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Union Budget 2024: Key insights for the technology sector

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Union budget 2024

Finance Minister Nirmala Sitharaman presented the Interim Budget in Lok Sabha on February 1, maintaining a strong focus on infrastructure, Make in India, and welfare. The budget laid the groundwork for inclusive development across key pillars such as the poor, women, youth, and farmers.

While no groundbreaking announcements were made, a detailed budget is expected in July after the General Election results. The Interim Budget, though fiscally prudent, sets a promising trajectory for sustainable growth until then.

One of the key highlights of the budget is the projection of India’s real GDP to grow at 7.3% in FY 2023-24. With a focus on fiscal responsibility, the Finance Minister announced an 11.1% increase in the capital expenditure outlay for the next year, amounting to Rs 11,11,111 crore, representing 3.4% of the GDP. The estimated fiscal deficit for 2024-25 is pegged at 5.1% of the GDP. The overarching goal is to lay the foundation for a developed India by 2047.

The Finance Minister outlined key economic indicators, stating that estimated gross and net market borrowings through dated securities for 2024-25 are projected at Rs 14.13 and 11.75 lakh crore, respectively, both lower than the figures in 2023-24. Positive economic trends include a Revised Estimate of Rs 27.56 lakh crore for total receipts, with tax receipts contributing Rs 23.24 lakh crore. The Revised Estimate for total expenditure is Rs 44.90 lakh crore.

Notably, revenue receipts are expected to surpass the Budget Estimate, reaching Rs 30.03 lakh crore, reflecting robust growth. Additionally, Smt. Sitharaman highlighted a significant increase in Foreign Direct Investment (FDI) from USD 596 billion during 2014-23, twice that of 2005-14. Efforts to encourage sustained foreign investment include negotiating bilateral investment treaties in line with the ‘first develop India’ approach.

Few major announcements for the tech sector

Empowerment of tech-savvy youth: The budget places a strong emphasis on long-term financing and refinancing for the tech-savvy youth of India. Smt. Nirmala Sitharaman announced the establishment of a corpus of Rs one lakh crore with a fifty-year interest-free loan. This initiative aims to encourage the private sector to scale up research and innovation significantly, particularly in sunrise domains.

No major taxation changes proposed: The Interim Budget maintains existing tax rates for direct and indirect taxes, ensuring continuity. However, certain tax benefits for start-ups, sovereign wealth or pension funds, and select income of IFC units have been extended until March 31, 2025.

Boost for electronics manufacturing: The electronics manufacturing sector is set to receive a substantial boost with an allocation of Rs 15,500 crore for various programs, including the semiconductor mission and mobile and IT hardware PLI scheme for the fiscal year 2024-25. It also proposes incentives of Rs 4,203 crore for assembly, test, and packaging plants that are expected to benefit projects by major players like Micron, Foxconn, HCL joint venture, and the Tata Group. The proposed outlay includes projects for setting up compound semiconductor and sensor plants.

Sustainable development initiatives: In line with the commitment to environmental sustainability, the government plans to launch the Biomanufacturing and Bio Foundry scheme, providing eco-friendly alternatives for biodegradable production. The government will also expand the electric vehicle ecosystem, by supporting charging infrastructure and encouraging the use of e-buses for public transport.

Skill India Mission and higher education: The government’s dedication to upskilling through the Skill India Mission and establishing higher learning institutions is evident from the budget. The interim budget highlights a remarkable 28% increase in women’s enrollment in higher education over the last decade, with a 43% enrollment rate in STEM courses. This initiative is expected to stimulate research and innovation in emerging sectors, contributing to overall growth and development.

The Interim Union Budget 2024 not only charts India’s path to economic prosperity but also establishes a foundation for resilient and inclusive growth, in harmony with the vision of a developed India by 2047. Looking ahead, the Government anticipates presenting a comprehensive roadmap for the realization of ‘Viksit Bharat’ in the upcoming full budget in July, providing a detailed plan for the nation’s continued progress and development.

Image credits: Twitter

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