10 big-bang coverage strikes Modi authorities made in 2024, CFO Information, ETCFO
In a 12 months India navigated the complexities of a quickly altering international panorama in addition to the return to energy of Narendra Modi, the Central authorities took daring, transformative steps that are anticipated to form the nation’s future for a very long time to come back. With formidable coverage reforms throughout key sectors — starting from the economic system and local weather motion to digital infrastructure and social fairness — the 12 months has seen a number of big-bang strikes that mirror India’s rising confidence in its future.
Right here’s a have a look at a few of the main coverage shifts and initiatives that outlined India in 2024:
One Nation, One Election
The One Nation, One Election proposal goals to carry simultaneous elections for the Lok Sabha, state assemblies and native our bodies throughout India. The invoice, tabled within the Lok Sabha on December 17, 2024, seeks to amend the structure to permit joint elections for the Lok Sabha and state assemblies. Whereas the federal government plans to exclude native physique elections for now, these could also be phased in later. The BJP has lengthy supported the idea, with Prime Minister Narendra Modi championing it since 2014, citing the necessity to cut back the frequency of elections, which dominate public discourse and disrupt governance.
Supporters argue that simultaneous elections would alleviate the disruptions brought on by frequent polls, saving time, assets, and prices. In response to the Confederation of Indian Trade (CII), a synchronised election cycle would enhance financial exercise by decreasing delays in authorities initiatives and bettering funding. At the moment, elections for panchayats, native our bodies, state assemblies, and the nationwide authorities can occupy as much as 200-300 days yearly, stalling infrastructure growth and draining authorities assets. Nevertheless, opposition events, notably Congress, TMC, and AAP, oppose the thought, arguing it will marginalise regional points and cut back political area for smaller events. They argue that simultaneous elections would prioritise nationwide points over native considerations, homogenising political discourse and weakening the affect of states and regional events.
RBI’s instructions for microfinance lending
In March, the Reserve Financial institution of India (RBI) emoved the rate of interest ceiling on loans provided by non-bank microfinance establishments (NBFC-MFIs) whereas making just a few different sweeping adjustments to place all microfinance lenders together with banks, small finance banks, NBFC and not-for-profit firms on a uniform regulatory platform.
The RBI additionally raised the annual family revenue to Rs 3 lakh for a collateral-free mortgage to be categorised as microfinance mortgage. Such loans got to households with an annual revenue of Rs 1.25 lakh in rural India and Rs 2 lakh in city and semi-urban areas have been categorised as microfinance loans.
To guard debtors from falling right into a debt-trap — a difficulty that retains haunting the sector — the regulator capped the month-to-month mortgage compensation of debtors, saying that it mustn’t exceed half the month-to-month family revenue. Additionally, no mortgage could be linked to a lien on the deposit account of the borrower, the RBI mentioned. There can be no prepayment penalty on microfinance loans. The margin cap on lending charges was launched a decade again to cease NBFC-MFIs from charging usurious charges. The RBI now provided freedom in fixing board-approved lending charges, however warned that these shouldn’t be usurious and that the charges would come below its supervisory scrutiny.
Unified Pension Scheme
The Centre introduced the Unified Pension Scheme (UPS) for its staff in August, providing new options and a major change for individuals who joined the federal government after 2004 and are at the moment coated by the Nationwide Pension System (NPS). From April 1, 2025, these staff may have the choice to shift to the UPS, which ensures a set pension. Below the UPS, staff with 25 years of service or extra will obtain 50% of their common pay from the previous 12 months as a pension, adjusted for inflation by means of dearness allowance. Whereas worker contributions will stay the identical, the federal government will improve its contribution from 14% to 18.5%.
The federal government claims that over 99% of staff will profit from switching to the brand new scheme. In contrast to the NPS, the place a portion of the fund should be invested in a low-yield annuity, the UPS affords a assured pension of fifty%, which is seen as a safer and extra predictable various, as attaining the same return below the NPS requires a big corpus as a result of low annuity charges in India.
Scrapping of angel tax
In a serious transfer to help the nation’s rising entrepreneurial ecosystem, the federal government introduced the abolition of angel tax for all investor courses, a major aid for startups and traders. The announcement, made by Finance Minister Nirmala Sitharaman throughout her Price range speech for FY 2024-25, goals to foster innovation and ease fundraising efforts.
The adjustments to the angel tax system will come into impact on April 1, 2025, and apply from the evaluation 12 months 2025-2026, making a extra supportive surroundings for innovation and funding.
Angel tax, which falls below Part 56(II)(viib) of the Revenue Tax Act, imposes revenue tax on funding raised by unlisted firms or startups when their valuation exceeds the corporate’s honest market worth. Initially in tended to curb cash laundering and forestall the influx of unaccounted funds, angel tax had sparked controversy for hindering entrepreneurial progress. In response to those considerations, the federal government has launched varied exemptions and aid measures for eligible startups.
BioE3 coverage
In August, the Union Cupboard accepted the Biotechnology for Economic system, Surroundings and Employment (BioE3) coverage, designed to boost high-performance biomanufacturing throughout the Division of Biotechnology. The BioE3 coverage, as defined by Info and Broadcasting Minister Ashwini Vaishnaw, focuses on fostering innovation-driven analysis and growth and supporting entrepreneurship throughout key thematic sectors. The initiative is anticipated to speed up know-how growth and commercialisation by establishing biomanufacturing hubs, bio-AI hubs, and biofoundries.
Along with selling regenerative bioeconomy fashions that encourage inexperienced progress, the BioE3 coverage is designed to foster the growth of India’s expert workforce whereas driving vital job creation. The coverage targets key areas akin to bio-based chemical compounds, enzymes, biopolymers, sensible proteins, and useful meals. It additionally focuses on precision biotherapeutics, climate-resilient agriculture, carbon seize and utilisation, and advancing marine and area analysis. By addressing urgent societal challenges like local weather change, meals safety, and human well being, the coverage goals to foster a round bioeconomy that can profit the nation’s financial and environmental future.
