The Finance Minister presented the Union budget, which emphasized on sustainable growth and a fiscal prudence, with a record allocation of ₹11.11 lakh crore for infrastructure development, including significant investments in urban planning, transport, and industrial parks. It also highlights various social welfare schemes, such as financial aid for farmers and housing projects, while promoting MSMEs and skill development initiatives. The biggest focus of the budget has been on continuing fiscal consolidation and macro-stability. The emphasis on skill development and employment generation is likely to be transformative in the long run.
Moreover, the fiscal deficit has been reduced to 4.9% of GDP for FY 2024-25 from the earlier estimate of 5.1% in the interim budget, with a target to reduce it below 4.5% next year.
However, the increase in tax rates on long-term capital gains (LTCG) and short-term capital gains (STCG) on equity, along with the hike in the securities transaction tax (STT) on futures and options, aims to moderate heightened market activity and promote sustainable growth. These changes have impacted market sentiment negatively, even though the budget’s focus on boosting consumption and capital expenditure is seen as positive.
The Indian 10-year benchmark bond yield briefly dropped to a two-year low at 6.92%, but reversed course and remained flat at 6.97% as the cut in market borrowing was lower than anticipated. Additionally, the Indian Rupee dropped to record low of 83.71 to the dollar, pressured by the drop in domestic equity market.
Overall, the 2024-25 budget balances growth with fiscal responsibility, aiming for inclusive development and long-term economic stability.
If you would like to view the Official Highlights of the Budget 2024-25, click below: