The first budget of the Narendra Modi 3.0 government, presented by Finance Minister Nirmala Sitharaman on Tuesday, marks a strategic approach to addressing employment and regional development, particularly in Bihar and Andhra Pradesh. Despite the demands for Special Status by the Chief Ministers of these states, the budget instead provides a substantial financial boost with nearly Rs 75,000 crore allocated for various projects. This move reflects the post-election strategy of the government, balancing political alliances and economic goals.

Employment-Linked Incentive Schemes

Prime Minister Narendra Modi's government introduced five major schemes under the 'Employment-Linked Incentive' package to address the critical issue of job creation, which has been a focal point of opposition critique.

Direct Benefit Transfer for First-Time Employees: The government will provide a one-month wage up to Rs 15,000 in three instalments to all new employees registered in the Employees' Provident Fund Organisation (EPFO), with a salary cap of Rs 1 lakh per month. This initiative is expected to benefit 2.1 crore youth, incentivizing formal employment across sectors.

EPFO Contribution Incentives: The second scheme offers direct incentives to employees and employers based on their EPFO contributions over the first four years of employment, benefiting an estimated 30 lakh new entrants to the workforce.

Employer Reimbursements for Additional Hiring: Employers will receive up to Rs 3,000 per month for two years towards their EPFO contributions for each new hire, aiming to create an additional 50 lakh jobs.

Skill Development and Industrial Training: The fourth scheme focuses on skilling 20 lakh youth over five years and upgrading 1,000 Industrial Training Institutes (ITIs). This effort aims to enhance employability and meet industry demands.

Internship Opportunities and Allowances: The final scheme under this package offers a monthly internship allowance of Rs 5,000 and a one-time assistance of Rs 6,000 to those interning with the top 500 companies. This initiative targets one crore youth over five years, providing them with real-world business experience funded partially by corporate social responsibility (CSR) initiatives.

Special Assistance to Bihar and Andhra Pradesh

Finance Minister Sitharaman announced significant financial assistance to Bihar and Andhra Pradesh, reflecting the government's commitment to regional development and political alliances.

Bihar: The state will see the development of an industrial node in Gaya on the Amritsar-Kolkata Industrial Corridor, alongside several key road projects including the Patna-Purnea Expressway and the Buxar-Bhagalpur Expressway. Additionally, a new 2400 MW power plant will be established in Pirpainti at a cost of Rs 21,400 crore. These projects, totaling Rs 26,000 crore, aim to address Bihar's infrastructure deficits and boost economic growth.

Andhra Pradesh: The new capital city, Amravati, will receive Rs 15,000 crore in the current financial year through foreign development agencies. The Centre also committed to the early completion of the Polavaram irrigation project and enhancing infrastructure on the Vishakhapatnam-Chennai and Bangalore-Hyderabad industrial corridors. Additional grants will support the backward regions of Rayalaseema, Prakasam, and North Coast Andhra.

Focus on Regional Development: The 'Purvodaya Plan'

The 'Purvodaya Plan' targets the holistic development of Eastern India, encompassing Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh. This initiative includes:

Human Resource Development: Investment in education and healthcare to improve living standards and workforce quality.

Infrastructure Projects: Enhancements in road, rail, and power connectivity to facilitate economic growth.

Economic Opportunities: Creation of industrial hubs and development corridors to attract investments and generate employment.

For Bihar, specific projects under this plan include the development of medical colleges, educational institutions, and new industrial zones, which address the state's long-standing issues of poor infrastructure and inadequate educational facilities.

Opposition's Critique and Government's Defense

Following the budget presentation, opposition leaders labeled it as the 'Kursi Bachao Budget,' suggesting it was designed to secure political support from allies JD(U) and TDP. Prime Minister Modi and Finance Minister Sitharaman defended the budget, emphasizing its inclusive approach and focus on long-term economic development. Modi highlighted the employment schemes as transformative steps to provide job opportunities to millions of young Indians, particularly from rural and economically disadvantaged backgrounds.

Conclusion

The Modi government's first budget of its third term strategically addresses key economic challenges while bolstering political alliances through targeted financial assistance and development projects. By focusing on employment creation, regional development, and infrastructure enhancement, the budget aims to foster inclusive growth and sustain economic momentum. The comprehensive package for Bihar and Andhra Pradesh, alongside broader regional initiatives, reflects a balanced approach to addressing both immediate and long-term needs of the Indian economy.

With significant allocations for employment schemes and infrastructure projects, the budget sets a forward-looking agenda that could potentially transform India's economic landscape. However, its successful implementation will be crucial in achieving the desired outcomes and addressing the opposition's concerns about equitable distribution of resources.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst & Finance Saathi Telegram Channel for Regular Share Market, News & IPO Updates

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX & Upstox.