The Union Budget 2024 shows a clear plan to boost economic growth in many areas. This includes focus on infrastructure, rural development and real estate. Big steps are also planned for manufacturing, electric vehicles and technology sectors. Moreover, the budget highlights space economy along with telecom, defense and MSMEs as key focus areas that will receive special attention from the government’s investment and policy backing. These plans are expected to create an environment where business can grow well in India. The budget also brings fresh incentives like making items in India more attractive by reducing taxes on them or increasing credit guarantee limits for MSMEs while encouraging employment-linked benefits all adding up to improve conditions for businesses.
Key Sectors with Growth Potential
1. Infrastructure
The budget has set aside a significant ₹11.1 lakh crore for capital investment in infrastructure like roads, highways, railways and housing projects. This focus is predicted to help companies dealing with construction, engineering and infrastructure development such as Larsen & Toubro or GMR Infrastructure. The attention on sustainable and climate-resilient infrastructure also creates chances for businesses working in renewable energy as well as green construction fields.
2. Rural and Agricultural Development
Government’s intention to increase funds for rural schemes will help in increasing consumption from rural areas. This is good news for companies like Hindustan Unilever, TVS Motor and Hero MotoCorp. Also, the setting aside of ₹1.52 lakh crore for agriculture sector could encourage biotechnology and digital farming innovations leading to benefits for agri-tech startups along with businesses involved in sustainable farming practice.
3. Real Estate and Housing Finance
More money being given for affordable housing and urban development is predicted to benefit real estate developers like Macrotech Developers and Sunteck Realty. Financial institutions such as Aavas Financiers and Home First Finance might also experience growth because of possible interest subsidy schemes linked with urban housing.
- Manufacturing
The ongoing production-linked incentive schemes are expected to encourage local manufacturing and job opportunities, which could aid companies such as Dixon Technologies and Biocone. The concentration on capital goods and industrial parks in the National Industrial Corridor Development Program is also likely to promote manufacturing expansion.
- Electric Vehicles (EVs)
The budget keeps in place subsidies for electric vehicle (EV) adoption. This is good news for important participants in the EV sector like Tata Motors, Ola Electric, Olectra Greentech and JBM Auto. These incentives are very important to help EV market grow within India.
- Technology and Digitalization
The focus on digitization and backing for new technologies like artificial intelligence (AI) and digital NBFCs (Non-Banking Financial Companies) are forecasted to stimulate growth in the tech sector. Businesses dealing with AI, fintech, and digital infrastructure will have fresh chances to create novel ideas and increase their operations.
- Space Economy
A significant amount of ₹1,000 crore has been set aside for space startups. This move intends to boost the space economy considerably and could be beneficial for companies participating in activities like space exploration and satellite technology such as Antrix (ISRO’s commercial arm) along with private players including Skyroot Aerospace who might see more investments and government help coming their way.
- Telecom
The telecom industry will also see progress, with ₹1.28 lakh crore set aside for telecom projects that involve giving substantial funds to Bharat Sanchar Nigam Limited (BSNL). This will aid telecom giants such as Reliance Jio and Bharti Airtel in enhancing their connectivity and technological base.
- Defence
The amount of ₹6.21 lakh crore set aside for the defense sector shows that the government keeps on giving a lot of importance to indigenize defense production and increase exports in this area. Companies such as Bharat Dynamics and Hindustan Aeronautics Limited (HAL) are predicted to be recipients of this ongoing assistance.
- Social Sector and MSMEs
The budget shows focus on social and welfare spending. There is a rise in outlays for rural roads, employment and public health insurance programs. Also, backing for MSMEs via tax reforms as well as financial inclusion actions will aid small and medium enterprises to flourish.
New Incentives for the Manufacturing Sector
- Production-Linked Incentive (PLI) Scheme
The budget has given much more money to the Production-Linked Incentives (PLI) scheme. It is increased by 33%, going from ₹4,645 crore last year’s estimate to now being ₹6,200 crore. This rise shows the government’s dedication in helping manufacturing across different areas like electronics, drugs making industry and car building field among others along with IT hardware section too. The PLI plan will probably get bigger to cover extra sectors that require lots of labor such as clothes making business, leather goods industry including shoes production and toy sector which are all important for creating jobs.
- Customs Duty Adjustments
We have made strategic changes in customs duties to promote manufacturing within the country. Import duties for important minerals like lithium, copper and cobalt have been decreased to encourage local processing and refining needed by sectors including renewable energy, defense as well as electronics. There are also reductions of duty on x-ray equipment in order to stimulate production domestically within the healthcare industry and PCBA for mobile phones/chargers so as not only support electronic manufacturing but also reduce dependence from abroad.
- Infrastructure Development
The spending plan highlights big spending on industrial infrastructure, such as making more places ready for investment in industrial parks and enlarging the National Industrial Corridor Development Programme. These actions intend to improve supply chains, lower logistics expenses, and build an environment that is supportive of manufacturing so as to boost India’s worldwide competitiveness.
Project Report on : Infrastructure
- Support for MSMEs
The budget brings in many actions for helping the Micro, Small, and Medium Enterprises (MSMEs) that form a crucial part of manufacturing sector. This involves employment-linked encouragements as well as credit guarantees meant to strengthen MSME ecosystem. The limit for Mudra loans has been increased to ₹20 lakh from its present value of ₹10 lakh, making more credit available during stressful times to MSMEs.
- Export Promotion
New PLI schemes in the leather and textile areas are likely to receive more budget allocation, improving their ability to compete globally. The problem of duty inversion concerning spandex yarn is a crucial development for helping local producers and exporters in the textile industry.
