Due to policy uncertainties, the global economy is still witnessing quite the disruption in today’s time. However, India’s economic growth continues to shine out from the rest and is expected to remain positive going forward. While presenting the Union Budget 2024-25 in Parliament on 23rd July, FM Nirmala Sitharaman stated that India’s inflation is steadily decreasing and is moving towards the target of 4 percent. The core inflation drivers such as non-food and non-fuel currently stands at 3.1 percent, wherein, steps are being taken to ensure supplies of perishable goods reach the market adequately.

Now let’s look at some of the highlights of Union Budget 2024-2025 before we look into the reactions from indsutry stalwarts:

Low and Stable Inflation: India's inflation remains low and stable, providing a conducive environment for economic growth.

PM's Package: A INR 2 lakh crore package comprising five schemes aims to facilitate employment, skilling, and opportunities for 4.1 crore youth over the next five years.

Budget Priorities: The 2024-25 budget focuses on employment, skilling, MSMEs, and the middle class, with an emphasis on nine priorities to generate ample opportunities for all.

Agriculture and Natural Farming:

• Release of 109 high-yielding, climate-resilient crop varieties.

• Initiation of 1 crore farmers into natural farming over two years.

• Allocation of INR 1.52 lakh crore for agriculture and allied sectors.

• Industrial Training and Regional Development:

Upgradation of 1,000 Industrial Training Institutes:

Launch of the Purvodaya plan for comprehensive development of Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh.

Women-Led Development: Allocation of over ₹3 lakh crore for schemes benefiting women and girls.

Rural Development: Provision of ₹2.66 lakh crore for rural development, including infrastructure.

Mudra Loans: Enhancement of the Mudra loan limit from ₹10 lakh to ₹20 lakh.

Youth Internships: A comprehensive scheme to provide internship opporunities in 500 top companies to 1 crore youth over five years.

Housing: Under PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹10 lakh crore.

Connectivity: Launch of Phase IV of PMGSY to provide all-weather connectivity to 25,000 rural habitations.

Space Economy: Aim to expand the space economy fivefold in the next decade with a venture capital fund of INR 1,000 crore.

Tax Relief:

• Increase in the standard deduction from INR 50,000 to INR 75,000 under the new tax regime.

• Deduction on family pension increased from INR 15,000 to INR 25,000

• Corporate tax on foreign companies reduced from 40% to 35%

• Merging of multiple 5% TDS payments to a single 2% TDS

• Capital gain exemption limit increased to ₹1.25 lakh per year

• Reduction of customs duty on X-ray panels, mobile phones, and PCBA to 15%

• Reduction of customs duty on precious metals to 6%

Investment Incentives:

• Abolition of angel tax for all investor classes to boost startups and investments

• Major relief for 4 crore salaried individuals and pensioners

• Over 58% of corporate tax receipts collected under the new regime

• Two-thirds of individual income taxpayers have switched to the new income tax regime

The Positive & Negative Reactions of Industry Leaders against the Union Budget 2024:

Venkat Chalasani, Chief Executive at AMFI: 'Capex with clear roadmap for Viksit Bharat is Extremely Positive'

Giving a positive feedback towards the Union Budget, Venkat Chalasani, Chief Executive at AMFI cited, "The Finance Minister presented a growth-oriented budget today. The focus on fiscal consolidation without cutting down on capital expenditure with clear roadmap for “Viksit Bharat” is extremely positive.  The emphasis on job creation, skilling, a boost to the MSME sector as well as tax relief to the middle classes will add more income in the hands of the people. The increase in exemption limit for Long Term Capital Gains tax from Rs 1 lakh to Rs 1.25 lakh is a welcome change. While the changes in rates for LTCG and STCG were not anticipated, the markets will take them in their stride. We are happy to note that AMFI’s demand of change in definition of ‘Specified Mutual Funds’ under Section 50AA has been acceded to and will lead to rationalization in taxation for the funds affected hitherto."

