Business Today Budget 2024 Roundtable: Jobs, taxes, and a road map to Viksit Bharat. Key takeaways

Just days after presenting the Union Budget, Finance Minister Nirmala Sitharaman delved into the finer details of the document at Business Today's Budget 2024 Roundtable, outlining how it aligns with India's vision for a Viksit Bharat.

The roundtable offered a comprehensive look at the budget's implications, revealing the government’s strategic initiatives aimed at fostering economic growth and job creation.

The event saw participation from notable figures like Jayant Sinha, Chairman of the Parliamentary Standing Committee on Finance, and Sanjeev Bikhchandani, Founder of Info Edge. Their insights provided a well-rounded discussion on various aspects of the budget. Jayant Sinha highlighted the new Employment Linked Incentive (ELI) scheme, stating, “The ELI scheme focuses on the formalization of labor, which is crucial for sustainable economic growth.” He elaborated on how the scheme aims to provide internships to 1 crore youth by India’s top 500 companies, thus bridging the gap between education and employment.

Sanjeev Bikhchandani emphasized the importance of government jobs for the youth in India, explaining, “Sarkari naukari remains a coveted aspiration because it offers job security and stability, which are highly valued in our socio-economic context.” His perspective shed light on the cultural and economic significance of government employment in the country.

At the roundtable, Sitharaman highlighted the significant steps the government has taken to monitor employment schemes, ensuring they benefit both employees and employers. She emphasized the government's consistent focus on job creation, citing that every cabinet proposal since 2014 has been scrutinized for its potential to generate direct and indirect employment. The introduction of Rozgar Melas has facilitated the appointment of individuals to unfilled government positions, demonstrating the administration’s commitment to addressing unemployment. “If we didn’t think jobs were important, why would we do this?” she remarked, refuting allegations that these measures are election-driven.

Addressing the contentious issue of long-term capital gains (LTCG) tax changes, Sitharaman explained that the government has treated all asset classes uniformly to simplify the tax code. She mentioned that a review of the direct tax code will be undertaken in the next six months to ensure stability and simplicity. She clarified that the tax changes were not aimed at increasing revenue but at streamlining the system, with FAQs and explanatory notes being released by the IT and CBDT departments. “This is a stability argument versus simplicity argument,” she noted, underscoring the rationale behind the tax reforms.

The Finance Minister also discussed the role of banks in the economy, encouraging them to seek more deposits and adjust to the rates set by the Reserve Bank of India (RBI). She acknowledged the importance of industry 4.0 and the need for capacity utilization and skilling, indicating that a flat capacity utilization rate is a concern. “There is a reset happening in the industry, looking at Industry 4.0 seriously,” she remarked, highlighting the evolving industrial landscape.

Agriculture was another focal point of the discussion. Sitharaman pointed out the challenges of fragmented land holdings and fluctuating input costs, despite subsidies and farm loans. The shifting monsoon patterns and the lack of climate-resilient seed varieties are significant concerns for farmers, necessitating a balance between supporting farmers and managing consumer prices. “Monsoon has shifted from the traditionally predicted dates, this weighs heavily in the mind of farmers,” she noted, emphasizing the unpredictability farmers face.

On the topic of disinvestment, the Finance Minister emphasized the meticulous preparatory work required for each public sector enterprise, highlighting the unique issues that need to be addressed. She reassured that the government is committed to ensuring the safety and continuity of workers’ conditions during disinvestments, although these processes can be lengthy and complex. “Disinvestments don’t happen like that; they need a lot of preparatory work with each department,” she explained, providing insights into the complexities of the process.

Income tax reforms were also discussed, with the standard deduction increased from ₹50,000 to ₹75,000, benefiting the salaried class and potentially having a cascading effect on high-net-worth individuals (HNIs). Sitharaman reiterated the government’s stance on maintaining fiscal discipline, aligning with the fiscal consolidation path. “The increase in the standard deduction will benefit the salaried class significantly,” she asserted, highlighting the positive impact on taxpayers.

The decision to remove indexation for real estate was another significant move. The Department of Economic Affairs Secretary explained that the decision to rationalize and simplify the capital gains tax regime was based on suggestions from the middle class. “Haven't we as a country kept saying why there is a difference between different asset classes?” Sitharaman asked, emphasizing the need for uniformity in tax treatment.

Sitharaman also addressed the topic of securities transaction tax for the F&O segment, describing the hike as a minor adjustment and expressing confidence in SEBI’s capability to manage the F&O market’s concerns. “The rates have not been hiked very significantly; it’s just a little nudge,” she stated, reinforcing the minor nature of the adjustment.

The roundtable concluded with an optimistic outlook on cooperative federalism, despite political differences, and a reaffirmation of the government’s disinvestment philosophy. The Finance Minister’s detailed breakdown of the budget underscores the government’s strategic efforts to drive economic growth, create jobs, and ensure fiscal stability, paving the way for a Viksit Bharat.

In addition to the core discussions, the event also touched on broader economic themes. The importance of banks in adjusting to over and above rate margins was highlighted, with Sitharaman urging banks to leverage their positions for economic stability. She also mentioned the ongoing reset in the industry, particularly concerning Industry 4.0 and the necessity for skilling and capacity utilization.

Agriculture faced in-depth scrutiny, with issues like land fragmentation, fluctuating input costs, and shifting monsoon patterns taking center stage. Sitharaman's insights into the challenges of supporting farmers while managing consumer prices illustrated the delicate balance the government must maintain. “There is this balance that the government struggles to achieve,” she admitted, reflecting on the complex interplay of agricultural policies.

Disinvestment processes were acknowledged as intricate and prolonged, with the need for detailed preparatory work underscored. Sitharaman emphasized the government’s commitment to ensuring worker safety and job continuity during these transitions. “We are on the disinvestment course,” she affirmed, indicating the ongoing efforts despite the challenges involved.

The Finance Minister also touched upon the RBI dividend issue, noting that it was up to the RBI to decide on the matter, while the government remains committed to the fiscal consolidation path. “Dividend or no dividend, have we not shown our commitment on the glide path?” she questioned, highlighting the government's dedication to fiscal discipline.