The first budget of the new NDA government focused on employment, skill development, infrastructure, and changes in the tax regime. Following days of speculation about sops for Bihar and Andhra Pradesh, Union finance minister Nirmala Sitharaman announced a range of financial measures to boost development in the two states governed by BJP allies.
Besides announcing support of Rs 15,000 crore to Andhra Pradesh and Rs 41,000 crore to Bihar, Sitharaman said the government has nine priorities: employment and skilling, productivity and resilience in agriculture, social justice, manufacturing and services, energy security, infrastructure, innovation, and next generation reforms.
Let’s look at five key takeaways.
Employment
The government will allocate Rs 2 lakh crore for three new employment-linked schemes to provide jobs to about 4.1 crore youth over the next five years. In addition, Rs 1.48 lakh crore will be allocated for skill development of at least 20 lakh youth.
She said a total of 1,000 industrial training institutes will be upgraded, and a one-time wage will be provided through direct benefit transfer to all first-time employees across the sectors.
The FM said the government will provide one month’s provident fund to 30 lakh youth entering the job market, and working women hostels will be set up to promote their participation in the workforce. She said that high stamp duty may be lowered, especially for women.
The government will also launch internship opportunities for one crore youth in 500 companies in five years, said the finance minister. The interns will get on ground exposure and an allowance of Rs 5,000 per month. Meanwhile, the companies will bear the training costs, with 10 percent of it allocated from CSR funds. With emphasis on social justice, the FM said that disabled persons will also be trained for employment opportunities.
She also mentioned street vendors, for whom 100 weekly haats will be set up in select cities under the PM Swanidhi scheme.
Tax rejig
Sitharaman announced changes in the new tax regime, with the standard deduction proposed to increase to Rs 75,000 from Rs 50,000. The FM said that salaried employees in the new tax regime will save up to Rs 17,500 in income tax.
The tax rate structure is set to be revised, with 5 percent taxation for those in the income slab of Rs 3-7 lakh, 10 percent for those under Rs 7-10 lakh, 15 percent for the ones under Rs 10-12 lakh, 20 percent for Rs 12-15 lakh, and 30 percent for those with over Rs 15 lakh income.
The government is also considering rationalising the tax structure under GST.
The long-term capital gains on all financial and non-financial assets will be subjected to 12.5 percent tax, and the limit of exemption for capital gains will be set at Rs 1.25 lakh per year. Meanwhile, the customs duty on gold and silver will be reduced to 6 percent, and for platinum, it will be lowered to 6.4 percent.
The customs duty on mobile phones will also be lowered to 15 percent, and three cancer medicines will be fully exempted from custom duty.
Sitharaman said the government will also abolish the “so-called angel tax” to bolster the startup ecosystem. The Foreign Direct Investments will also be simplified to facilitate more funds inflow and promote the use of Rupee.
Agriculture
About one crore farmers will be initiated into natural farming over the next few years, said Sitharaman, adding that the government will look to strengthen production, storage, and marketing for pulses and oilseeds.
The government will also push for digital public infrastructure to aid farmers, and roll out a National Cooperation Policy for the development of the cooperative sector. Sitharaman said that large-scale vegetable production will be developed closer to major consumption centres and the government will provide funds to the private sector and experts to develop climate-resilient seeds. It will also launch Jan Samarth-based Kisan Credit Card in five states.
Infrastructure
The government has allocated Rs 11,11,111 crore for capital infrastructure, with a push for the energy sector. Sitharaman said that private investment in infrastructure will also be promoted.
For the development of rural infrastructure, the government has allocated a dedicated Rs 2.66 lakh crore. Under the phase 4 of the PM Gram Sadak Yojana, the government will also construct all-weather roads to 25,000 rural habitats. And provide support Rs 11,500 crore for flood mitigation projects in Bihar, Assam, Himachal Pradesh, Uttarakhand, and Sikkim.
Under the PM Awas Yojana-Urban, Sitharaman said Rs 10 lakh crore will be allocated for housing of one crore poor and middle class families, including the centre’s assistance of Rs 2.2 lakh crore in the next five years.
MSMEs and energy sector
For credit support to the MSMEs, Mudra loans limit will be increased from Rs 10 lakh to Rs 20 lakh for those who have successfully repaid loans previously.
A self-financing guarantee fund will also be provide a cover of up to Rs 100 crore while loan amount may be larger, said the finance minister. She added that ease of doing business and digitalisation will be prioritised.
The government’s Rooftop Solar scheme will enable one crore households to get up to 300 units of free electricity every month.
Sitharaman said that electricity storage solutions will be worked out for renewable energy, while research and development will be done on smaller nuclear reactors. The government will also partner with the private sector to set up Bharat Small Reactors, and research and development of new technologies for nuclear energy.
An 800 MW commercial plant will be set up, with the government’s fiscal support, the FM said.
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