Sadaf Sayeed, CEO, at Muthoot Microfin: Maintaining Fiscal Discipline with a Targeted Fiscal Deficit of 4.9%

In reaction to the Union Budget, Sadaf Sayeed, CEO, Muthoot Microfin, said, "The Union Budget 2024–25 provides an impetus for rural development and growth. Furthermore, it underscores a continuous focus on supporting women and girls through schemes that aid inclusive growth and development. The Union Budget aims to maintain fiscal discipline with a targeted fiscal deficit of 4.9 per cent, which is commendable. The allocation of Rs 2.66 lakh crore for rural development will significantly boost economic activity, create job opportunities, and improve rural living standards and incomes. Its emphasis on job creation and incentivizing skill development initiatives will effectively channel the demographic dividend, benefiting the overall economy.”

Sambitosh Mohapatra, Partner & Leader - ESG, Climate and Energy, PwC India:  'Budget’s Focus on Streamlining Climate Finance to  Stimulate Carbon Markets'

“The budget focuses on all elements of the energy value chain – managing and reducing demand, encouraging resource efficiency, enhancing energy security at a national and citizen level, driving energy transition, and indigenising technologies like nuclear reactors. Most importantly, it focuses on streamlining climate finance and stimulating carbon markets. At the core of the budget is the respite given to the common man’s energy bills through the solar rooftop mission,” signified Sambitosh Mohapatra, Partner & Leader - ESG, Climate and Energy, PwC India.

Deepak Ramaraju, Senior Fund Manager at Shriram AMC: Striking a Balance between Social Reforms and Growth

Deepak Ramaraju, Senior Fund Manager, Shriram AMC, stated, "The budget has not been a big bang budget in terms of announcements or reforms. The government has tried to strike a balance between social reforms, growth, fiscal prudence and coalition partners. Special packages to Andhra Pradesh and Bihar have been provided in terms of industrial corridors, infrastructure push and financial support for key projects. This ensures the continuity of the coalition. The fiscal prudence is improved and the fiscal deficit is reduced to 4.9% of the GDP from 5.1%. The borrowing is pegged to Rs 14 L Cr which is less than last year. This is positive for the overall economy. Hike in short-term capital gains and long-term capital gains have been sentimentally negative for the equity markets. This has resulted in short-term selling pressure. However, this can be the beginning of reforming the capital markets and curbing retail participation in the F&O segment. We can expect more measures in the F&O space in the days to come." 

Ashok Hinduja, Chairman at Hinduja Group (India): A Positive Budget for the Macro Investment Climate

“The budget shows Modi 3.0 is all about continuing the path to Fiscal Consolidation with the Fiscal Deficit target of 4.9% this year and 4.5% the next while maintaining the Capex figure at 3.6%. The focus on the agri sector and housing infrastructure - affordable and urban - is substantive and augurs well. Quite a few changes in taxation have been announced which needs a detailed study. Higher FDI is expected with a reduction in tax on Foreign Companies from 40 to 35%. Overall, a good budget for the macro Indian Investment Climate but could have been better for Indian Investors," cited Ashok Hinduja, Chairman, Hinduja Group of Companies (India).

Ankit Jain, Partner at Ved Jain & Associates: 'Abolishing of Angel Tax Abolishment is Set to Create more Favorable Ecosystem for Startup Growth'

Ankit Jain, Partner, Ved Jain & Associates stated, "The abolishing of the Angel Tax will create a more favorable environment for startup growth and early-stage investments in India. The removal of this tax will likely encourage more investments in early-stage startups and increase the growth of innovation. Investors previously deterred by the tax implications may now find it more appealing to fund young companies, potentially leading to increased capital flow into the startup ecosystem. By eliminating the Angel Tax, the burden of financial scrutiny and administrative hassle will be greatly reduced on startups, enabling them to focus more on innovation and growth. This move will cement India's position as a global startup hub."

Alay Razvi, Partner, Accord Juris: 'A Push towards Andhra’s Development with allocation of INR 15,000 Crore '

Alay Razvi, Partner, Accord Juris, said, "The allocation of Rs 15,000 crore for Andhra Pradesh's new capital is a significant step towards the development and modernisation of the state. This funding will not only boost infrastructure but also enhance economic opportunities and improve the quality of life for the residents. The commitment by the Union Government underscores its focus on balanced regional growth and equitable resource distribution. Such investments are crucial for the overall progress and prosperity of the nation."

