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(GIST OF YOJANA) SALARIED CLASS AND CONSUMERS: KEY TO VIKSIT BHARAT

(SEPTEMBER-2024)

SALARIED CLASS AND CONSUMERS: KEY TO VIKSIT BHARAT

Context:

The third-largest economy in the world with a GDP of $5 trillion in the next three years, $7 trillion by 2030, $10 trillion by 2033, and set a higher goal of becoming a ‘developed country’ by 2047, then it needs a strong virtuous cycle. This is the cycle where one positive leads to another positive, and the process continues for betterment, first at the micro-level and then at the macro-level. In this entire cycle, there are two important categories of people: salaried and consumers. Are these two different? The answer is that all salaried people could be consumers, but not all consumers need to be salaried.

Initiative taken by the government:

Standard Deduction: The Budget proposed raising the standard deduction by 50 per cent to Rs 75,000 from Rs 50,000. After a gap of 13 years, this deduction was re-introduced by then Finance Minister Late Arun Jaitley in the budget of Fiscal Year 2018-19 and the amount was Rs 40,000 in lieu of the exemption in respect of transport allowance (Rs 19,200 per annum), and reimbursement of miscellaneous medical expenses (Rs 15,000 per annum) which means a net gain of Rs 5,800, but most importantly, this resulted in reducing paper work and compliance.
Change in New Income Tax Regime: Neither there is any change in the number of slabs nor in the rates. However, three slabs have been expanded. The previous slab of Rs 3 lakhs to Rs 6 lakhs will now be Rs 3 lakhs to Rs 7 lakhs, while the rate remains at 5 per cent. Similarly, the slab of Rs 6 lakh to Rs 9 lakh will now be Rs 7 lakh to Rs 10 lakh, with a rate of 10 per cent. Slab of Rs 9 lakh to Rs 12 lakh is now contracted to Rs 10 lakh to Rs 12 lakh at a rate of 15 per cent.
Employment Linked Incentive (ELI) Scheme: In order to add more and more employed persons to the category of salaried persons, a three-tiered ELI scheme has been proposed:
Scheme A: Under this, a one-month wage up to Rs 15,000 will be given to all persons newly entering the workforce in all formal sectors. The amount will be given in 3 instalments through the direct benefit transfer.
Paid Internships Scheme: This could help in temporary addition in persons getting fixed income every month. It aims to provide paid internship opportunities in 500 top companies to 1 crore youth in 5 years. They will gain exposure for 12 months to the real-life business environment, varied professions and employment opportunities. The participant will geta monthly stipend of Rs 5,000, along with one time assistance of Rs 6,000.

Conclusion

The journey to achieve ‘Viksit Bharat’ is not just about higher allocation in the budget, but also to ensure enhancing regular income along with a gradual increase in consumption over a period of time. These two acts play a key role in the virtuous cycle. The Union Budget 2024-25 appears to have understood this philosophy and acted upon it.