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India’s commitment to upskilling; Boosting MSMEs through credit

The Union Budget 2024 had several notable highlights, including a massive outlay for skilling, credit access schemes for MSMEs, and natural farming initiatives, among others.

India’s commitment to upskilling; Boosting MSMEs through credit

Wednesday July 24, 2024 , 5 min Read

Hello,

You win some, you lose some.

Finance Minister Nirmala Sitharaman, in her seventh Budget speech, abolished angel tax in all shapes and forms, bringing a much-needed respite to Indian startups.

Besides, the long-term capital gains on financial and non-financial assets will now attract a taxation rate of 12.5%. This brings down the taxation on gains from sales of shares in startups and unlisted entities by nearly 8%—bringing parity with listed shares. 

The announcement dragged the Indian bourses into the red during the day. The see-saw session saw the NSE Nifty 50 ending 0.12% lower at 24,479.05, while the S&P BSE Sensex settled 0.09% lower at 80,429.04. 

Among the biggest gainers was the space tech sector, with the Budget announcing a venture capital fund with a corpus of Rs 1,000 crore to expand the space economy over the next 10 years. 

So were Andhra Pradesh and Bihar, which bagged mega development deals. 

In a big push for digital marketplaces, the FM reduced the TDS for ecommerce operators from 1% to 0.1% and announced plans to set up ecommerce export hubs in a public-private partnership structure. 

Nonetheless, the Budget fell short of announcing a detailed strategy for AI, leaving India's approach to utilising the next-gen technology's potential somewhat unclear. 

You can check our detailed coverage of Union Budget here. 

ICYMI: No Budget is complete without a meme storm!

Peak Indian Twitter (oops! X) moment!

In today’s newsletter, we will talk about 

  • India’s commitment to upskilling
  • Boosting MSMEs through credit
  • Focus on natural farming

Here’s your trivia for today: Who presented India’s first-ever Budget?


Union Budget

India’s commitment to upskilling

The latest Economic Survey indicated that a large portion of India's youth were unemployable as they lacked the necessary skills that industry requires—a problem Finance Minister Nirmala Sitharaman set out to address in her Budget.

Industry stakeholders lauded this year’s Budget, which earmarked Rs 1.48 lakh crore for education, employment, and skilling, and introduced a package of schemes to train the incoming workforce and help first-time employees.

Bolstering employment:

  • The FM announced a package of five schemes and initiatives to facilitate employment, skilling, and other opportunities for 4.1 crore youth over a five-year period, with an allocation of Rs 2 lakh crore.
  • The government will launch a comprehensive scheme to provide internship opportunities in 500 top companies to one crore youth in five years. However, the government should allow all employers to benefit from the scheme, believes Shantanu Rooj of TeamLease Edtech.
  • Sitharaman also announced financial support for loans of up to Rs 10 lakh for higher education in domestic institutions, as well as a planned revision to the Model Skill Loan Scheme to facilitate loans up to Rs 7.5 lakh with a guarantee from a government-promoted fund.
skilling, employment

Union Budget

Boosting MSMEs through credit

In a move to boost India’s MSME sector, the Budget announced extensive measures aimed at easing credit access, enhancing financial stability, and supporting global competitiveness for MSMEs.

The new initiatives introduced for the MSME sector include a new credit guarantee scheme, enhanced Mudra loans, and provisions for public sector banks to develop credit assessments, among others.

Access to financing:

  • A credit guarantee scheme for MSMEs that does not require collateral would not only alleviate the financial barriers that MSMEs face but also promote technological advancement and productivity, believes Abhishek Gupta, Founder and Managing Partner of Pierag Consulting LLP. 
  • In contrast, the outlay for the Guaranteed Emergency Credit Line facility for MSME borrowers has been slashed to Rs 9,813 crore in the Budget for 2024-25 from Rs 14,100 crore in the previous fiscal year.
  • The government also plans to establish ecommerce export hubs in public-private partnership mode to help MSMEs and traditional artisans access international markets.
MSME

Union Budget

Focus on natural farming

The Union Budget allocated Rs 1.52 lakh crore for the agricultural and allied sectors to boost productivity and promote natural farming. According to Sitharaman, one crore farmers across India will be initiated into natural farming supported by certification and branding in the next two years.

Towards organic agriculture:

  • This year's Budget allocation with a focus on natural farming could benefit small and middle-scale farmers, bringing them under an organised set-up, says Satyajit Hange, Co-founder of Two Brothers Organic Farms. 
  • The industry also lauded the government’s push towards ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower as announced in the interim Budget.
  • The implementation of digital public infrastructure (DPI) within three years will ensure that farmers and their lands are comprehensively covered, leading to better resource management, believes Sat Kumar Tomer, Founder and CEO, Satyukt Analytics.
Budget agri-sector

News & updates

  • Meta AI: Meta is releasing Llama 3.1, the largest-ever open-source AI model, which it claims outperforms GPT-4o and Anthropic’s Claude 3.5 Sonnet on several benchmarks. CEO Mark Zuckerberg now predicts that Meta AI will be the most widely used assistant by the end of this year, surpassing ChatGPT.
  • No deal: Wiz ended talks with Google parent Alphabet on a proposed $23-billion deal, where the Israeli cybersecurity startup would have become the US tech giant’s largest-ever acquisition. Wiz CEO Assaf Rappaport said it would now focus on an IPO and growing the business to generate $1 billion in annual revenue.
  • Air show: The UK’s Farnborough Air Show generated deals at list prices worth $50.8 billion across its first day. Airbus performed a public display of its soon-to-launch A321XLR for the first time since it was certified, as airlines eagerly await deliveries of the long-haul narrow-body jet later this year.


Who presented India’s first-ever Budget?

Answer: James Wilson. The Scottish economist presented the first Indian Budget 160 years ago in 1860.


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