Union Budget 2024: Focus on Rural Economy, Agri-Infra

New Delhi, Jul 19 (PTI) With Finance Minister Nirmala Sitharaman gearing up to present the first Budget of the Modi 3.0 government, industry players expect that the government would come out with proposals to boost the rural economy and earmark adequate funds for agri-infrastructure development.

On Tuesday, Sitharaman will present the Union Budget 2024-25, the first major economic document of the Modi 3.0 government in the Lok Sabha.

The government has a capital expenditure target of Rs 11.1 lakh crore in the Interim Budget Estimate (IBE), said Ashish Modani, Icra's senior vice president and co-group head - corporate ratings.

He said against the embedded growth target of 17.1 per cent for FY2025 (over the preceding fiscal), the government's capital expenditure declined by 14.4 per cent on a year-over-year basis to Rs 1.4 lakh crore in April-May FY25 amid a volatile monthly trend.

"Further, the capex numbers are typically low in the monsoon months, thereby suggesting that the required monthly run-rate in the second half of FY2025 would be quite sharp to achieve the IBE for the fiscal. Consequently, ICRA believes that the government is likely to retain its capital expenditure target of Rs 11.1 trillion for FY2025," Modani said.

Seeking lower customs duties on medical devices, Pavan Choudary, Chairman of Medical Technology Association of India (MTaI), said the gross customs duties on such devices coming in India is between 13 per cent and 16 per cent, whereas in neighbouring countries like Sri Lanka and Nepal, it less than 5 per cent.

The difference in duties creates opportunities for smuggling.

It is one of the important reasons why customs duties on medical devices should be brought down. "The other reason concerns patient affordability which is a top priority of the government. A consistent customs duty reduction will go towards improving affordability and access," Choudary said.

"The industry seeks immediate government assistance by removal of health cess (at the minimum, bring down to 2.5 per cent) and rollback of the additional 5 per cent health cess ad valorem imposed on imported medical devices in the upcoming Union Budget 2024-25," Sanjay Bhutani, Managing Director at Bausch & Lomb India & SAARC, said.

Akshay Munjal, Founder and CEO of Hero Group firm Hero Vired, said as India aspires to become a USD 5 trillion economy, it is crucial that education, health and skill development remain at the forefront of the national agenda in the upcoming Budget.

"Developing a strong tech infrastructure is critical for fueling growth and job creation in high-demand sectors like AI, cybersecurity and big data. Our policies must equip our workforce with essential digital skills and technologies, enabling India to spearhead global advancements," Munjal said.

Sanjay Kumar Sinha, founder and managing director of Chaitanya Projects Consultancy, anticipates robust support for sectoral growth in the upcoming Budget.

He expects more incentives for technology and leveraging cutting-edge tools like AI (Artificial Intelligence) and IoT (Internet of Things) as these are crucial for the economy.

Founder and CEO of Gurugram-based property brokerage firm VS Realtors Vijay Harsh Jha said the government should raise the tax deduction limit for interest payment on home loans from the existing Rs 2 lakh a year to Rs 5 lakh per year. This, he said, will add momentum to the demand in the segment.

"This is especially crucial given the substantial rise in housing prices and mortgage rates over the past 1-2 years," Jha said.

Madhusudan G, CMD of Sumadhura Group, expects the Union Budget to introduce progressive reforms to meet rising demands for residential and commercial spaces.

"Our top priorities include tax breaks for affordable housing projects to boost stagnant sales in the sector. Also, a revival of the Credit-Linked Subsidy Scheme will make homeownership more accessible," he said.

Shreeram Bagla, MD of Annapurna Swadisht, cited data and said the FMCG industry has witnessed a growth of 6.5 per cent in volume terms on a country-wide basis. Rural areas surpassed the growth in urban areas for the first time in five quarters.

"So, the green shoots of recovery in the rural market are clearly visible. We expect that in the upcoming Budget for 2024-25, finance minister Nirmala Sitharaman is likely to announce measures to boost rural jobs, create adequate agricultural infrastructure besides laying increased thrust on infrastructure sector leading to better roads and connectivity," Bagla said.

Sudeep Chandran, Founder and CEO of YOURS, a platform for fractional ownership of luxury second homes, said allocating funds for infrastructure development in metros, suburbs, tier II cities, and holiday destinations is essential to drive real estate demand.

"Additionally, co-ownership and fractional ownership are becoming increasingly popular in India. The government should implement better rules and regulations, along with incentives, to regulate and promote these innovative property ownership models," he said.

Rakesh Kumar, Founder of Square Insurance, said increasing the tax exemption limit on health insurance premiums to Rs 75,000 would make healthcare more accessible.

Further, he said that offering tax deductions for home insurance premiums under Section 80C of the Income Tax Act will encourage homeowners to protect their assets.

To enhance cybersecurity, he noted, "Tax incentives for cyber insurance, particularly for SMEs, are essential."

Earlier this week, Sitharaman participated in a traditional 'halwa' ceremony, marking the final stage for preparation of the Union Budget 2024-25 to be unveiled on July 23.