Budget 2024 prioritises employment, fiscal prudence: Finance Secretary TV Somanathan

Finance Secretary TV Somanathan provided an in-depth analysis of Budget 2024 in an exclusive interview to Republic Business saying that the primary focus of Budget has been on employment generation and the importance of maintaining fiscal prudence. The budget aims to create a robust foundation for India’s journey towards becoming a developed nation under the Viksit Bharat initiative.

Somanathan highlighted that the main emphasis of this budget is on boosting employment through various direct and indirect measures. "We have introduced employment-related schemes and incentives, improved scaling, provision of skills, and encouraged employment-intensive sectors like MSMEs," he said. The budget has made significant allocations to sectors known for their high job-creation potential, reaffirming the government’s commitment to addressing unemployment.

Despite the new focus on employment, the budget continues the themes of capital investment, infrastructure development, and fiscal prudence from previous budgets. Somanathan stressed that fiscal prudence is essential for macro-economic stability and financial strength, which are foundational for development. "For India to become a developed country, we have to be macro-economically stable and financially strong," he said, adding that losing fiscal prudence could undermine these efforts.

Addressing concerns about the middle class, Somanathan assured that the budget has taken significant steps to provide relief. "There is substantial tax relief for the middle class through a higher standard deduction for salaried taxpayers and changes in tax rates," he explained. Additionally, the budget includes measures to support middle-class entrepreneurs and students through various schemes and loans.

Regarding capital expenditure, the Finance Secretary noted that the budget has allocated Rs 11.11 lakh crore for infrastructure investment, marking a 17% increase from the previous year. He also highlighted the role of the private sector in driving economic growth, urging businesses to commit to higher levels of capital investment.

The budget proposes a review to simplify the tax code, aiming to make it more straightforward for taxpayers and administrators. This includes reducing the complexity of sections and provisos that have accumulated over time.

Somanathan clarified changes to the capital gains tax, which now sees a reduced rate of 12.5 per cent without indexation for long-term gains. This move aims to simplify the tax structure and, in many cases, benefit taxpayers, especially those with high returns on real estate investments.

The budget introduced several innovative schemes to promote job creation. These include fiscal incentives for employers to hire first-time employees, subsidies for incremental job creation, and partnerships with the private sector for internships funded through CSR expenditure. "We are making it easier for those who have not entered the job market to secure positions in the organized sector," Somanathan explained.

With its dual focus on employment and fiscal stability, Budget 2024 sets the stage for sustainable economic growth. Somanathan's insights highlight the government’s commitment to creating jobs, supporting the middle class, and maintaining financial discipline as India progresses towards becoming a developed nation by 2047.