Introduction:
As India approaches the announcement of the Union Budget 2025-26, it is essential to evaluate the impact of the previous budget (2024-25). The 2024-25 budget aimed to strengthen the country’s economic framework with a focus on infrastructure, employment, fiscal responsibility, and digitalization. But how much of this vision has been realized, and what remains to be addressed?
This blog provides a detailed analysis of the 2024-25 Union Budget, its implementation, and its effects on key sectors. Let’s dive into what was promised, what has been achieved, and what remains pending.
Key Promises of the 2024-25 Union Budget
1. Infrastructure Development
- Allocated Funds: ₹20 lakh crore allocated for infrastructure projects, with a particular focus on highways, railways, and renewable energy.
- Goals: Modernize transportation, improve logistics efficiency, and achieve green energy milestones.
2. Employment and Skill Development
- ₹1.48 lakh crore allocated for education, employment, and skill enhancement initiatives.
- The budget emphasized bridging the skill gap through vocational training and apprenticeship programs.
3. Disinvestment and Asset Monetization
- The government set a target of ₹50,000 crore for disinvestment to reduce fiscal deficits and fund capital expenditures.
4. Digital and Technological Transformation
- A dedicated outlay for expanding digital infrastructure and accelerating India’s shift toward a digital economy.
5. Tax Reforms
- Increased tax exemptions under the new regime to boost disposable income for the middle class.
Implementation Status as of January 2025
1. Infrastructure Progress
- Achievements:
- Significant progress in highway expansion, with major projects nearing completion.
- Renewable energy initiatives like green hydrogen projects and solar parks saw accelerated development.
- Railway modernization is on track, with electrification and new corridors operationalized.
- Pending: Urban metro projects and rural connectivity targets remain behind schedule due to delays in land acquisition.
2. Employment and Skilling
- Achievements:
- Successful rollout of skilling programs under the Skill India initiative.
- Apprenticeship opportunities expanded, creating over 1 million training positions.
- Challenges: Limited enrollment in rural areas and logistical hurdles in executing skill training programs.
3. Disinvestment Goals
- Shortfall: The disinvestment target was reduced by 40%, bringing it down to less than ₹30,000 crore. Key projects, including the privatization of IDBI Bank, remain incomplete.
4. Digital Transformation
- Achievements:
- Increased adoption of digital payment systems and blockchain-based government processes.
- Implementation of AI-driven platforms in education and healthcare sectors.
- Pending: The expansion of digital infrastructure in rural areas is still a work in progress.
5. Tax Reforms
- Achievements:
- Simplified tax slabs under the new regime provided relief to middle-class taxpayers.
- Enhanced compliance through digital filing systems.
- Impact: Improved retail participation in mutual funds and equity markets.
Sector-Wise Impact Analysis
1. Infrastructure and Energy
The focus on green energy has bolstered the renewable energy sector, attracting investments in solar and wind energy projects. However, delays in urban projects and PPP (Public-Private Partnership) models have hindered overall progress.
2. Financial Services
Banks benefited from increased government spending, leading to improved credit growth. However, the fiscal deficit remains a concern for market stability.
3. Manufacturing
The expansion of the Production Linked Incentive (PLI) scheme stimulated investments in electronics and EVs. Companies like Tata Motors and Bharat Forge saw significant growth due to incentives.
4. Technology and Startups
Startups and MSMEs benefited from tax holidays and easier access to credit. Digital India initiatives further boosted tech adoption across industries.
5. Healthcare
Increased spending on public health infrastructure and R&D for pharmaceuticals had a positive impact, but rural healthcare delivery still lags.
Challenges and Missed Targets
1. Fiscal Deficit
While the government prioritized growth, the fiscal deficit widened, raising concerns over long-term sustainability.
2. Disinvestment Delays
The inability to meet privatization targets has constrained the government’s ability to fund capital-intensive projects.
3. Uneven Implementation
Regional disparities in infrastructure development and skilling initiatives highlight the need for better execution strategies.
Lessons for the Upcoming Budget
- Prioritize Execution: Streamlining project implementation to minimize delays.
- Focus on Rural Inclusion: Expanding skilling and digital infrastructure in rural areas.
- Accelerate Disinvestment: Achieving privatization targets to support fiscal stability.
- Strengthen Monitoring: Enhancing transparency and accountability in budget allocations.
Conclusion: A Mixed Bag of Progress
The 2024-25 Union Budget laid a strong foundation for growth, with significant achievements in infrastructure, energy, and tax reforms. However, challenges such as fiscal deficit management, uneven implementation, and unmet privatization targets underscore the need for a more balanced approach in the upcoming budget.
As we await the 2025-26 budget, reflecting on the previous budget’s successes and shortcomings will be crucial in setting realistic expectations and shaping effective policies for India’s economic future.
FAQs
- What were the key promises of the 2024-25 Union Budget? Infrastructure development, skilling initiatives, tax reforms, and digital transformation were key highlights. The government aimed to modernize transportation, reduce fiscal deficits through disinvestment, and accelerate the digital economy while providing tax relief to the middle class.
- Which sectors benefited the most from the budget? Renewable energy, manufacturing, and technology saw significant gains. Renewable energy projects attracted investments, while the Production Linked Incentive (PLI) scheme boosted manufacturing growth, particularly in electronics and EVs.
- What challenges did the government face in implementation? Delays in disinvestment, regional disparities in project execution, and an expanding fiscal deficit were major hurdles. While some sectors progressed, uneven implementation highlighted structural inefficiencies.
- What should investors expect from the upcoming budget? Increased focus on execution, rural inclusion, and fiscal stability measures are likely priorities. The government may also enhance support for green energy, startups, and public health infrastructure.