Employment-linked scheme
The Employment-Linked Incentive (ELI) Scheme, launched within the FY 2024-25 Price range, goals to create over 2 crore jobs within the subsequent two years, with a robust give attention to ability growth. The scheme emphasises the event of transversal expertise, akin to digital literacy, problem-solving, and communication, to boost the workforce’s readiness to fulfill evolving {industry} calls for. By specializing in these expertise alongside technical experience, MSMEs (Micro, Small, and Medium Enterprises) can domesticate a extremely adaptable and progressive labor pressure, which is crucial for enhancing productiveness and financial resilience. It additionally focuses on inclusive progress, significantly by offering extra alternatives for ladies, particularly in rural areas the place the labor pressure participation charge (LFPR) for ladies has elevated considerably, from 24.6% in 2017-18 to 41.5% in 2022- 23.
With a goal on formalising employment and fostering ability growth, the ELI Scheme has the potential to reshape India’s job market, significantly throughout the MSME sector, which incorporates over 633.9 lakh enterprises, most of them categorised as micro-enterprises. This formalisation course of is important for workforce growth and financial development, because it addresses India’s comparatively low LFPR of 40%, in comparison with the worldwide common of 60%. By creating extra structured, safe jobs, MSMEs can considerably bridge the employment hole, contributing to a sustainable and affluent economic system. Because the spine of India’s economic system, MSMEs are well-positioned to play a central position on this transformation, serving to to unlock the huge untapped potential of India’s younger labor pressure.
New EV coverage
In a serious initiative to remodel the electrical car (EV) panorama in India, the federal government accepted the Scheme to Promote Manufacturing of Electrical Passenger Vehicles in India (SPMEPCI) on March 15, 2024. The brand new coverage encourages firms to determine EV passenger automotive manufacturing services in India with a minimal funding of Rs 4,150 crore (USD 500 million). In return, these firms can be allowed to import a restricted variety of automobiles costing USD 35,000 or extra at a decreased customs/import obligation of 15% for 5 years, ranging from the date the approval letter is issued. Car producers making use of for the scheme will obtain an eligibility certificates from the federal government to proceed with their plans.
Below the coverage, the manufacturing services should be operational inside three years from the approval date and should obtain a minimal home worth addition (DVA) of 25% inside this era. Moreover, firms are required to achieve a DVA of fifty% inside 5 years. This push for native worth addition is designed to strengthen India’s EV manufacturing capabilities and cut back reliance on imports, supporting the nation’s transition in the direction of a extra sustainable automotive {industry}.
PM Internship Scheme
The Prime Minister’s Internship Scheme (PMIS), introduced within the Union Price range for 2024, goals to supply internships to 10 million younger individuals over the following 5 years. This initiative seeks to offer sensible, real-world enterprise expertise by matching youth with 12- month internships at India’s high 500 firms throughout varied sectors. The scheme is designed to offer younger individuals publicity to various enterprise environments, serving to them achieve useful expertise and work expertise that may considerably improve their profession prospects.
Eligible candidates may have the chance to work in a variety of industries, together with IT and Software program Improvement, Banking and Monetary Providers, Oil, Fuel, Vitality, FMCG, Telecom, Retail, Prescribed drugs, Aviation, Defence, Healthcare, and extra. By providing internships in these high-demand sectors, the PMIS gives youth with an opportunity to construct industry-specific experience and enhance their employability. This authorities initiative is a major step in the direction of equipping India’s younger workforce with the abilities wanted to thrive within the international job market, guaranteeing that they achieve hands-on expertise with a few of the nation’s most outstanding firms.
Indexation profit for immovable property eliminated
The Price range 2024 additionally introduced the elimination of the indexation advantages on property gross sales, eliminating the flexibility to regulate the acquisition worth of property to mirror inflation, aside from properties acquired earlier than 2001. This alteration is anticipated to end in larger capital positive factors tax on the sale of long-term property, as taxpayers will now not be capable to cut back their capital positive factors by factoring in inflation. Indexation had beforehand allowed property homeowners to regulate their funding’s buy worth, reducing their tax legal responsibility primarily based on how lengthy they held the asset.
Below the earlier system, if inflation outpaced the rise in property worth—or in circumstances the place property values declined—taxpayers might declare a capital loss. This loss may very well be used to offset taxes on different capital positive factors, probably decreasing their total tax burden. With the elimination of this profit, people promoting their properties will now not have the choice to inflate the acquisition worth for tax functions, resulting in a rise within the capital positive factors tax they’re required to pay.
Rooftop solar energy
In February, the Centre unveiled a brand new scheme to advertise the set up of rooftop photo voltaic panels as a part of India’s dedication to triple its renewable vitality capability by 2030. This system allocates 75 billion rupees (USD 9 billion) in subsidies to assist set up grid- related rooftop photo voltaic programs on roughly 10 million properties. This initiative permits customers to cut back their electrical energy payments throughout sunny durations and earn cash by promoting extra energy again to the grid. The scheme goals to generate 30 gigawatts (GW) of photo voltaic capability in residential areas, considerably contributing to India’s renewable vitality targets.
The scheme is anticipated to chop 720 million tonnes of CO2-equivalent emissions over the 25-year lifespan of the put in programs. To simplify the method, which was beforehand advanced and fragmented, the federal government has launched a one-stop on-line portal for purposes, making the set up course of extra seamless. Moreover, subsidies can be immediately transferred to beneficiaries, financial institution accounts, guaranteeing a smoother and extra environment friendly implementation of this system.
