As we process the details of Budget 2024, industry experts are offering their insights and analyses on the proposed economic strategies. In this collection of expert quotes, we present a broad spectrum of opinions to help you understand the anticipated effects of the budget on various industries and what it means for the year ahead.
Quote on behalf of Parimal Heda, Chief Investment Officer, Go Digit General Insurance
The Union Budget 2024 has maintained its commitment to fiscal prudence yet announced various tax-friendly measures for the Indian taxpayers. From the perspective of the Insurance Sector, amendment made by the government to clarify various activities in insurance sector as neither a supply of goods nor a supply of services is an extremely positive measure for the sector. This will immensely reduce compliance and ongoing litigation burden and provide overall stability to the sector.
Rationalisation of tax deducted at source (TDS) from 5% to 2% for payment of insurance commission to individual agents will ensure additional income in the hands of such individuals for payments made by the insurers. TDS reduction to 2% for payment of bonus or proceeds made on life insurance policies upon maturity will also ensure higher receivables for individual policyholders.
Abolishment of angel tax for all classes of investors will provide a huge fillip to the start-up sector that in the past had witnessed funding winter. This will bring in the much-needed capital, especially from the foreign investors to the growing start-up ecosystem of the country and aid in their future growth.
Floods are one of the most common natural disasters in India. Identifying key states, the government has taken strong steps towards flood mitigation. As systemic risks of floods get mitigated over time through various measures like flood-controlled structures, it will aid insurance companies in underwriting the risks related to liability and property insurance better going forward.
New assessment model for MSME credit and announcement of credit guarantee scheme will also foster better insurance collaboration with lending companies and aid in better assessment of risks.
From an ancillary benefits point of view, the government’s proposal to boost domestic tourism and unlock economic potential of key destinations will have an ancillary impact on travel insurance as well and boost its uptake as bite-sized travel insurance products will likely become part of travellers’ planning.
The government’s aim to prioritise agriculture research and developing climate-resilient varieties of 32 field and horticulture crops will also have an ancillary effect on the crop insurance segment as losses over medium- to long-term will likely reduce from loss of crop due to climate-related incidents.
The Finance Minister’s financial sector vision and strategy document will also be another keenly watched policy by the BFSI sector to garner better insights on the agenda planned by the government for the remaining decade.
Anish Srikrishna, CEO, TimesPro
“The Finance Ministry’s focus on youth development, job creation and the skilling of millions of young learners will establish a robust foundation for India’s economic strength and position it as a global hub for skills. The comprehensive package of schemes, with an estimated cost of Rs. 2 lakh crores, aims to facilitate employment and skilling initiatives, significantly contributing to job creation and skill enhancement across various candidate categories in the country. The direct benefit transfer of one month’s salary to new entrants in the workforce will help expand the base of formal employment, benefiting 2.1 lakh young people in India.
Higher education has a crucial role in executing these next-generation initiatives. EdTech platforms, in particular, have proven to be key differentiators in democratising education through innovative and cutting-edge technology. They are significantly upskilling Indian youth to enhance employability and contribute to executive learning, thereby creating a substantial upskilled workforce to power the economy and we look forward to Edtech’s continued participation in India’s growth narrative.”
Dr. Payal Kanodia, Chairperson, FICCI YFLO Delhi.
“It is promising to see our vision align with the Modi government’s forward-thinking ideology. As the newly appointed Chairperson of YFLO Delhi, my dedication to women and child welfare has been amplified by this honour. I am committed to reaching 1 million people, focusing on livelihood opportunities, youth skill development, literacy, socio-economic empowerment, environmental conservation, and enterprise development. Modi 3.0’s focus on enhancing women’s workforce participation through initiatives like hostels and women-specific skilling programs is inspiring. At YFLO, in collaboration with Womenovator, we are encouraging private academic institutions to help post-graduate women overcome societal challenges and secure relevant work. Additionally, through M3M Foundation, new initiatives for promoting private investment in post-harvest activities and faster adoption of technologies like nano DAP to boost agricultural productivity will be scaled in Delhi NCR and border areas like Leh and Ladakh, benefiting women in rural areas.”
Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd
This budget can be termed as prudent and holistic in each aspect the government’s decision to allocate ₹10 lakh crore under the PMAY Urban Scheme, targeting 3 crore houses and key focus on rationalising stamp duty for Home byers especially for women, underscores a robust vision for urban development and will help homebuyers would save the significant amounts, making home ownership more accessible.
