (LTCG) has increased from 10% to 12.5%. He conjectured that the market activity might be slowed down by these adjustments.
Banks are facing difficulties as fewer people are investing in Fixed Deposits (FDs), and there were already speculations about the STT hike. Investors may be compelled by these adjustments to reassess their plans, possibly concentrating their attention on more tax-efficient assets. A change in strategy may also be necessary for banks to draw in additional FD deposits.
Budget 2024 Key Highlights Live Updates: Arpit Jain highlights the negative impact of the STT hike on investors
Joint MD of Arihant Capital Markets Ltd. Arpit Jain voiced worries about the rise in long-term capital gains tax (LTCG) from 10% to 12.5% and the securities transaction tax (STT) on F&O from 0.01% to 0.02%. He characterized these modifications as detrimental to investors. By taxing the gains from stocks for foreign institutions, the market anticipated a level playing field for both domestic and foreign investors; however, the LTCG hike has let market participants down.
Jain acknowledged the improvement in the fiscal deficit, which is expected to drop from 5.1% to 4.9% with a target of 4.5% for the next year. This means that instead of the projected ₹15.43 lakh crore for FY24, the borrowing objective will drop to ₹1.4 lakh crore. Even while there might be some disappointment, Jain thinks that people will still buy Indian stocks because the markets will eventually stabilize.
Govt lowers fiscal deficit target to 4.9% of GDP for FY25
The Center reduced its FY25 objective for the fiscal deficit to 4.9% of GDP, which is a substantial decrease from the 5.1% estimate that was revealed in the February interim budget.
Finance Minister Nirmala Sitharaman stated during her budget speech on Tuesday that the goal for the fiscal deficit in 2024–25 will be roughly 200 basis points lower than the initial estimate for the current fiscal year.
By fiscal year 2025–2026, the government hopes to keep the fiscal deficit on its projected glide path, with a goal of 4.5% or less by FY26.
The government’s initiatives to enhance skills and boost women’s workforce participation are commended by Swaminathan Subramanian, SMFG India Credit
“We applaud the government’s initiatives to enhance skills and boost women’s workforce participation,” stated Swaminathan Subramanian, Chief Operating Officer of SMFG India Credit. Workforce competencies will be greatly improved by the updated skilling loan scheme, which allows loans up to ₹7.5 lakh, and the modernization of 1,000 Industrial Training Institutes (ITIS). Financial assistance for working women’s hostels, higher education loans, and women-focused skill development initiatives will foster inclusivity and diversity and advance the country’s overall economic growth.”
Subramanian stated: “It’s a commendable step that the new Prime Minister’s Package includes direct benefit transfers of a one-time wage for new hires. Offering employees earning up to ₹1 lakh up to ₹15,000 in three installments will strengthen their entry into the workforce and encourage employment.”
The government’s visionary Budget for transforming the real estate industry was welcomed by Sandeep Runwal
“We welcome the government’s visionary Budget aimed at transforming the real estate industry and promoting equitable urban development,” said Sandeep Runwal, Managing Director of Runwal. Through the PMAY project, which aims to construct 3 crore homes in rural and urban regions and provide rental housing support for industrial workers, this budget lays the groundwork for inclusive growth. The government’s considerable ₹10 lakh crore investment in urban housing under PMAY – Urban 2.0 is indicative of its commitment to economically disadvantaged urban dwellers and the middle class. The digitization of property data and the anticipated stamp-duty cut, which includes reduced rates for female buyers, will improve accessibility and draw in potential buyers.”
Digital India advancement through comprehensive support package for MSMEs lauded by Vishal Mehta
“The budget is exceptionally commendable for the advancement of Digital India,” stated Vishal Mehta, Chairman and Managing Director of Infibeam Avenues Ltd. The introduction of a comprehensive financial and technological assistance package for MSMEs in the budget is expected to hasten the nation’s digitalization. By starting the creation of E-Commerce Export Hubs using a Public-Private Partnership (PPP) model, the Honorable Finance Minister has made a substantial contribution to empowering MSMEs and traditional craftspeople to sell their goods globally. India’s small enterprises have benefited greatly from the implementation of a credit guarantee policy for MSMEs in the manufacturing sector, which covers up to ₹100 crore. Additionally, Public Sector Banks’ creation of a new evaluation model that links MSMEs’ digital footprint scores to MSME loans would increase their involvement in digitalization through e-commerce and the use of digital payments. In addition, in the upcoming years, the development of SIDBI branches throughout significant MSME clusters and the improvement of Mudra loans for entrepreneurs would promote robust business growth. Lastly, by lowering the turnover threshold for buyers to onboard the TReDS platform, MSMEs will find it easier to raise working capital from their trade receivables, which will support the expansion of both their businesses and their digital industries.”
Expansion of Pradhan Mantri Awas Yojana to include 3 crore additional houses praised by Deepak Patkar
“The expansion of the Pradhan Mantri Awas Yojana (PMAY) to include 3 crore additional houses in the FY25 Union Budget represents a decisive step forward in addressing India’s housing needs.” This ambitious plan demonstrates the government’s commitment to providing high-quality housing for everyone, and it is bolstered by a proposed ₹2.2 lakh crore in central assistance over the next five years. The implementation of an interest subsidy program for urban housing will lower the cost of loans, improving access for a large number of people hoping to fulfill their housing aspirations. With ₹10 lakh crore allocated, the Budget also highlights significant investment in urban housing under PMAY 2.0, demonstrating a comprehensive strategy to satisfy the need for urban housing. SMFG Grihashakti’s MD and CEO, Deepak Patkar, stated.
In conclusion, the Union Budget 2024–25 presented by Finance Minister Nirmala Sitharaman has drawn varied reactions across different sectors of the economy. While it has been lauded for its robust initiatives in agriculture, support for MSMEs, infrastructure investment, and efforts to reduce the fiscal deficit, there are concerns regarding tax hikes on securities transactions and capital gains. Overall, the budget aims to foster inclusive growth through targeted investments and reforms, setting a roadmap for economic recovery and sustainable development in the coming fiscal year.