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The Controversial Budget 2024-2025: A Detailed Analysis
The recently presented Budget 2024-2025 by Finance Minister Nirmala Sitharaman has sparked widespread public outrage, even among ardent supporters of Prime Minister Narendra Modi. The budget has been criticized for its perceived bias towards the wealthy elite, while the middle class bears the brunt of increased taxes. This article will delve into the key aspects of the budget, the public's reaction, and the implications for India's economic landscape.
Public Outcry and Social Media Trolls.
The Budget 2024-2025 has been met with unprecedented backlash from the public. Even the staunchest Modi supporters have expressed their dissatisfaction, highlighting the growing discontent with the government's economic policies. Social media platforms have been flooded with memes and critical tweets targeting Finance Minister Sitharaman and the ruling government. Many people, who once hailed the government as a beacon of hope, are now questioning its policies, especially in terms of tax regulations.
One viral tweet by comedian Abhijit Ganguly summed up the public sentiment: "If I earn money, Nirmala taxes it. If I spend money, then also Nirmala taxes it. If I don't earn or spend both and my money is just lying in investment, Nirmala taxes that too!" This sentiment reflects the widespread frustration over the government's approach to taxation in the Budget 2024-2025.
Capital Gains Tax: A Major Point of Contention.
One of the most criticized aspects of the Budget 2024-2025 is the increase in the Capital Gains Tax. The government has raised the Short-Term Capital Gains (STCG) tax from 15% to 20% and the Long-Term Capital Gains (LTCG) tax from 10% to 12.5%. While the exemption limit has been increased from ₹100,000 to ₹125,000, this change has angered investors, particularly those involved in stock market and mutual fund investments.
Additionally, the Securities Transaction Tax (STT) on Futures and Options trading has also been increased. The tax on Futures transactions has been raised from 0.0125% to 0.02%, and on Options, it has been increased from 0.0625% to 0.1%. These changes have been justified by the government as necessary to curb market speculation and instability, as highlighted in the Economic Survey preceding the Budget 2024-2025. However, investors and traders view these changes as detrimental to their interests.
Impact on Property Investments
The Budget 2024-2025 has also made significant changes to the taxation of Non-Financial Assets, such as property. While the Long-Term Capital Gains tax on property transactions has been reduced from 20% to 12.5%, the government has removed the indexation benefits that adjusted for inflation. This means that property owners will now pay tax on the entire profit without considering inflation, leading to higher tax liabilities.
For example, if someone bought a property in 2004 for ₹2 million and sold it in 2024 for ₹12.4 million, under the old system with indexation, they would have paid around ₹1.2 million in tax. However, under the new system in Budget 2024-2025, without indexation, the tax liability would increase to ₹1.3 million. This change has raised concerns that it might discourage investment in real estate and lead to an increase in black money transactions as people attempt to evade higher taxes.
Addressing Unemployment and Skill Development.
The Budget 2024-2025 also attempts to address the pressing issue of unemployment, particularly among the youth. The Economic Survey highlighted the need to create 7.85 million jobs annually until 2030 to meet the demands of the growing workforce. The survey also pointed out that a significant percentage of Indian graduates are unemployable due to a lack of sufficient skills, with the unemployment rate among the 20-24 age group reaching 44.49% in early 2024.
In response, the budget has allocated resources for several schemes aimed at skill development and employment generation. These include support for first-time employment, benefits for employees and employers in the manufacturing sector, and a skilling scheme to train 2 million youth over the next five years. Additionally, the government has promised to provide internship opportunities for 1 million youth in the top 500 companies, a move that has been welcomed by both the ruling party and the opposition.
Taxation and Income Inequality.
One of the most contentious issues surrounding the Budget 2024-2025 is its impact on income inequality. Critics argue that the budget favors the wealthy while burdening the middle class with higher taxes. For instance, the maximum tax rate for individuals earning over ₹1.5 million annually is 30%, the same as for those earning over ₹10 million. This has led to accusations that the government is more concerned with protecting the interests of the wealthy elite, often referred to as the "Adani-Ambani government."
The budget document reveals that 19% of the government's revenue comes from Income Tax, 18% from GST, and only 17% from Corporate Tax. This marks a significant shift from pre-2014 levels when corporate tax was the largest contributor to government revenue. Over the years, the government has gradually reduced corporate taxes, shifting the burden onto individual taxpayers. This has fueled the perception that the government is squeezing the middle class to benefit its billionaire allies.
Budget Allocation and Regional Disparities.
The Budget 2024-2025 has also been criticized for its allocation of funds among different states. Andhra Pradesh and Bihar, in particular, have received substantial allocations, leading to allegations that the government is using the budget to secure political support in these regions. For instance, ₹150 billion has been allocated for the development of Amravati in Andhra Pradesh, and ₹600 billion for various infrastructure projects in Bihar, including expressways, power plants, and airports.
The focus on these two states, especially Bihar, has been interpreted as an attempt by the ruling party to strengthen its political alliances ahead of the upcoming elections. This has led to accusations from the opposition that the budget is more about seat conservation than economic development, a sentiment echoed by Rahul Gandhi, who labeled it a "Seat Conservation Budget."
The Budget 2024-2025 has undoubtedly sparked significant debate and controversy. While it includes measures aimed at addressing unemployment and promoting skill development, it has also been criticized for its perceived bias towards the wealthy and its impact on the middle class. The changes to capital gains tax, property tax, and corporate tax, coupled with the regional disparities in budget allocation, have raised concerns about the government's priorities.
As India moves forward, it remains to be seen whether the Budget 2024-2025 will succeed in addressing the country's economic challenges or whether it will further exacerbate income inequality and public discontent. The government's focus on collecting more revenue from individual taxpayers while providing benefits to large corporations and specific states has left many questioning the fairness and effectiveness of the budget.
Only time will tell if these policies will lead to a more equitable and prosperous India or if they will deepen the existing divides. For now, the Budget 2024-2025 continues to be a topic of heated debate, with its long-term impact on the economy and society yet to be fully realized.- India-Pakistan Separation 1947 Click here
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