Overview to July 2024 union budget based

1. Overview to yesterday's union budget 

Here’s an overview of the Union Budget 2024-25, which was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha on July 23:

Priorities and Focus Areas:

The budget outlined nine key priorities for India, including provisions for the agricultural sector, employment schemes, loan programs, financial support for MSMEs, infrastructural development, and fiscal deficit reduction.

The government aims to reduce the fiscal deficit from 4.9% to 4.5%.

Customs duties were adjusted, and changes were made to capital gains taxes.

Taxation Changes:

The new tax policy introduced revised tax slabs, impacting individual taxpayers.

Long-term capital gains tax was set at 12.5% to simplify taxation.

Women’s Workforce Participation and Skilling Initiatives:

The government’s initiatives to enhance skills and boost women’s workforce participation were commended.

Upgrading Industrial Training Institutes (ITIs) and facilitating loans up to ₹7.5 lakh will enhance workforce competencies.

Direct benefit transfers for first-time employees were introduced to incentivize employment.

Healthcare and COVID-19 Preparedness:

The budget allocated funds for strengthening healthcare infrastructure, including setting up new medical colleges and upgrading existing ones.

A special provision was made for COVID-19 vaccination and pandemic management.

Infrastructure and Connectivity:

The government emphasized infrastructure development, including highways, railways, and airports.

The Bharatmala Pariyojana and Sagarmala projects received funding for road and port connectivity.

Education and Research:

The budget aimed to enhance educational facilities, with a focus on quality education and skill development.

Research institutions and universities received financial support for innovation and research.

Environment and Renewable Energy:

The budget addressed environmental concerns by promoting clean energy sources and sustainable practices.

Investments were made in solar power, wind energy, and electric mobility.

2. Pros and cons of the budget

Let’s discuss the pros and cons of the Union Budget 2024-25:

Pros:

Focus on Infrastructure: The budget allocates significant funds for infrastructure development, including highways, railways, and airports. This can boost economic growth and connectivity.

Healthcare Investment: Increased funding for healthcare infrastructure, medical colleges, and pandemic management will enhance India’s healthcare system.

Skill Development: Initiatives to upgrade Industrial Training Institutes (ITIs) and support first-time employees can improve workforce skills and employment prospects.

Clean Energy: The budget promotes renewable energy sources, contributing to environmental sustainability.

Research and Education: Financial support for research institutions and universities can drive innovation and quality education.

Cons:

Fiscal Deficit: Despite efforts to reduce the fiscal deficit, it remains a challenge. Balancing expenditure and revenue collection is crucial.

Taxation Changes: While the revised tax slabs simplify taxation, some individuals may face higher tax burdens.

Implementation Challenges: Execution of budgetary plans can be complex, especially in a diverse country like India.

Sector-Specific Gaps: Some sectors may not receive adequate attention or funding, impacting their growth.

3. What became cheap and what became expensive and why?

Here’s a breakdown of items that became cheaper and costlier in the Union Budget 2024-25:

Items That Became Cheaper:

1. Mobiles, Chargers, and Accessories: Customs duty reduced to 15%.

2. Gold and Silver: Customs duty lowered to 6%, and platinum to 6.4%.

3. Cancer Treatment Medicines: Exempted from basic customs duty.

4. Ferro Nickel and Blister Copper: Basic Customs Duty removed.

5. Solar Panel Manufacturing: Proposed expansion of exempted capital goods list.

Critical Minerals: Fully exempt from custom duties.

6. Shrimp and Fish Feed: Customs duty reduced to 5%.

7. Leather Goods: Customs duty reduced.

8. X-ray Machines for Medical, Surgical, Dental, or Veterinary Use.

Items That Became Costlier:

1. Specified Telecom Equipment: Basic customs duty increased to 15% from 10%.

2. Plastic Products: Custom duty hiked.

Ammonium Nitrate: Customs duty raised from 7.5% to 10%.

3. Imported Garden Umbrellas.

4. Laboratory Chemicals.

5. Additionally, for those opting for the new tax regime, the standard deduction for salaried employees increased from ₹50,000 to ₹75,0001

4. What got middle class family

The Union Budget 2024-25 had several provisions that could impact middle-class families in India. Here are some key points:

Taxation Changes:

The new tax slabs were introduced, allowing individuals to choose between the old and new tax regimes.