He further added, "The resolution of over 1,000 complaints through the Insolvency and Bankruptcy Code (IBC), resulting in the recovery of Rs 3.3 lakh crore to creditors, marks a significant milestone in India's financial sector reforms."

Bose Varghese, Senior Director - ESG, Cyril Amarchand Mangaldas: 'A Disappointment when it comes to Budget that sets no timeline for transitioning from legacy PAT scheme'

Bose Varghese, Senior Director - ESG, Cyril Amarchand Mangaldas, highlighted, "Research and development funding for Bharat Small and Modular nuclear reactors is a significant step in developing this critical technology of the future indigenously. Modular nuclear reactor is expected to be a key technology for the planet’s net zero transition. Disappointing to note that the Budget sets no timeline for transitioning from the legacy PAT scheme to Indian Carbon Market that is expected to set emission reduction targets for hard-to-abate industries."

Arun Alagappan, Executive Chairman, Coromandel International: Strengthening Rural Economy by Focusing on Organic Farming

“With agriculture remaining the backbone of the Indian economy, we welcome the Union Budget’s emphasis on ensuring food security, strengthening rural economy, as well as building resilience and productivity in agriculture. The proposed comprehensive review of the agricultural research setup to focus on improving productivity and developing climate resilient crops will lend an impetus to ensuring that Indian agriculture can withstand climate impact. The initiative to bring together experts from both the government and the private sector will lend a much-needed fillip to the R&D in the agri sector. The government’s commitment to get 1 crore farmers into organic farming and promote large-scale horticulture production in the next two years will significantly increase agricultural productivity and sustainability," stated Arun Alagappan, Executive Chairman, Coromandel International.

Dhawal Dalal, President & CIO-Fixed Income at Edelweiss MF: A realistic Union Budget as seen by the financial markets: Edelweiss MF and Dhawal Dalal

"The final Union Budget for FY25 maintained the idea of continuity while putting more of an emphasis on employment, business accessibility, tourism, and rural infrastructure. The whole amount of capital spending for FY25 was left at Rs. 11.1 trillion, however the fiscal deficit was decreased from the initial forecast of 5.1% to 4.9%. From the standpoint of the bond market, gross borrowing and net borrowing through dated IGB in FY25 are down by Rs. 12,000 crore, to Rs. 14.01T and Rs. 11.63T, respectively. This falls just short of what the market anticipated. In addition, taxes on bonds, market-linked bonds, debt mutual funds, and fixed deposits remained the same. For investors in fixed income, this was a little depressing. Having said that, we do not anticipate a substantial shift in investor attitude. From the standpoint of the financial market, the Union Budget is generally sensible", stated Dhawal Dalal, President & CIO-Fixed Income, Edelweiss MF.

Shishir Baijal, chairman and managing director, Knight Frank India: A Capital Expenditure of Rs 11.1 Trillion will Bolster the Development Objective

"We applaud the statements made by the Honorable Finance Minister in the Union Budget today. The Union Budget for FY 2024–2025 demonstrates the government’s continued commitment to long-term infrastructural and social development. The 11.1 lakh crore capital expenditure budget, rising from 3.3% of GDP in FY 2023–2024 to 3.4% in FY 2024–2025, will sustain the nation's plan for the construction of roads, trains, and other logistical facilities. The National Industrial Corridor Development Program has selected 12 industrial park projects that are significant endeavors that have the ability to expand economic centers and enhance real estate development along their alignment", stated Shishir Baijal, chairman and managing director, Knight Frank India.

Sanjaya Mariwala, Chairman & MD at OmniActive Health Tech: INR 1 Trillion Fund for Private-sector Research

“The 2024 Union Budget aligns with our expectations, prioritizing infrastructure, skill development, and job creation. It places an emphasis on rural development, recognising the diverse needs of India's economic landscape.Agriculture takes center stage with initiatives for climate-resilient crops and increased MSPs, aiming to boost farmer incomes and stability. A groundbreaking Rs 1 lakh crore fund for private-sector research positions India to compete globally and potentially replace China as a primary market in certain sectors," highlighted Sanjaya Mariwala, President, IMC Chamber of Commerce and Industry and executive Chairman & Managing director at OmniActive Health Technologies.

