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Budget 2024-2025: Enhancing Economic Stability and Grassroots Development

Financial Experts Applaud Measures for Long-Term Economic Health and Inclusive Growth

The Budget 2024-2025, unveiled by Finance Minister Nirmala Sitharaman, has drawn praise for its comprehensive approach to fostering economic stability and addressing grassroots issues. By focusing on long-term economic health, enhancing employment, and supporting the underprivileged, the budget aims to create a more inclusive and robust economy. Here’s what industry leaders have to say about the budget’s impact on the financial sector and grassroots development.

Quote on Economic Strategy from Mr. Nitin Rao, CEO, InCred Wealth

“Budget 2024-2025 build up for long term measures is positive. Many key areas have a positive build-up without impacting the fiscal position. Taxation increases seem negative, though was anticipated. Markets will stabilize after the negative shocks in the short term and track the progress of the country in the medium term.”

Quote on Grassroots Development from Mr. Siddarth Bhamre, Head of Research at Asit C Mehta Investment Intermediates Ltd

“The budget 2024-2025 is economy-centric and especially targets grassroots issues like employment and rural economic stress. Multiple direct and indirect schemes and announcements will target the upliftment of the poor, women, youth, and farmers. The finance minister has made this budget to enhance employment, increase skill sets, ease business for MSMEs, and provide tax measures for the middle class. From the capital markets point of view, it would be slightly disappointing as far as taxation is concerned. The economic measures announced are the need of the hour for rural employment and reduce stress in the MSME space. This budget has targeted the pain points in the economy.”

Mr. Dhaval Ajmera, Director, Ajmera Realty & Infra India Ltd

“The Union Budget 2024-25 reflects the growth-led vision of the government towards building a dynamic Viksit Bharat. The reforms announced by the honourable Finance Minister like enabling a stamp-duty cut for women homebuyers will act as a sense of encouragement for fence-sitters to make the move along with resonating a strong message for women empowerment. Keeping in check the motive to promote housing for EWS, the announcement about the allocation of additional 3 crore homes under PMAY along with interest subvention schemes about affordable homes will contribute to the vision of Housing for All. Overarching this, the 10-lakh crore outlay to boost urban housing under PMAY 2.0 will elevate the demand for affordable homes. The state-wise moderation of stamp duty rates is a strong move that will potentially enable relief to homebuyers from the stamp duty and registration charges, thus propelling housing demand across new and emerging markets. However, the sector still awaits the need to redefine the definition of affordable homes to include home sizes from 60 sq.m to 90 sq.m, rather than the current price bracket of ₹45 lakh, and incentivization to developers and homebuyers to develop and invest in green projects to save the environment. Overall, Budget 2024’s strategic investments and reforms are expected to drive substantial growth in the real estate sector, benefiting both developers and homebuyers alike.”

Quote on Insurance Sector from Mr. Parimal Heda, Chief Investment Officer, Go Digit General Insurance

“The Union Budget 2024-2025 has maintained its commitment to fiscal prudence yet announced various tax-friendly measures for the Indian taxpayers. From the perspective of the Insurance Sector, amendment made by the government to clarify various activities in insurance sector as neither a supply of goods nor a supply of services is an extremely positive measure for the sector. This will immensely reduce compliance and ongoing litigation burden and provide overall stability to the sector. Rationalisation of tax deducted at source (TDS) from 5% to 2% for payment of insurance commission to individual agents will ensure additional income in the hands of such individuals for payments made by the insurers.

TDS reduction to 2% for payment of bonus or proceeds made on life insurance policies upon maturity will also ensure higher receivables for individual policyholders. Abolishment of angel tax for all classes of investors will provide a huge fillip to the start-up sector that in the past had witnessed funding winter. This will bring in the much-needed capital, especially from the foreign investors to the growing start-up ecosystem of the country and aid in their future growth. Floods are one of the most common natural disasters in India. Identifying key states, the government has taken strong steps towards flood mitigation. As systemic risks of floods get mitigated over time through various measures like flood-controlled structures, it will aid insurance companies in underwriting the risks related to liability and property insurance better going forward. New assessment model for MSME credit and announcement of credit guarantee scheme will also foster better insurance collaboration with lending companies and aid in better assessment of risks.

From an ancillary benefits point of view, the government’s proposal to boost domestic tourism and unlock economic potential of key destinations will have an ancillary impact on travel insurance as well and boost its uptake as bite-sized travel insurance products will likely become part of travellers’ planning. The government’s aim to prioritise agriculture research and developing climate-resilient varieties of 32 field and horticulture crops will also have an ancillary effect on the crop insurance segment as losses over medium- to long-term will likely reduce from loss of crop due to climate-related incidents. The Finance Minister’s financial sector vision and strategy document will also be another keenly watched policy by the BFSI sector to garner better insights on the agenda planned by the government for the remaining decade.”

