By Mohit Malhotra
The standout feature of the Union Budget 2024-25 was its focus on speeding-up fiscal consolidation, with the fiscal deficit being revised down 20 bps from the Interim Budget to 4.9%. While finance minister Nirmala Sitharaman rolled out a string of measures aimed at job creation, rural development, women empowerment and infrastructure investment, the announcement on the capital gains tax seems to have come as a big dampener for the market.
Infrastructure development
The Budget’s push on urban and rural growth will help boost rural consumption and also increase discretionary spending.This year’s Budget has had a sharp focus on urban as well as overall infrastructure development. Urban housing needs of as many as 10 million urban poor and middle-class families are being addressed, with an investment outlay of Rs 10 lakh crore.In addition, the government’s decision to allocate Rs 2.66 lakh crore for rural development – including rural infrastructure – and its continued focus on rural infrastructure development are major steps in the right direction. These measures would further boost overall consumer demand in the hinterland, which is already showing green shoots of revival.
Consumer goods companies
The above step will, in turn, have a positive impact on consumer goods companies with a strong rural footprint. We, for example, have been investing ahead of the curve to expand our rural presence, which has grown by 22,000 villages to 122,000 in the previous fiscal. These Budget measures will encourage us to further expand this coverage – as we are working towards enhancing our footprint to 130,000 villages this year.
Education and skilling
Increased allocation in the Budget towards education, skilling and employment, and special employment-linked incentive schemes for employees and employers aptly demonstrated the government mindset to significantly improve employment and employability in the country.The Union Budget’s special focus on skilling 2 million youth over the next five years through centrally-sponsored schemes, upgrading of 1,000 industrial training institutes (ITIs), and the provision of skilling loans are steps in the right direction.These steps will go a long way in driving consumerism. The support for higher education loans and the push for women in the workforce are other big pluses. The impact of these measures on skilling, employment, and job creation will be profound.
Tax rates
The government has increased standard deductions from Rs 50,000 to Rs 75,000, revised tax rates under the new tax regime, and slab revisions would result in savings of around Rs 17,500 in net taxes in the hands of the individual. This would mean more disposable income in the hands of consumers and would lead to sustained demand for branded consumer goods.
Women empowerment
A highlight is the focus on enhancing women’s participation in the workforce by investing in establishing working women hostels, creches, and women-specific skilling programmes. It is a progressive move that will help improve gender diversity in the workforce and create a supportive environment for women workers, fostering empowerment and economic independence. This will empower women to become more independent and earn a dignified living.I feel this Union Budget will help unlock our demographic dividend and pave the way for a brighter, more skilled future – or should I say the ‘Amrit Kaal’ – for our youth, preparing them to meet the demands of a dynamic and highly competitive world.
Mohit Malhotra
Chief Executive Officer, Dabur India Ltd