Kalyan Krishnamurthy, CEO at Flipkart Group: 'Provisions of Budget is believed to eradicate bottlenecks in the supply chain'

Reacting to the Union Budget Presentation, Kalyan Krishnamurthy, CEO, Flipkart Group, stated, "The Budget is a bold move to enhance India’s human and organizational capital. It spares no effort in incentivizing the youth to upskill and join the formal workforce. The provisions of the budget will remove bottlenecks in the supply chain and lend a big support to industries by encouraging clusters, establishing e-commerce export hubs and improving credit flow to MSMEs. Reducing the TDS rate from 1 per cent to 0.1 per cent will significantly free up working capital for sellers. Development of DPI applications for urban governance shows the government’s focus on improving and easing daily life."

He further added, "The government's commitment to green energy and critical mineral missions also underscores a forward-looking strategy to ensure sustainable development. This comprehensive and inclusive budget aligns with our nation's aspirations to achieve 'Viksit Bharat' and lays a strong foundation for a prosperous and equitable society."

Aditi Nayar, Chief Economists at ICRA: Small Adjustments should Raise the Mood for those Who are being Paid

"The overall budgetary math seems reasonable in some respects. With the tax changes announced in the Budget and the nominal GDP growth expected for FY25, the growth rate of gross tax revenues relative to the preliminary actuals for FY24 is estimated at 10.8%, which appears reasonable. The Budget made a few minor adjustments to the personal income tax system, which could boost sentiment and spending for salaried people making up to about Rs 15-20 lakh. Nevertheless, since a large portion of the tax break would probably be used for high-priced goods that are subject to indirect taxes, this policy is unlikely to result in a significant loss of income", highlighted Aditi Nayar, Chief Economists at ICRA.

Sanjiv Puri, President at CII: People-centric Budget that that creates an equilibrium  for equitable growth with fiscal sustainability

Sanjiv Puri, President at CII, cited, "The maiden budget of the new government has unravelled a comprehensive roadmap for sustainable and equitable growth while retaining the focus on creation of jobs. Budget 2025-26 provides an extensive roadmap for each segment of the society so that every Indian becomes an equity holder in the growth aspirations of the new and progressive India. The nine key priorities unveiled in the Budget for Viksit Bharat provides an all-encompassing blueprint for an inclusive, resilient, prosperous, environmentally sustainable and technologically advanced India, which would be a crucial milestone in our journey for a developed India @2047." 

Deep Roy, Managing Partner at Equilex: Merger & Demerger Cases have been Kept in the Background

Deep Roy, Managing Partner, Equilex, said, "Today the merger, demerger cases and oppression and mismanagement cases have taken a back seat, in light of the thrust on IBC. First measure that was taken by the NCLT president was to apportion a specific day in each bench to hear only company cases. This too was not considered enough. This measure will definitely help improve the time taken for the non IBC, companies act cases as oppression and mismanagement cases sometimes require very detailed hearings which were not being provided by the existing benches. This move will allow such cases to be heard in detail."

Shri Venkatesh, Managing Partner, SKV Law Offices: Introduction of integrated platform for IBC is expected to Enable Swifter Recovery Process

Shri Venkatesh, Managing Partner, SKV Law Offices stated, "The Indian Government has decided not to extend the custom duty exemptions on critical parts such as Solar Gas, Glass and tinned copper interconnects; as the manufacturing capacity of said parts in India is now sufficient. This will boost indigenous and self-sufficient solar energy infrastructure within India."

He further said, "Finance Minister Sitharaman’s Budget announcements aimed at accelerating the Insolvency and Bankruptcy Code (IBC) process are laudable. The government intends to set up an integrated technology system for the IBC to achieve more effective outcomes. The plan to implement necessary amendments to the IBC is expected to expedite asset resolution, and the establishment of additional specialized tribunals will be a significant facilitator. However, the true impact will rely on the effectiveness of on-ground execution." He continued, "At present, the National Company Law Tribunal (NCLT) is inundated with numerous IBC cases, resulting in delays and causing operational inefficiencies. The introduction of an integrated platform for the IBC, along with more tribunals, will ensure a swifter recovery process and prompt corporate actions, benefiting all stakeholders involved."