The standard deduction for salaried employees increased from ₹50,000 to ₹75,000 for those opting for the new regime.

However, some individuals may face higher tax burdens due to changes in tax rates.

Healthcare and Education:

Increased funding for healthcare infrastructure and medical colleges can benefit middle-class families.

Skill development initiatives, including support for Industrial Training Institutes (ITIs), may enhance employment prospects.

Infrastructure Development:

Investments in highways, railways, and airports can improve connectivity and quality of life.

Clean Energy and Environment:

The focus on renewable energy sources aligns with sustainable practices.

Cost of Living and Inflation:

While specific items became cheaper (e.g., mobiles, gold), overall inflation and cost of living can impact middle-class households.

Remember that the impact varies based on individual circumstances.

5. What is its impact on share market India?

The Union Budget 2024-25 had a notable impact on the Indian stock market. Here are some key points:

Tax Hike on Capital Gains and Derivatives:

The government proposed raising the tax on capital gains and trading derivatives.

As a result, the NSE Nifty 50 and S&P BSE Sensex dropped about 1% each on the day of the budget announcement.

Market watchers expressed concerns that this move might discourage savings and investments.

Market Volatility:

The stock markets experienced significant volatility due to the tax changes.

Investors closely monitored the impact on various sectors and individual stocks.

Sector-Specific Impacts:

Shrimp stocks, such as Avanti Feeds and Apex Foods, surged up to 20% due to proposed financial aid for shrimp farming and marketing.

Hindustan Unilever faced a 2.5% decline after its first-quarter results, signaling cautious optimism.

Long-Term Outlook:

While short-term reactions were negative, experts anticipate a more sustainable investment landscape in the long term3.

The budget’s focus on enhancing the port and shipping sector, green energy, and urban infrastructure could further impact market performance.

The impact of the Union Budget on various aspects, including the stock market, arises from a combination of economic policies, investor sentiment, and market dynamics. Here are some reasons behind the market reactions:

Tax Changes: The proposed tax hike on capital gains and derivatives can directly affect investor behavior. Higher taxes may discourage trading and impact investment decisions.

Investor Sentiment: Investors react to budget announcements based on their perception of policy changes. Positive measures (e.g., infrastructure spending) can boost confidence, while negative changes (e.g., higher taxes) may lead to caution.

Sector-Specific Impacts: Different sectors respond differently. For instance, the shrimp farming sector surged due to proposed financial aid, while other sectors faced volatility.

Long-Term Outlook: Markets also consider the budget’s long-term implications. Infrastructure development, clean energy focus, and other policies can shape economic growth over time.

The impact of the Union Budget on various aspects, including the stock market, arises from a combination of economic policies, investor sentiment, and market dynamics. Here are some reasons behind the market reactions:

Tax Changes: The proposed tax hike on capital gains and derivatives can directly affect investor behavior. Higher taxes may discourage trading and impact investment decisions.

Investor Sentiment: Investors react to budget announcements based on their perception of policy changes. Positive measures (e.g., infrastructure spending) can boost confidence, while negative changes (e.g., higher taxes) may lead to caution.

Sector-Specific Impacts: Different sectors respond differently. For instance, the shrimp farming sector surged due to proposed financial aid, while other sectors faced volatility.

Long-Term Outlook: Markets also consider the budget’s long-term implications. Infrastructure development, clean energy focus, and other policies can shape economic growth over time.

Remember that market reactions are multifaceted, influenced by a wide range of factors.

Here are the key tax changes introduced in the Union Budget 2024-25:

Standard Deduction:

The standard deduction for salaried employees opting for the new tax regime increased from ₹50,000 to ₹75,000.

This change benefits around 4 crore salaried individuals and pensioners, allowing them to save up to ₹17,500 annually in taxes.

Family Pension Deduction:

The deduction for family pensioners has been enhanced from ₹15,000 to ₹25,000.

National Pension System (NPS):

The deduction limit for the employer’s contribution to NPS increased from 10% to 14%.

This covers both government employees and private companies participating in NPS.

Securities Transaction Tax (STT):

STT on Futures and Options contracts increased to 0.2% and 0.1%, respectively.

Capital Gains Tax:

Income received on the buyback of shares will now be taxed in the hands of the recipient.

These changes aim to simplify taxation and provide relief to taxpayers.