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By:

Amey Chitale

28 October 2024 at 5:29:02 am

Growth Without Fireworks

The Budget leans on tourism, technology, trade calibration and fiscal discipline to anchor growth amid global uncertainty Mumbai: The new budget positions tourism as a key driver of jobs, forex earnings, and local growth. Incentives will back indigenous seaplane manufacturing through a Seaplane VGF Scheme, while a new National Institute of Hospitality will strengthen academia-industry-government linkages. A pilot programme will upskill 10,000 guides at 20 iconic sites with IIM collaboration,...

Growth Without Fireworks

The Budget leans on tourism, technology, trade calibration and fiscal discipline to anchor growth amid global uncertainty Mumbai: The new budget positions tourism as a key driver of jobs, forex earnings, and local growth. Incentives will back indigenous seaplane manufacturing through a Seaplane VGF Scheme, while a new National Institute of Hospitality will strengthen academia-industry-government linkages. A pilot programme will upskill 10,000 guides at 20 iconic sites with IIM collaboration, and a National Destination Digital Knowledge Grid will document cultural and heritage sites. Heritage tourism will be enhanced with experiential upgrades at 15 archaeological sites, and new projects will expand the Buddhist circuit in the northeast. Seven High-Speed Rail corridors will serve as sustainable ‘growth connectors,’ boosting mobility and linking emerging hubs. Software services, IT-enabled services, KPO, and contract R&D are consolidated under ‘Information Technology Services’ with a uniform safe harbour margin of 15.5 percent. The safe harbour threshold rises from Rs. 300 crore to Rs. 2,000 crore, easing compliance for mid-sized firms. To spur investment in critical infrastructure, a tax holiday until 2047 is offered to foreign companies delivering global cloud services via Indian data centres, provided domestic customers are served through Indian resellers. This landmark measure positions modern data centres as central pillars of India’s digital economy and future growth. Key Reforms Income tax rates remain steady but introduces key compliance reforms. TCS on foreign travel and education is reduced to 2 percent, and TDS rules for manpower services have been simplified. Taxpayers can now file Form 15G/15H directly through depositories, easing coordination. Penalty provisions are de-criminalised, with many shifted to late fees. While broader capital gains rationalisation was anticipated, relief comes through treating buyback proceeds as capital gains, lowering the tax burden for recipients. Trade-friendly customs duty reforms find place instead changes rather than sweeping reforms. The duty-free import limit for seafood export inputs rises from 1 percent to 3 percent of turnover, with similar relief extended to shoe uppers. Exporters of leather, textiles, and footwear gain flexibility as the export period is extended to one year. To encourage domestic value addition in consumer electronics, specified parts for microwave oven manufacturing are now exempted. The recommendations of 16th Finance Commission have been accepted by the centre which recommended 41 percent devolution. Budget 2026 reaffirms the government’s commitment to fiscal consolidation while safeguarding social priorities. The debt-to-GDP ratio is projected to decline from 56.1 percent in 2025–26 to 55.6 percent in 2026–27, freeing resources for priority spending by lowering interest outgo. The fiscal deficit target has been met at 4.4 percent of GDP in 2025–26 and is estimated to further ease to 4.3 percent in 2026–27, in line with the path toward a 50±1 percent debt-to-GDP ratio by 2030–31. Revised estimates for 2025–26 place non-debt receipts at Rs. 34 trillion and expenditure at Rs. 49.6 trillion, including Rs. 11 trillion in capital outlay. For 2026–27, receipts are projected at Rs. 36.5 trillion and expenditure at Rs. 53.5 trillion, with net tax receipts of Rs. 28.7 trillion. The government is banking on higher RBI dividends and higher disinvestment receipts. Fiscal deficit financing will hinge on Rs. 11.7 trillion in net market borrowings, supplemented by small savings and other sources, with gross borrowings at Rs. 17 trillion. Successful execution will decide if the budget’s ambitions become reality. This year’s strategy favours actions over numbers, consolidating and reinforcing the ecosystem instead of chasing headline reforms. Amid geopolitical tensions and market volatility, it prioritises stability and durable growth over quick wins - less a Sehwag-style first-ball six, more a Rahul Dravid innings: deliberate, resilient, and built for the long haul.

The AKKA Budget

Nirmala Sitharaman opts for steadiness, backing manufacturing and infrastructure over headline-grabbing reform

Mumbai: The Union Budget, often tracked for bold announcements, strikes a steadier tone this year. Amid global uncertainty, it avoids dramatic policy shifts, favouring a measured path. Manufacturing and MSMEs remain at the core, with tourism, healthcare, and IT services positioned as growth drivers. True to its deregulation tradition, the government has opted for caution, carefully balancing fiscal priorities. Alongside industry, renewed emphasis on cultural heritage and medical tourism rounds out a balanced growth agenda.


