Modi 3.0’s first Budget: Major push for jobs, spiritual tourism & infrastructure

The Union Budget 2024-25, unveiled by Finance Minister Nirmala Sitharaman, attempts to address some of the concerns of the voters, especially youth, with a spotlight on infrastructure, employment, and skill development, while farming, rural job guarantee schemes, health and filling government vacancies remain overshadowed.

Presenting the budget for 2024-25 on Tuesday in Lok Sabha, marking the beginning of Prime Minister Narendra Modi’s third term, Finance Minister Nirmala Sitharaman said she has attempted to invigorate employment, enhance skills development, and deliver significant relief to the middle class. Sitharaman said that the Union Budget for 2024-25 has a clear focus on long-term economic stability, presents a blend of fiscal prudence and targetted interventions.

In her address, Sitharaman said that the fiscal landscape has been reshaped with a reduction in the Fiscal Year 2025 deficit target to 4.5 pc. She added that she has introduced a revised income tax structure designed to ease the burden on individuals. Under the new regime, income slabs have been adjusted to provide relief at various levels those earning between INR 300,000-700,000 will now face a 5 pc tax, with incremental rates for higher earnings. The revised structure maintains the basic exemption limit at INR 300,000, while the old tax regime remains unchanged, offering flexibility for taxpayers.

Under the new tax regime, for salaried individuals and pensioners, there is an increase in the standard deduction from INR 50,000 to INR 75,000. Additionally, the deduction from family pensions is set to rise from INR 15,000 to INR 25,000. These adjustments are anticipated to provide a tax saving of up to INR 17,500 for those within the new regime, offering much-needed financial relief, Sitharaman said.

In her speech, the Finance Minister said that the budget also places a strong emphasis on employment and skills development, aligning with the government’s broader goals of economic inclusivity and growth. A substantial central outlay of INR 26.67 billion has been earmarked for a new package of five schemes targeting 41 million youth over the next five years. This initiative is expected to foster job creation and skills enhancement across the nation, claimed Sitharaman.

She added that one of the standout features of this budget is its focus on job creation, with a new scheme that will reimburse employers INR 3,000 per month for two years for each additional employee hired. This initiative aims to stimulate the creation of 5 million new jobs, Sitharaman said. Additionally, a fresh employment-linked skilling scheme will provide up to INR 15,000 in salary support for first-time employees, based on their enrolment under Employees Provident Fund Organisation (EPFO), further incentivising job creation.

Sirtharaman said that besides incentives to companies to hire more workers, the budget also encourages internships, with up to 10 million youth expected to benefit from placements in the top 500 companies. These internships will come with a monthly allowance of INR 5,000 and a one-time assistance of INR 6,000, providing practical experience and financial support.

However, the finance minister did not address the vital issue of the union government filling up the thousands of vacancies in its various departments, leaving only its incentives for the private sector to do the trick.

Sitharaman also announced a substantial allocation of INR 11.11 trillion for capital expenditure in the Union Budget 2024-25. This allocation, representing 3.4 pc of the GDP, it underscores the government’s commitment to infrastructure development as a key policy priority, she said. Sitharaman highlighted that this significant outlay aligns with previous years’ investments, which have generated a multiplier effect across the economy.

The Budget was met with enthusiasm, particularly among those in the transport sector, who are celebrating the increased focus on infrastructure. The substantial allocation for road development is seen as a game-changer for the industry, offering exciting prospects for growth and improvement. As a result, many are optimistic about the potential benefits, especially in enhancing inter-city bus transport.

“We are thrilled by the continued focus on road and travel infrastructure in the budget, which opens tremendous opportunities for expanding and enhancing inter-city bus transport. The substantial allocation of INR 11.11 trillion  for capital expenditure will greatly improve road infrastructure, boosting the efficiency and reach of our bus networks. With significant investments, such as INR 260 million earmarked for road projects in Bihar and the strategic ‘Purvodaya’ initiative in eastern states, we anticipate a transformative impact on connectivity and travel experiences. These developments align with our dedication to providing reliable, comfortable, and affordable long-distance bus services, supporting India’s economic growth and meeting the evolving needs of travellers and tourists alike,” Kapil Raizada, Co-Founder, IntrCity Smartbus, that operates inter-city buses all over the country, tells Media India Group.

While Sitharaman did not announce any new projects under Railways, but mentioned two new expressways for Bihar, at Patna-Purnia and Buxar-Bhagalpur.

