Finance Minister Nirmala Sitharaman has unveiled the first budget of the Modi 3.0 government, emphasizing four key areas: the poor, women, youth, and farmers. The budget aims to address pressing concerns while laying the foundation for India’s development by 2047. Reflecting the NDA’s coalition nature, the budget has made notable provisions for crucial allies like the JDU and TDP, ensuring their continued support.
The budget, introduced on July 24, highlights the government’s effort to keep important allies, including Nitish Kumar’s JDU and Chandrababu Naidu’s TDP, satisfied. With Bihar and Andhra Pradesh receiving substantial allocations, these states have been acknowledged for their significant roles in the NDA coalition, which holds 28 out of 293 NDA seats. Bihar will benefit from the Purvodaya project, road connectivity initiatives, expressways worth ₹26,000 crore, and power projects amounting to ₹21,400 crore. Additionally, ₹11,500 crore has been allocated for flood relief. Andhra Pradesh will receive ₹15,000 crore for reconstruction, further funding for the Polavaram Project, investments in the Vizag-Chennai Industrial Corridor, and special funds for seven backward districts.
Critics argue that the budget disproportionately favors Bihar and Andhra Pradesh, while states with upcoming elections, such as Maharashtra, Haryana, Jharkhand, and Jammu-Kashmir, were left out of significant announcements. This approach suggests a strategic move by the government to avoid political controversies.
For the middle class, the budget offers modest relief. The standard deduction limit has been raised from ₹50,000 to ₹75,000 annually, and tax slabs have been adjusted for incomes up to ₹12 lakh, potentially saving taxpayers ₹17,500 annually. However, the increase in long-term capital gains tax from 10% to 12.5% may dampen sentiment among the middle class, who view this as an effort to address economic inequality.
Addressing concerns about unemployment and inflation, the budget allocates ₹10,000 crore for a ‘price stabilization fund’ to manage food inflation. It also emphasizes job creation, with plans to generate 78.5 lakh jobs annually until 2036. Five schemes totaling ₹2 lakh crore will focus on educating, employing, and skilling youth, benefiting over 4.1 crore individuals in the next five years. Additionally, a new initiative will offer internships at 500 leading companies for 1 crore students, providing a monthly stipend of ₹5,000 and a one-time assistance payment of ₹6,000.
Despite these measures, the government did not introduce direct cash transfers for women or youth, nor did it increase support under the PM Kisan Nidhi scheme, aligning with Prime Minister Modi’s economic philosophy. Allocations for agriculture and rural development have been increased, with ₹1.52 lakh crore allocated for agriculture spending and ₹2.66 lakh crore for rural areas.
The budget maintains a tight fiscal stance, with a fiscal deficit projected at 4.9% of GDP, down from the 5.1% estimated in the interim budget. This reflects the government’s commitment to economic discipline while addressing the nation’s pressing challenges and laying the groundwork for future growth.