As front loaded strategy Capex is expected to close at Rs. 10.95 trillion in current year and increases by 11 percent to Rs. 12.21 trillion next year. Railways, roadways, and defence together account for nearly two-thirds of the allocation. Grants-in-aid for capital asset creation have jumped from Rs. 3.08 trillion to Rs.4.92 trillion, largely benefiting states and reinforcing cooperative federalism. This underscores the strategy of driving productivity through renewed infrastructure.


Focus on MSMEs continues with launch a Rs. 10,000 crore SME Growth Fund, while the Self-Reliant India Fund will receive an additional Rs. 2,000 crore. Over Rs. 7 trillion will be made available through TREDS to ease liquidity stress. The government will enable professional institutes to create short-term courses for training ‘Corporate Mitras’ in Tier-II and Tier-III towns to support MSMEs with affordable compliance solutions.


On manufacturing front, the Rs. 10,000 crore Biopharma SHAKTI initiative will position India as a hub for biologics and biosimilars over next five years. Semiconductor Mission 2.0 expands into equipment, materials, and full-stack IP with industry-led R&D and training centres, while the Electronics Components Manufacturing Scheme has grown to Rs. 40,000 crore after surpassing targets.


Rare Earth Corridors and three new Chemical Parks will cut import dependence, complemented by Hi-Tech Tool Rooms, advanced construction equipment schemes, and a Rs.10,000 crore container manufacturing programme to strengthen logistics. Customs duty exemptions remain a lever, continuing for rare earth processing, battery manufacturing, and energy storage systems, with nuclear power project emptions extended till 2035 to reinforce clean energy growth.


Rural Prosperity

Targeting rural prosperity, the centre will develop 500 reservoirs and Amrit Sarovars to boost fisheries and promote animal husbandry for quality jobs. Coconut Promotion Scheme will benefit 30 million people, alongside cashew and cocoa programmes aiming for self-reliance by 2030. Bharat-VISTAAR, a multilingual AI advisory, will support smarter farming, while SHE-Marts will help rural women shift from credit-based livelihoods to business ownership.


Considering healthcare as a core of growth measures have taken to train and add 1 lakh Allied Health Professionals, train 1.5 lakh caregivers, and invest in Ayurveda, mental health, and medical tourism. Five Regional Medical Hubs will integrate healthcare, education, research, AYUSH centres, and tourism to drive jobs and value-based care. Traditional medicine will be strengthened through three new Ayurveda institutes, upgraded labs, and an expanded WHO Centre in Jamnagar to boost certification, research, and exports.


A High-Level standing Committee on Banking for Viksit Bharat will review the banking sector. Public sector NBFCs like PFC and REC will be restructured to improve efficiency. The hike in STT on futures and options has unsettled equity markets, but it comes against SEBI’s finding that 97 percent of traders lose money in F&O. The move signals the government’s intent to caution retail investors against excessive speculation in this segment.


The textile industry, hit by US tariffs, gets a major boost through support for natural and new-age fibres, cluster modernisation, and integrated backing for handloom and handicrafts. The Tex-Eco Initiative drives sustainability, while Samarth 2.0 enhances skilling through industry-academia partnerships. Mega Textile Parks will advance technical textiles, and the Mahatma Gandhi Gram Swaraj programme will strengthen khadi, handloom, and rural crafts, linking them to global markets and empowering artisans and rural youth.


Logistical connectivity is boosted with declaration of new east west Dedicated Freight Corridors, and 20 National Waterways to be operationalised over five years. Regional Centres of Excellence will train youth along these routes, while ship repair hubs in Varanasi and Patna will support maritime infrastructure.


Nirmala Sitharaman is fondly known as ‘Akka’ (elder sister) in her inner circles. While presenting her record ninth consecutive budget she has ensured that the acronym ‘Akka’ stood true. Here is the ‘Akka’ stands for her trust on the key areas – Ayush, Kartaya (duty), Kisan (farmer) and Avsar (opportunities).   


Record for Nirmala

Nirmala Sitharaman on Sunday made history as she presented a record ninth consecutive Budget. This took her closer to the record of 10 budgets that were presented by former Prime Minister Morarji Desai over different time periods. Desai presented six budgets during his tenure as finance minister from 1959 to 1964, and four budgets between 1967 and 1969. Former finance ministers P Chidambaram and Pranab Mukherjee had presented nine and eight budgets, respectively, under different prime ministers. Sitharaman, however, will continue to hold the record of presenting the maximum number of budgets on the trot -- nine straight budgets under Prime Minister Narendra Modi.

 

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