The first post-election Union Budget has sparked significant interest, particularly due to its dual focus on job creation and rural development. This strategic move, announced by Finance Minister Nirmala Sitharaman, aims to address the economic challenges that played a crucial role in the government’s recent electoral setback. The budget’s allocation of substantial funds for both urban and rural development reflects a balanced approach designed to foster inclusive growth across the nation.

One of the standout features of the budget is the allocation of Rs 2 lakh crore over the next five years for job creation. This significant investment is poised to invigorate the job market, which has been under scrutiny for its perceived inadequacies. By introducing incentives for companies, especially in the manufacturing sector, and launching three employment-linked incentive schemes, the government aims to stimulate job growth and skill development. The focus on providing subsidised loans for higher education and enhancing skill programmes is expected to equip the youth with the necessary tools to succeed in a competitive job market. In addition to urban employment, the budget dedicates Rs 2.66 lakh crore to rural development, a move that underscores a broad commitment to uplifting rural India. This allocation is intended to address the distress in rural areas that analysts believe contributed to the BJP’s electoral challenges.

The provision of state aid for affordable housing, particularly in urban and rural areas, is a step towards ensuring that development reaches the grassroots level. Furthermore, the specific support earmarked for Bihar and Andhra Pradesh through multilateral loans highlights the government’s strategy to address the aspirations of states ruled by key allies. The budget’s approach to fiscal prudence is evident in its target to reduce the fiscal deficit to 4.9 per cent of GDP for 2024-25. This careful balancing act between expenditure and fiscal responsibility is crucial for maintaining economic stability while driving growth. The continuation of spending on long-term infrastructure projects, with an outlay of Rs 11.11 lakh crore, is another highlight.

These projects are expected to catalyse economic growth, create jobs, and improve the overall infrastructure landscape of the country. Tax reforms also feature prominently in the budget, with the revision of the Income Tax Act and the abolishment of the angel tax for start-ups being notable measures. The new tax regime, with revised slabs, is designed to provide relief to the middle class and stimulate economic activity. The reduction of corporate tax rates for foreign companies from 40 per cent to 35 per cent is a strategic move aimed at attracting foreign investment. However, the removal of indexation benefits from property sale, and increases in capital gains tax, have predictably caused distress.

Inflation control measures, such as supply-side interventions to contain food inflation, and the allocation for new airports, medical colleges, and sports infrastructure in Bihar reflect the government’s approach to economic management. The emphasis on developing small and modular nuclear reactors in partnership with private players also signals a forward-looking vision for India’s energy sector. Overall, India’s first postelection budget is a well-rounded document that seeks to address immediate challenges while laying the groundwork for sustained long-term growth.