In Budget 2024, The Lok Sabha Election Effect

The first budget of the third term of Narendra Modi government bore a clear imprint of the recent Lok Sabha election, in which the BJP failed to gain majority on its own and had to depend on allies to form government. The reaction went beyond the special packages for Nitish Kumar's Bihar and Chandrababu Naidu's Andhra Pradesh – a compensatory gesture for the blocked special category status that both states had demanded.

The biggest focus of this budget was employment for the country's young people -- across all sectors and including the opportunity for apprenticeship in private companies. The government is also providing a month's salary upto Rs 15,000 to the new recruits through Direct Benefit Transfer.

The deal is sweetened for employers with subsidy on their share of Provident Fund Payments.

One crore people will get jobs in a year under this project, the minister said, making it clear that the BJP considers unemployment and the subsequent concern among the young people as one of the  key reasons for its lacklustre performance.

There is also an effort to boost economy by reworking of slabs in the new tax regime and pushing up the standard deduction from Rs 50,000 to Rs 75,000. This alone can provide an extra 17,500 in the hands of employees, pushing consumption and therefore demand.

The deduction on family pension for pensioners was enhanced from Rs 15,000 to Rs 25,000.

There is also some relief in other areas, with cuts on customs duty on cellphones and chargers, drugs for cancer, seafood, leather and gold. After many years, the government has not increased tax on tobacco.

"My proposals for customs duties intend to support domestic manufacturing, deepen local value addition, promote export competitiveness, and simplify taxation, while keeping the interest of the general public and consumers surmount," Ms Sitharaman said while presenting the budget.

Largescale unemployment and the lack of disposable income in the hands of the people had kept the economy stymied and big projects lie unfinished or under-utilised. A case in point would be infrastructure for which there are few takers. Investments have been subdued and the labour market weak, with millions struggling to hold down low-productive jobs.