Quote on MSME Support from Mr. Manish Aggarwal, CEO & Founder, FINQY

“We welcome the key announcements made in the Budget 2024-2025 presented by Finance Minister Nirmala Sitharaman. The introduction of the MSME credit guarantee scheme for collateral-free loans and the doubling of the MUDRA loan scheme to Rs 20 lakh marks a significant positive development. These measures will facilitate easier access to capital for the MSME sector, fostering favorable conditions ahead. The allocation of Rs 10 lakh crore for the Prime Minister’s urban housing plan is commendable. Encouraging states to reduce stamp duties is a positive development for aspiring homeowners, as lower stamp duties will make homeownership more affordable and stimulate the housing market. In my view, these initiatives will also significantly boost the home loan industry as a beneficial side effect. We also welcome the abolition of the 30% Angel Tax for all investor classes. This move will encourage more angel investors to support startups, fostering innovation and growth in the startup ecosystem.”

Quote on Startup Ecosystem from Mr. Ankur Mittal, Cofounder, Inflection Point Ventures
“While we have to still read the complete change on the abolishment of angel tax but on the face of it, this action has the ability to bring lot of regulatory clarity which generally is appreciated by the investor communities across the world. This should help founders looking to raise capital both in domestic and international markets.”
Quote on Infrastructure from Mr. Subahoo Chordia, Head – Real Assets Strategy, Edelweiss Alternatives
“The government has maintained its allocation towards infrastructure sector at INR 11+ lakh crores (i.e. 3.4% of GDP) and additional interest free loan of INR 1.5 lakh crores to States will be a booster for the infrastructure segment. The budget has lent further emphasis to multiple infrastructure segments towards development of roads, airports etc. Further, industrial parks, to service 100+ cities and development of 12 specific industrial parks under national schemes is envisaged. The Government has lent further weight in its fight against climate change. The fiscal incentives for rooftop solar and pumped storage will enhance energy security and availability. Further indirect tax incentives towards renewable energy items and critical minerals such as lithium, copper bodes well for the segment. Overall the budget maintains its focus on long term growth and sustainability and is positive towards infrastructure segments.”
Quote on Fiscal Prudence from Mr. Deepak Ramaraju, Senior Fund Manager, Shriram AMC
“The budget has not been a big bang budget in terms of announcements or reforms. The government has tried to strike a balance between social reforms, growth, fiscal prudence and coalition partners. Special packages to Andhra Pradesh and Bihar have been provided in terms of industrial corridors, infrastructure push and financial support for key projects. This ensures the continuity of the coalition. The fiscal prudence is improved and the fiscal deficit is reduced to 4.9% of the GDP from 5.1%. The borrowing is pegged to Rs 14 L Cr which is less than last year. This is positive for the overall economy. Hike in short-term capital gains and long-term capital gains have been sentimentally negative for the equity markets. This has resulted in short-term selling pressure. However, this can be the beginning of reforming the capital markets and curbing retail participation in the F&O segment. We can expect more measures in the F&O space in the days to come. On the growth and social agenda, the government has clearly articulated the focus areas like agriculture, employment, skilling, infrastructure, inclusive social growth, manufacturing, infrastructure, urbanization, innovation and next-gen reforms. The budget spending in the years to come will keep adding to these focus areas.”
Sangram Baviskar, Managing Director, Real Estate Practice, TruBoard Partners
“The Union Budget’s emphasis on infrastructure, skilling, and rural development sets the stage for broad economic growth, which typically translates to a thriving real estate market. The allocation for rural development and the focus on building smart cities will significantly enhance real estate opportunities across urban and rural areas. Additionally, the introduction of new schemes for affordable housing will drive demand in the real estate sector, making homeownership more accessible to a broader population. Overall, these initiatives will contribute to a robust and resilient real estate market, fostering economic growth and development.”
Uday Chawla, Managing Partner, TRANSEARCH India
“We welcome the Budget 2024-25 as a people-friendly and pro-development budget. This year’s budget has paved the way for India by focusing on employment and skilling opportunities. We appreciate the various initiatives announced by the Honourable Finance Minister, focusing on the nine critical priorities—ranging from productivity and resilience in agriculture to next-generation reforms—demonstrating a comprehensive approach to fostering sustainable growth and development. For future leaders, these priorities offer a robust foundation to build upon and will create dynamic opportunities for innovation and leadership in these vital sectors. We believe that the budget, along with conducive policies and regulatory reforms, will facilitate research and development, and foster a culture of innovation, across sectors. With increased investment, the budget is poised to enhance employment opportunities and spur rising demand, especially for skilled leadership in these sectors.”
Conclusion:
Budget 2024-2025 sets a clear path towards economic stability and inclusive growth. By addressing critical issues such as employment, rural economic stress, and grassroots development, the budget aims to uplift the underprivileged and create a more balanced economic environment. The feedback from financial experts highlights the potential of these measures to foster long-term economic health and support the overall growth trajectory of the country. As the government implements these initiatives, the collaboration and support of various stakeholders will be crucial in realizing the vision of a resilient and inclusive India.
The article was curated by Prittle Prattle News as an industry story feature.
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