At macro level sustained infrastructure impetus, reflected in the ₹11.11 lakh crore Capex allocation, we anticipate all these would create a multiplier impact and significant boost in the overall housing sector.
Additionally, a focus on rental housing in industrial parks via the PPP model, digitizing land records in cities will greatly improve transparency and ease property transactions.
Mr. Mohit Jain, Managing Director, Krisumi Corporation
Urban centers, being the drivers of growth, saw major allocation and attention in the Union Budget 2024. More homes under PMAY (U), transit development, creative redevelopment of cities, industrial parks, rental housing for industrial workers, digitization of land records, development of industrial parks and call for moderation in stamp duty, particularly for women buyers are some of the measures that will usher Indian cities towards the path of modernization, enhancing livability and enabling them as growth and employment centers. The real estate sector, as partners in this development, will play a major role in contributing towards the government’s urban vision. The increase in Standard Deduction of Rs 25,000 to Rs 75,000 will be a sentiment booster for the sector, which is on a high and expected to perform well in the near future.
Mr. Rohit Mali, Director, Firefly Fire Pumps
“I am thrilled with the Budget 2024-2025 announcements that demonstrate a visionary commitment to MSMEs and labor-intensive manufacturing, essential pillars for India’s economic growth. The comprehensive package of financial, regulatory, and technological support signals a transformative era for MSMEs, enabling them to scale operations and compete globally.
Moreover, the Credit Guarantee Scheme for MSMEs in manufacturing, leveraging digital footprints for credit assessment, and measures to support MSMEs during stress periods are game changers that will foster innovation, expand access to credit, and sustain entrepreneurial resilience. Enhancements in Mudra Loans, mandatory onboarding on TReDS, and SIDBI branch establishments in MSME clusters will unlock working capital, improve credit access, and extend critical support nationwide.
In essence, this budget lays down a robust roadmap for MSMEs, propelling us towards the vision of ‘Viksit Bharat’. We at Firefly Fire Pumps are excited to align our efforts with these initiatives, fostering an environment where MSMEs can thrive and contribute significantly to India’s economic renaissance.”
N D Mali, Founder, KDM
“The budget will steer India towards a Viksit Bharat by 2047 through a slew of measures that boost consumption. Tax reduction of up to 15% on mobile phones, mobile PCBs, and chargers is expected to boost domestic manufacturing and benefit customers. The budget focus on employment, skilling and middle class will spur consumer spending, which, in turn, would stimulate economic growth. The fiscal prudence of 4.9% and increased outlay of capex will put more money in the hands of people and general consumer sentiment will increase. The budget will further charge the economy of Bharat.”
Hardika Shah, Founder & CEO, Kinara Capital
It is very encouraging to see a number of announcements aimed at bolstering the MSME sector in the Union Budget 2024-25. The Finance Minister’s introduction of a credit guarantee scheme specifically tailored for MSMEs in the manufacturing sector is a particularly promising move. This initiative, which facilitates access to term loans for MSMEs to purchase machinery and equipment without the need for collateral or third-party guarantees, will incentivize formal lending at the last mile by mitigating credit risk. The creation of a self-financing guarantee fund to provide guarantees of up to INR 100 crores is also a game-changer in terms of delivering formal credit to small businesses. Equally commendable is the enhancement of the Mudra Yojana loan limit from INR 10 lakhs to INR 20 lakhs for entrepreneurs The government has already extended 43 crore loans amounting to around INR 22.5 lakh crores, and this move will expand the ambit of the scheme, empowering many more MSMEs with the necessary financial support.
One of the most forward-thinking aspects presented in the Budget with regard to MSMEs is the new assessment model for MSME credit. By enabling the development of capabilities to assess MSMEs for credit, rather than relying on external assessments, the government is paving the way for a more accurate and inclusive credit assessment process, a practice we at Kinara Capital have already adopted. Utilizing the digital footprints of MSMEs represents a significant improvement over traditional assessments based solely on assets or turnover, as the Finance Minister said, and it inclusively targets MSMEs without formal accounting systems, which is a huge step forward in driving financial inclusion at scale.
