Budget 2024: Amid subdued rural demand FM offers jobs, skill development and lower income tax

In a bid to lift economic growth in rural India and provide relief to the low to mid-income households, Finance Minister Nirmala Sitharaman today announced a slew of measures. Her seventh budget speech includes a range of schemes and central assistance for creating more jobs, provide skill upliftment opportunities to the youth and some income tax relief that are aimed at boosting consumption and economic growth, especially in the lower strata of the economy.

The measures come after a prolonged period of subdued consumption trends impacting all consumer facing sectors for nearly three years as poor household income in rural and low-to-mid-income urban households impaired sales of consumer items.

According to Mohit Malhotra, Chief Executive Officer, Dabur India, lowering of income tax, enhanced focus on employment linked schemes would be helpful. “The government has increased standard deductions from Rs 50,000 to Rs 75,000, revised tax rates under New Tax Regime and slab revisions would result in savings of around Rs. 17,500 in net taxes in the hands of individual. This would mean more disposable income in the hands of the consumers and would lead to sustained demand for branded consumer goods,” he says.

Malhotra further adds that 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. 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”.

Aasif Malbari, Chief Financial Officer, Godrej Consumer Products says, the budget promises holistic growth of India’s macroeconomics at the grassroots level. “Investments in job creation, skill upgradation and MSME development will support more inclusive economic growth. The special focus upon agriculture schemes and rural development indirectly boost consumption spending, particularly in rural and non-metro markets. The budget aligns with the vision of India@100 by allocating resources for rural upliftment, urban development and cultivating a resilient and inclusive economy.”

Experts like Rajeev Singh, Partner and Consumer Industry leader, Deloitte Asia Pacific says, the rural economy has been under strain since the pandemic. The budget has multiple announcements that can drive higher productivity & build resilience in the agricultural sector, strengthen rural infrastructure and generate more opportunities especially for the women.

“Overall, the budget appears to be growth oriented with special focus on two big issues - reviving the rural market and employment generation,” says Singh, adding, the measures “will drive overall consumption and is a positive news for 2-wheeler manufacturers as well as entry level cars. The budget also attempts to address the other big issue around unemployment – steps announced around skilling, support for MSME sector, construction of new industrial parks, the new employment generation scheme & incentive to employers to hire new resources should help in job creation which in turn will have a multiplier effect on both auto and consumer sectors.”

According to Kumar Rajagopalan, CEO, Retailers Association of India, initiatives such as monetary support for farmers, higher exemption limits in personal income tax, and increased standard deductions will provide higher disposable income, leading to increased spending. “We believe this will stimulate consumption growth, thereby boosting the overall economy. The reduction of duty on gold, precious metals, and mobile phones will also provide a significant boost to these sectors, particularly during the festive season,” he says.