- Employment Incentives
For encouraging more employment in manufacturing, the budget contains actions connected to the hiring of initial employees. It is anticipated that this will decrease labor expenses and promote job generation in this sector.
- Green Technology and Renewable Energy
An important item on the list is to encourage domestic manufacturing ecosystem for renewable energy, providing support from budget, grants, tax relief and PLIs. Also contained within this section are incentives aimed at promoting growth in green technology and alternate fuel segments that play a vital role towards sustainable development.
Support for MSMEs through Employment-Linked Incentives and Credit Guarantees
Employment-Linked Incentives
1. Scheme A: Incentives for First-Time Employees
Goal: Help employers recruit initial time workers who will require time to learn and become productive.
Benefits: Workers who qualify will get a wage subsidy for one month, maximum of ₹15,000 that comes in three parts through Direct Benefit Transfer (DBT). This plan is predicted to help around 1 crore fresh participants in the labor market every year.
2. Scheme B: Job Creation in Manufacturing
Objective: To encourage substantial hiring in the manufacturing sector.
Benefits: The scheme of incentives for individuals is designed to give first-time employees earning up to ₹1 lakh per month an interest on income tax that they pay. This will help 30 lakh employees who are new in their jobs.
3. Scheme C: Support to Employers
Objective: To incentivize employers to hire additional employees.
Benefits: The option for employers to be paid back ₹3,000 monthly for two years towards their EPFO contribution for each extra employee with a salary not surpassing ₹1 lakh every month. It is expected that about 50 lakh people will benefit from this scheme and it will also enhance the general employment rates.
Credit Guarantees
1. Credit Guarantee Scheme for MSMEs
Term Loans for MSMEs: For purchasing machinery and equipment, we offer term loans to Micro, Small and Medium Enterprises (MSMEs) without the need for collateral or third-party guarantees.
Mechanism: A self-financing guarantee fund will provide guarantee cover up to ₹100 crore per applicant. Borrowers will pay an upfront guarantee fee and an annual fee on the reducing loan balance. This scheme is meant to help more people get larger loans for modernization and expansion, which can improve efficiency and productivity.
2. New Credit Assessment Model
Objective: To improve credit access for MSMEs by developing in-house capabilities for evaluating creditworthiness.
Mechanism: Public Sector Banks (PSBs) will establish a fresh credit appraisal model that is founded on the digital footprints of MSMEs, going beyond just conventional asset or turnover requirements. This model would also incorporate MSMEs who do not possess formal accounting systems to enhance financial inclusion.
3. Support During Stress Periods
Objective: To ensure continued bank credit for MSMEs during periods of financial stress.
Mechanism: A fund encouraged by the government will offer guarantees to assist MSMEs in the ‘special mention account’ (SMA) stage, ensuring they can continue their activities and not turn into non-performing assets (NPAs). This step is taken for providing steadiness and help to MSMEs during difficult times.
Credit Guarantees
- Credit Guarantee Scheme for MSMEs
Objective: Facilitating term loans for MSMEs to buy machinery and equipment without collateral or third-party guarantee.
Mechanism: A self-financing guarantee fund, which will give guarantee cover up to ₹100 crore per applicant. Borrowers have to pay an upfront guarantee fee and also an annual fee on the reducing loan balance. The goal of this scheme is to make it easier for people who need big loans for modernization and expansion purposes, so that they can improve their work efficiency and productivity.
- New Credit Assessment Model
Objective: To improve credit access for MSMEs by developing in-house capabilities for evaluating creditworthiness.
Mechanism: Public Sector Banks (PSBs) will introduce a fresh credit assessment model reliant on the digital footprints of MSMEs, moving away from the conventional criteria of assets or turnover. This new model also incorporates MSMEs that do not possess formal accounting systems, hence expanding financial inclusion.
- Support During Stress Periods
Objective: To ensure continued bank credit for MSMEs during periods of financial stress.
Mechanism: For businesses in the ‘special mention account’ (SMA) stage, a fund backed by the government will give guarantees. This is to help them continue their operations and not become non-performing assets (NPAs). This step intends to offer steadiness and assistance for MSMEs when they encounter difficulties.
Additional Measures
- Enhanced Mudra Loans
Objective: To provide greater access to credit for micro-entrepreneurs.
Benefits: Mudra loans, which are loans for small businesses in India, have a higher limit now. If someone has repaid their loan before, they can apply for a new one with a maximum amount of ₹20 lakh instead of the previous ₹10 lakh. This change is to help more micro units and entrepreneurs at the grassroots level.
- E-Commerce Export Hubs
Objective: To enable MSMEs and traditional artisans to access international markets.
Mechanism: Setting up e-commerce export hubs in a partnership between the public and private sectors (PPP), creating an easy regulatory and logistical structure for trade and services related to exporting. This plan hopes to improve the market expansion and competitiveness of MSMEs.
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Conclusion
The Union Budget 2024 has brought in various incentives and support methods to boost the manufacturing sector as well as assist MSMEs (Micro, Small and Medium Enterprises) of India. By giving more financial resources for the PLI scheme, changing customs duties, spending on infrastructure, assistance to MSMEs and pushing ahead with green technology – the government is trying its best to turn India into a worldwide manufacturing center. The employment-related rewards and credit guarantees are anticipated to establish a strong environment that tackles present job issues while also improving workforce job potentials along with providing necessary monetary assistance. At the end, these steps will create growth for all and lasting development, pushing India closer to its goal of being an advanced country.