I am thrilled to see these initiatives, as they align perfectly with our larger vision of a more financially equal landscape by delivering access to formal credit to MSMEs. Our commitment to alternative credit assessment and last-mile facilitation resonates strongly with the government’s push towards financial inclusion for MSMEs through policy, tech, and financing support. We look forward to contributing to and benefiting from these progressive changes, driving growth and stability within the MSME sector.
Bhaskar Majumdar, Managing Partner, Unicorn India Ventures
This is recognition of the growing need for a deeptech economy. However, alongside the R&D Fund, the government should look at the Intellectual Property regime. The much overdue Patent Policy needs to come out soonest to enable maximisation of R&D Fund.
Anil Joshi, Managing Partner, Unicorn India Ventures
The 1000 Cr fund of funds for space tech is testimonial to India’s capability in coming up with breakthrough solutions at low cost. This will certainly help space tech companies to look for much needed early stage capital to get started. This will certainly help mobilise over Rs 4000 Cr, great move. Angel Tax abolishment was long pending, glad that Hon. FM has heard industry voices and has finally abolished it. This will certainly help in expansion of angel investment in India and will take away a lot of burden from the minds of everyone on tax notice for tax paid investment. This will also free up a lot of domestic capital and improve the funding sentiment in a strong way.
Mayuresh Raut, Managing Partner, Seafund
This was an albatross that hindered much needed capital to be deployed to deserving founders. Removal of this dreaded tax will give a huge fillip to startups in the country and free up investors to focus on the investments without having anxiety on how to deal with their implications. A few other things that work well for deep tech focused funds like us. The rooftop solar policy, the pumped storage policy and research and development for small & modular nuclear reactors, Bharat small reactors, R&D for small modular reactors, R&D for new technology in nuclear form a neat troika to alter the energy map of India. Specially on the nuclear side, it positions India to replicate the renaissance that nuclear is experiencing in the US.
Anirudh A Damani -Managing Partner – Artha Venture Fund
The removal of the angel tax will make it significantly easier for us to complete transactions faster and streamline the investment process. Previously, the requirement for income tax officers to understand and assess valuations led to unnecessary conflicts and delays, involving CAs, valuers, and tax officials. Valuation assessments were never meant to fall within the purview of income tax officers, and this change eliminates those complications. This simplification allows us to focus on our primary job—investing in and supporting innovative startups—without the burden of navigating through cumbersome tax regulations.
As a venture capital fund, we see the Indian Budget 2024’s tax reforms as a major boost for the VC, PE, and startup ecosystem. The increase in LTCG tax rate for financial assets to 12.50% and STCG to 20% may pose challenges for listed investments. Still, it’s a significant advantage for other financial products like startups and Alternative Investment Funds. The reduction in LTCG tax from 20% to 12.50% for these investments will result in substantial savings and increased IRR, fostering growth and innovation. While we await the detailed budget, this move is a long-awaited positive development that will make India an even more attractive destination for global investors and drive further growth in the venture capital and private equity sectors.
Ratna Mehta – Managing Partner, Fundalogical Ventures
“Abolition of angel tax will provide a boost to the budding Indian startup ecosystem. It will encourage the flow of capital without tax leakages, especially relevant at a time when the funding crunch is impacting startup liquidity. It is key to establish India as an innovation hub and leader vs follower for new and breakthrough ideas. Focus of the budget is on sustainable growth with employment generation, of continuity and stability. The changes on the capital gains tax structure was unexpected, especially during a time when the fiscal position of the economy seems to be in check.
The logistics and supply chain is the lifeline of India’s growth story. The budget’s identification of infrastructure, manufacturing, and skilling as key areas for long-term development and subsequent allocation is a step in making India the logistics and manufacturing powerhouse of the world. As a fund focused on investing in supply chain and logistics, we are bullish on backing innovative entrepreneurs building the support ecosystem of India’s supply chain. The government’s move to set up E-commerce export hubs to be set up for enabling MSMEs to export their local products is a huge step in the direction of driving growth through innovation and building on new-age trends to drive MSME growth.
Dr. Sanjay Salunkhe, CMD, Jaro Education
“The budget has struck the right balance to enhance the education and employment sector. The Finance Minister’s financial support for loans up to Rs 10 lakh for higher education in domestic institutions is a commendable initiative. This will provide ample opportunities for upskilling the youth and budget emphasis on education, skilling, and job creation will foster long-term growth for corporates like us who have been striving to make youth of the country employable.”