The Budget has spotlighted Bihar’s religious tourism with a series of significant initiatives aimed at enhancing its key destinations. Sitharaman announced plans for the development of the Vishnupad temple corridor in Gaya, the Mahabodhi temple at Bodh Gaya, and the revival of Rajgir, a revered site for Hindus, Buddhists, and Jains. These initiatives are set to bolster Bihar’s appeal as a spiritual hub, attracting pilgrims and tourists while contributing to the region’s cultural and economic revitalisation.

“The government’s policy initiatives to enhance spiritual tourism are a welcome move towards growing domestic tourism as well as making India a global travel destination. We saw a 40-50 pc increase in demand for spiritual tourism last year, for destinations like Varanasi, Ayodhya, and Tirupati. The government’s PRASAD Scheme has led to a remarkable transformation in Varanasi’s tourism sector, attracting an unprecedented 100 million visitors to Kashi Vishwanath Dham after the corridor project completion,” Aloke Bajpai, Chairman, Managing Director & Group CEO Ixigo, tells Media India Group.

The allocation of funds for spiritual tourism has been met with widespread approval, particularly among those invested in the preservation and promotion of religious sites.

“The Finance Minister’s proposals to develop tourism corridors at Vishnupad Temple and Mahabodhi Temple, along with support for Nalanda as a tourist hub, represent a positive leap towards enhancing India’s tourism infrastructure. These initiatives could stimulate local economies and attract more visitors, promising substantial growth for the travel and tourism sector,” Chirag Agrawal, Co-Founder, TravClan tells Media India Group.

“At TravClan, we believe that integrating these developments with advanced technology is crucial. Incorporating digital tools for better visitor management and promoting seamless travel solutions could significantly enhance their impact. While the focus on Odisha’s tourism is commendable, a more comprehensive strategy that leverages technology to address the needs of modern travel agents and improve domestic tourism efficiency would be even more beneficial. The economic policy framework for next-generation reforms is a step in the right direction, but practical implementations will be key to fully realising these goals. Overall, the budget shows great promise for the tourism sector, and adopting innovative solutions could amplify benefits and drive sustainable growth in the industry,” he adds.

“The 2024 budget introduces impactful initiatives for the tourism sector, poised to enhance India’s global appeal as a tourist destination significantly. The government’s decision to promote Nalanda and Orissa, along with the focus on religious tourism, reflects a strategic and holistic approach that will drive economic growth and showcase India’s rich heritage” Aditya Sanghi, CEO & Co-Founder, Hotelogix tells Media India Group.

TAAI disappointed with budget

While some players expressed satisfaction with the budget, others have also voiced significant dissatisfaction. The Travel Agents Association of India (TAAI), India’s oldest and largest association of tour operators, says it is deeply disappointed with the Government of India’s response to its pre-budget requests. Despite being a major driver of economic growth and employment, the sector has been largely overlooked and underfunded.

In a press statement, TAAI says that while it appreciates the reduction in TDS for e-commerce platforms from 1pc to 0.1 pc and a simpler tax regime for foreign shipping companies operating domestically. However, several other requests were not addressed. The lack of consideration for reducing Aviation Turbine Fuel (ATF) prices, which would help lower airfares and boost traveller numbers, is a significant concern. Additionally, the request to rationalise GST rates for inbound, outbound, and domestic travel remains unheeded. TAAI also sought GST input credit for interstate hotel rates to benefit both hotels and passengers, but this request was ignored, it says.

“The Finance Minister’s speech focused on infrastructure development for only two to three religious locations, which are still in their early stages and require substantial investment. Instead of improving existing locations and enhancing connectivity to popular sites, the government appears to be pushing for the development of areas where connectivity is a challenge and interest is lacking in both domestic and inbound tourism markets,” says TAAI.

Beyond tourism, there has also been criticism of the absence of  any relief for the farmers in the budget, despite long-pending demands like guaranteed Minimum Support Prices or MSP for public procurement as well as waiver of farm loans. With assembly elections in farming states like Haryana and Maharashtra round the corner, the opposition parties have roundly criticised the government for ignoring the plight of the farmers as well as putting key rural safety net schemes like the MGNREGS that guarantees a minimum of 100 days of employment per a year to all rural people. The scheme has been hailed as one of the most important and effective social security nets in rural India for most vulnerable people and the absence of any reference to this scheme in Sitharaman’s budgetary speech has rankled the opposition.

Sitharaman has also been accused of being partial and showering funds generously on Bihar and Andhra Pradesh, the two states ruled by local allies of the Bharatiya Janata Party and who can pull the rug from under Modi’s feet anytime, putting his government into minority.