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Budget 2024: India slashes import tax on gold, silver, focuses on job creation
Finance Minister said the government will spend $32 billion on rural development while unveiling new schemes for states led by two key allies
FILE PHOTO: India's Finance Minister Nirmala Sitharaman. Photo: Reuters
India will spend $24 billion on job-spurring efforts over the next five years and boost rural spending, Finance Minister Nirmala Sitharaman said on Tuesday in the 2024/25 budget, which was unveiled after last month's election setback for the government.
Sitharaman said on Tuesday that import duties on gold and silver would be slashed to 6%, a move that industry officials say could boost retail demand and help curtail smuggling in the world's second-biggest bullion consumer.
Higher demand for gold from India could support global prices, which hit a record high earlier this year, although that could increase India's trade deficit and weigh on the ailing rupee.
"To enhance domestic value addition in gold and precious metal jewellery, I propose to reduce customs duties of gold and silver to 6%," Sitharaman said during her budget speech.
She also announced an import duty exemption for 25 critical minerals, including lithium. India has been exploring ways to secure supplies of lithium, a critical raw material used to make electric vehicle batteries.
Job creation, rural development
Analysts blamed distress in rural areas and a weak job market for a poor poll showing that cost Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) its absolute majority, making it dependent on allies to form a government.
The government will spend 2.66 trillion rupees ($32 billion) on rural development, Sitharaman said, while unveiling new schemes for states led by two key allies.
To spur employment, it will roll out incentives for companies, including those in manufacturing, along with programmes to improve skills and provide subsidised loans for higher education, Sitharaman added.
India's official unemployment rate in urban areas is 6.7%, but private agency the Centre For Monitoring Indian Economy pegs it higher, at 8.4%.
Government data this month showed 20 million new job opportunities generated each year since fiscal 2017-18, but private economists said self-employment and temporary farm hiring accounted for much of the figure.
India's consumer stocks rose 1.5% to a record high.
The government will also maintain spending on long-term infrastructure projects, at 11.11 trillion rupees, offering long-term loans of 1.5 trillion rupees to states to fund such expenditure.
Some of these loans will be linked to milestones reached in reform, covering areas such as land and labour, which Sitharaman said the government intended to push in its third term.
In a concession to the government's allies, Sitharaman said it would hasten loans from multilateral agencies for the eastern state of Bihar and the southern state of Andhra Pradesh.
The government plans to cut its fiscal deficit to 4.9% of gross domestic product in 2024-25, below the 5.1% figure in February's interim budget. It reduced its gross market borrowing marginally to 14.01 trillion rupees. ($1=83.6410 Indian rupees)
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