Post-Election Union Budget: A Strategic Push for Job Creation and Rural Development

Paromita Das

GG News Bureau

New Delhi, 24^th July. The first post-election Union Budget, announced by Finance Minister Nirmala Sitharaman, has garnered significant attention for its dual emphasis on job creation and rural development. This strategic initiative aims to address the economic challenges that contributed to the government’s recent electoral setbacks. The budget’s substantial funding for both urban and rural development demonstrates a balanced approach to fostering inclusive growth across the nation.

Job Creation: Revitalizing the Employment Landscape

A key highlight of the budget is the allocation of Rs 2 lakh crore over the next five years for job creation. This major investment aims to rejuvenate the job market, which has faced criticism for its perceived inadequacies. The government’s strategy includes offering incentives to companies, especially in the manufacturing sector, to stimulate job growth.

Employment-Linked Incentive Schemes

Three new employment-linked incentive schemes have been introduced:

1. Manufacturing Boost Initiative: Designed to incentivize companies to expand their operations and hire more employees.
2. Tech and Innovation Drive: Focused on startups and tech firms, encouraging innovation and job creation in emerging sectors.
3. Skill Enhancement Program: Aimed at improving the employability of the youth through subsidised loans for higher education and enhanced skill programs.

These schemes are designed to enhance skill development and provide the youth with the necessary tools to thrive in a competitive job market.

Rural Development: Addressing the Grassroots

The budget dedicates Rs 2.66 lakh crore to rural development, underscoring the government’s commitment to uplifting rural India. This allocation addresses the distress in rural areas that analysts believe played a role in the BJP’s electoral challenges. Key measures include:

Affordable Housing Initiatives

State aid for affordable housing, both in urban and rural areas, aims to ensure that development reaches the grassroots level. This initiative is expected to significantly improve living conditions and stimulate local economies.

Focus on Key States: Bihar and Andhra Pradesh

The budget includes specific support for Bihar and Andhra Pradesh through multilateral loans, highlighting the government’s strategy to meet the aspirations of states governed by key allies. This targeted approach is intended to bolster the development efforts in these regions and address localized issues effectively.

Fiscal Prudence: Balancing Growth and Stability

The approach to fiscal prudence is evident in the target to reduce the fiscal deficit to 4.9 percent of GDP for 2024-25. This careful balance between expenditure and fiscal responsibility is crucial for maintaining economic stability while driving growth.

Infrastructure Investment: Long-Term Vision

The budget continues its investment in long-term infrastructure projects, with an outlay of Rs 11.11 lakh crore. This includes projects aimed at enhancing transportation, energy, and digital infrastructure, which are critical for sustained economic growth.

Major Projects and Infrastructure Development

The budget outlines several key projects expected to drive economic growth and improve infrastructure. These projects include:

• New Airports: Allocations for new airports to improve connectivity and support regional development.
• Medical Colleges: Investment in new medical colleges, addressing both healthcare and education needs.
• Sports Infrastructure: Enhancements in sports infrastructure, particularly in states like Bihar, to promote physical health and boost local economies.

These initiatives are not only poised to create jobs but also enhance the overall quality of life and economic opportunities in these regions.

Tax Reforms and Economic Stimulation

Tax reforms are a significant highlight of the budget, with several measures designed to provide relief and stimulate economic activity:

• Income Tax Revisions: The revision of the Income Tax Act and the introduction of new tax slabs aim to provide relief to the middle class.
• Angel Tax Abolishment: The removal of the angel tax for start-ups is a notable move to encourage entrepreneurship and innovation.
• Corporate Tax Reduction: Reducing the corporate tax rate for foreign companies from 40% to 35% is a strategic effort to attract more foreign investment.

These tax reforms are intended to boost disposable incomes, foster a more business-friendly environment, and enhance India’s attractiveness as an investment destination.

Controversial Tax Changes

However, not all changes have been welcomed with open arms. The removal of indexation benefits from property sales and increases in capital gains tax have caused distress among investors and property owners. These measures are seen as potentially dampening investment in the real estate sector and reducing the attractiveness of property as an asset class.

Inflation Control and Economic Management

Addressing inflation, particularly food inflation, remains a priority for the government. Supply-side interventions have been planned to contain rising prices. Additionally, the budget allocates resources for:

• Energy Sector Development: A forward-looking approach to energy, including the development of small and modular nuclear reactors in partnership with private players, signals a commitment to sustainable and innovative energy solutions.

Conclusion

Finance Minister Nirmala Sitharaman’s first post-election Union Budget is a comprehensive plan that addresses immediate economic challenges while laying the groundwork for long-term growth. With a mix of job creation, infrastructure investments, tax reforms, and strategic economic measures, the budget aims to propel India towards a future of robust economic health and prosperity. This budget aims to foster inclusive growth and address the issues that contributed to the government’s recent electoral setbacks. This strategic initiative underscores the government’s commitment to balancing fiscal prudence with the need for robust economic development.