Kunal Savani, Partner, Cyril Amarchand Mangaldas: Needed Relief with Abolition of Angel Tax on Investments

Kunal Savani, Partner, Cyril Amarchand Mangaldas highlighted, "In a major reform to support startups and boost investment in the country, angel tax on investments is proposed to be abolished. While the detailed proposal to abolish the 2 percent equalization levy would need to be examined in detail, the FM seems to have provided a much yearned relief to foreign e-commerce operators and foreign crypto exchanges. The abolition of the angel tax is a major win for the Indian startup ecosystem. Especially for young companies, securing early-stage funding is crucial for growth and innovation. This should be especially helpful for attracting investment from outside India.”

He further added, "Non-resident investors have been facing double trouble in complying with the angel tax and FEMA valuation rules, after extension of the angel tax regime to non-resident investors recently. This change simplifies things and makes India a more attractive destination for startup capital."

Ritika Nayyar, Partner at Singhania & Co: The middle class expected more evident direct tax benefits: Ritika Nayyar, partner at Singhania & Co.

"In presenting the Finance budget for the third term, the Modi 3.0 administration attempted to strike a balance while addressing as many issues as possible. From emphasizing employment and related incentives to upskilling initiatives, huge avenues for MSMEs, focus on empowerment and various initiatives for women workforce, financial upliftment, housing schemes, agendas for both rural and urban development, the largest allocation to infrastructure capex, revisions on various custom duties, abolition of angel tax, changes in TDS rates, simplification of reopening and re-assessments, and so on. While all of these changes are good, the salaried and middle classes in India were hoping for more obvious direct tax advantages in addition to the minor rise in standard deduction and slabs under the new system. An increase in the capital gains tax system will have a negative impact on the market as a whole," said Ritika Nayyar, Partner at Singhania & Co.

Abe Abraham, Partner at Cyril Amarchand Mangaldas: Government Actions indicate a Desire to Increase Employment

"The government's financial assistance, which comes in the form of three different incentive programs, amply demonstrates its intention to increase employment across the board, with the industrial sector receiving particular attention. It has been declared by the government that an incentive of one month's salaries, up to a maximum of Rs. 15,000, will be paid in three installments. About 210 lakh people would benefit from this incentive, which will be given directly to all new hires in the formal sector who are registered with the EPFO and whose monthly income does not exceed Rs. 1 lakh. The second scheme is designed to reimburse employers in all formal sectors for up to Rs. 3000 monthly EPFO contributions for each additional employee working in that sector whose salary does not exceed Rs. 1 lakh. This incentive is expected to benefit approximately 50 lakh jobs and will be available for a two-year period", stated Abe Abraham, Partner at Cyril Amarchand Mangaldas.

Krishnendu Chatterjee, VP and Business Head at TeamLease Services: Government’s Commitment to Employment & Employability is Clear

Krishnendu Chatterjee, VP and Business Head at TeamLease Services, stated, "The government's commitment to employment and employability is clear with a Rs 1.48 trillion provision. This initiative, based on EPFO enrollment, focuses on recognising first-time employees and includes direct benefit transfers of the first month's salary in three installments for salaries up to Rs 1 lakh. Special emphasis is placed on the industrial and manufacturing sectors. Additionally, employers will receive incentives for job creation, with the government reimbursing up to ₹3,000 per month for two years towards EPFO contributions for each new employee."

Dr. Naresh Trehan, Chairman and Managing Director at Medanta: Healthcare sector Got Neglected in the Budget

Dr. Naresh Trehan, Chairman and Managing Director at Medanta cited, "We were hoping the Budget to go up. There is a gap in terms of providing quality healthcare to the whole country. There were expectations about expansion of the Ayushman Bharat Scheme to above 70 years of age. We had requested relooking at GST, as we don't get any set off. There is a very thin line the hospitals are walking right now. There are 2-3 things that can be tweaked to provide relief to healthcare."