The Indian government's recent budget announcement has set a significant capital expenditure target of ₹11.11 lakh crore, accounting for 3.4% of the country's GDP. This budget aims to bolster economic growth through various initiatives, particularly focusing on infrastructure, education, and agriculture, while also providing financial support to states like Bihar and Andhra Pradesh.
Support for Bihar
The budget allocates substantial resources to expedite Bihar's requests for external assistance from multilateral development banks, which are essential for fostering economic development. Key initiatives for the state include:
- New Airports and Medical Institutes: Investments in infrastructure to enhance connectivity and healthcare services.
- Sports Infrastructure: Development of facilities to promote sports and physical education.
- Temple Corridors: Construction of two temple corridors in Gaya and Bodhgaya, modeled after the Kashi Vishwanath Corridor, to boost religious tourism.
- Infrastructure Projects: A significant allocation of ₹26,000 crore for expressways and a bridge over the Ganga river, along with a new 2400 MW power plant costing ₹21,400 crore. The combined investment in Bihar is projected to exceed ₹50,000 crore.
Financial Support for Andhra Pradesh
Andhra Pradesh is set to receive ₹15,000 crore in the current financial year, with additional funds planned for future years. This support will focus on:
- Amaravati Development: Funding aimed at developing the capital city.
- Pollavaram Irrigation Project: Financial assistance for irrigation projects to enhance agricultural productivity.
Corporate Tax Revisions
The budget introduces a reduction in corporate tax for foreign companies from 40% to 35%. This change is expected to attract more foreign investments, particularly from companies looking to relocate from China, positioning India as a potential new production hub. This move is anticipated to create more job opportunities and stimulate economic growth.
Focus on Education and Skilling
A significant emphasis is placed on education and employment, with ₹1.48 lakh crore allocated for skill development. The government plans to:
- Skill approximately 20 lakh youth over five years.
- Provide a one-month wage (up to ₹15,000) to new entrants in the workforce across all sectors.
- Encourage internships in top companies, offering an allowance of ₹5,000 per month and a one-time assistance of ₹6,000.
The Purvodaya Scheme
To promote comprehensive development in the eastern states, including Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh, the Purvodaya scheme focuses on:
- Human Resource Development: Enhancing the skills and capabilities of the workforce.
- Infrastructure Development: Investing in critical infrastructure to support economic growth in these regions.
Agriculture and Rural Development
The budget allocates ₹1.52 lakh crore for agriculture and allied sectors, with a focus on:
- Research and Development: A comprehensive review to improve agricultural productivity and develop climate-resilient varieties.
- Natural Farming Initiatives: Introducing 1 crore farmers to natural farming practices over two years.
Additionally, ₹2.66 lakh crore is earmarked for rural development initiatives, aiming to uplift rural communities.
Fiscal Outlook for FY25
The budget estimates for FY25 indicate a fiscal deficit lowered to 4.9% of GDP, with a goal to reduce it further to below 4.5% by FY26. Key figures include:
- Estimated Revenue: ₹32.07 lakh crore.
- Estimated Expenditure: ₹48.21 lakh crore.
- Market Borrowing: Decreased to ₹14.01 lakh crore from ₹15.43 lakh crore for FY24.
This budget reflects a strategic approach to economic recovery and growth, emphasizing infrastructure development, education, and support for states, while also positioning India as an attractive destination for foreign investment.
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