MUMBAI:Should finance minister Nirmala Sitharaman be hailed or should she be nailed?
The jury is out - as were the stock markets.
One faction has been stunned in a negative sense and is pretty morose that the government is not pumping in enough capital spending behind infrastructure to make up for the loss of revenue courtesy the tax reforms. Hence, they pulled down all the infrastructure stocks.
They will change their minds quickly should the government make some interim extra-budgetary announcements on infrastructure spends which it most likely will.
Another faction is singing Sitharaman’s hosannahs for her tax reforms making government levies on personal income nil upto Rs 12 lakh. They believe that the repressed middle class will run to the malls and markets and buy more groceries and garters (read: items of luxury) now that it will more money in its pocket rather than given away to the government by way of taxes. Customers will premiumise, go after articles of conspicuous consumption.
This lot of the jury can’t stop praising Ms Sitharaman. They sent the stocks of FMCG, retail firms, entertainment outlets screaming up on the bourses.
Should they be proved right, then advertising spends will rise, sales will soar, and boy will it be party time for all.
On the whole, however, the Union Budget is being seen as growth oriented introducing significant measures aimed at stimulating economic growth and addressing key societal concerns.
In a bid to bolster the middle class and enhance domestic consumption, the government has raised the income tax exemption threshold from Rs 8 lakh to Rs 12 lakh per annum. Additionally, tax rates for higher income brackets have been reduced, a move anticipated to increase household spending and savings.
The budget unveiled a six-year programme to boost the production of pulses and cotton, aiming to reduce dependence on imports. This includes state agencies purchasing pulses at guaranteed prices to support farmers. Furthermore, a "national mission" has been announced to develop high-yielding seed varieties, addressing challenges posed by shrinking farmlands and erratic weather.
Revised MSME criteria will double investment and turnover limits, benefiting over a crore enterprises.
Credit guarantee cover for micro and small enterprises will increase from Rs 5 crore to Rs 10 crore, with start-ups eligible for up to Rs 20 crore.
A customised credit card scheme with a Rs 5 lakh limit will benefit 10 lakh micro-enterprises registered on the Udyam portal.
A Fund of Funds with a fresh government contribution of Rs 10,000 crore will support start-ups. A scheme offering loans up to Rs 2 crore will target first-time women, Scheduled Caste, and Scheduled Tribe entrepreneurs.
Labour-intensive sectors like footwear, leather, and toys will be promoted to boost employment and exports
The government plans to modestly increase capital spending to offset revenue losses from tax cuts. This includes investments in infrastructure development, manufacturing, and exports. A high-level committee for regulatory reforms and the creation of an investment friendliness index have been proposed to improve the ease of doing business.
Measures benefiting the poor, youth, farmers, and women have been incorporated into the budget. The allocation for food, fertiliser, and rural employment subsidies remains nearly flat at Rs 4.57 trillion, with the rural job guarantee programme retaining its budget of Rs 860 billion. These steps aim to support the rural economy and provide a safety net for vulnerable populations.
Infrastructure ministries will outline three-year project pipelines under PPP mode. States can leverage the India Infrastructure Project Development Fund.
The government has allocated Rs 1.5 lakh crore as interest-free loans to states for capital expenditure. The second Asset Monetisation Plan (2025-30) aims to unlock Rs 10 lakh crore for new projects.
The Jal Jeevan Mission will extend until 2028 to achieve universal rural tap water access.
Urban sector reforms will be incentivised, with a Rs 1 lakh crore Urban Challenge Fund supporting city redevelopment and sanitation projects.
India Post will evolve into a logistics hub for MSMEs, with NCDC supported for cooperative lending.
A National Manufacturing Mission will bolster clean tech production, including solar PV, EV batteries, wind turbines, and grid-scale batteries.
