10 big-bang policy moves Modi government made in 2024

In a year India navigated the complexities of a rapidly changing global landscape as well as the return to power of Narendra Modi, the Central government took bold, transformative steps which are expected to shape the nation’s future for a long time to come. With ambitious policy reforms across key sectors — ranging from the economy and climate action to digital infrastructure and social equity — the year has seen several big-bang moves that reflect India's growing confidence in its future.

Here’s a look at some of the major policy shifts and initiatives that defined India in 2024:

One Nation, One Election

The One Nation, One Election proposal aims to hold simultaneous elections for the Lok Sabha, state assemblies and local bodies across India. The bill, tabled in the Lok Sabha on December 17, 2024, seeks to amend the constitution to allow joint elections for the Lok Sabha and state assemblies. While the government plans to exclude local body elections for now, these may be phased in later. The BJP has long supported the concept, with Prime Minister Narendra Modi championing it since 2014, citing the need to reduce the frequency of elections, which dominate public discourse and disrupt governance.

Supporters argue that simultaneous elections would alleviate the disruptions caused by frequent polls, saving time, resources, and costs. According to the Confederation of Indian Industry (CII), a synchronised election cycle would boost economic activity by reducing delays in government projects and improving investment. Currently, elections for panchayats, local bodies, state assemblies, and the national government can occupy up to 200-300 days annually, stalling infrastructure development and draining government resources. However, opposition parties, notably Congress, TMC, and AAP, oppose the idea, arguing it would marginalise regional issues and reduce political space for smaller parties. They argue that simultaneous elections would prioritise national issues over local concerns, homogenising political discourse and weakening the influence of states and regional parties.

RBI's directions for microfinance lending

In March, the Reserve Bank of India (RBI) emoved the interest rate ceiling on loans offered by non-bank microfinance institutions (NBFC-MFIs) while making a few other sweeping changes to put all microfinance lenders including banks, small finance banks, NBFC and not-for-profit companies on a uniform regulatory platform.

The RBI also raised the annual household income to Rs 3 lakh for a collateral-free loan to be classified as microfinance loan. Such loans were given to households with an annual income of Rs 1.25 lakh in rural India and Rs 2 lakh in urban and semi-urban areas were classified as microfinance loans.

To protect borrowers from falling into a debt-trap — an issue that keeps haunting the sector — the regulator capped the monthly loan repayment of borrowers, saying that it should not exceed half the monthly household income. Also, no loan can be linked to a lien on the deposit account of the borrower, the RBI said. There will be no prepayment penalty on microfinance loans. The margin cap on lending rates was introduced a decade back to stop NBFC-MFIs from charging usurious rates. The RBI now offered freedom in fixing board-approved lending rates, but warned that those should not be usurious and that the rates would come under its supervisory scrutiny.

Unified Pension Scheme

The Centre announced the Unified Pension Scheme (UPS) for its employees in August, offering new features and a significant change for those who joined the government after 2004 and are currently covered by the National Pension System (NPS). From April 1, 2025, these employees will have the option to shift to the UPS, which guarantees a fixed pension. Under the UPS, employees with 25 years of service or more will receive 50% of their average pay from the preceding 12 months as a pension, adjusted for inflation through dearness allowance. While employee contributions will remain the same, the government will increase its contribution from 14% to 18.5%.

The government claims that over 99% of employees will benefit from switching to the new scheme. Unlike the NPS, where a portion of the fund must be invested in a low-yield annuity, the UPS offers a guaranteed pension of 50%, which is seen as a safer and more predictable alternative, as achieving a similar return under the NPS requires a large corpus due to the low annuity rates in India.

Scrapping of angel tax

In a major move to support the country's growing entrepreneurial ecosystem, the government announced the abolition of angel tax for all investor classes, a significant relief for startups and investors. The announcement, made by Finance Minister Nirmala Sitharaman during her Budget speech for FY 2024-25, aims to foster innovation and ease fundraising efforts.

The changes to the angel tax system will come into effect on April 1, 2025, and apply from the assessment year 2025-2026, creating a more supportive environment for innovation and investment.

Angel tax, which falls under Section 56(II)(viib) of the Income Tax Act, imposes income tax on funding raised by unlisted companies or startups when their valuation exceeds the company's fair market value. Initially in tended to curb money laundering and prevent the inflow of unaccounted funds, angel tax had sparked controversy for hindering entrepreneurial growth. In response to these concerns, the government has introduced various exemptions and relief measures for eligible startups.

BioE3 policy

In August, the Union Cabinet approved the Biotechnology for Economy, Environment and Employment (BioE3) policy, designed to enhance high-performance biomanufacturing within the Department of Biotechnology. The BioE3 policy, as explained by Information and Broadcasting Minister Ashwini Vaishnaw, focuses on fostering innovation-driven research and development and supporting entrepreneurship across key thematic sectors. The initiative is expected to accelerate technology development and commercialisation by establishing biomanufacturing hubs, bio-AI hubs, and biofoundries.

In addition to promoting regenerative bioeconomy models that encourage green growth, the BioE3 policy is designed to foster the expansion of India’s skilled workforce while driving significant job creation. The policy targets key areas such as bio-based chemicals, enzymes, biopolymers, smart proteins, and functional foods. It also focuses on precision biotherapeutics, climate-resilient agriculture, carbon capture and utilisation, and advancing marine and space research. By addressing pressing societal challenges like climate change, food security, and human health, the policy aims to foster a circular bioeconomy that will benefit the country’s economic and environmental future.

Employment-linked scheme

The Employment-Linked Incentive (ELI) Scheme, introduced in the FY 2024-25 Budget, aims to create over 2 crore jobs in the next two years, with a strong focus on skill development. The scheme emphasises the development of transversal skills, such as digital literacy, problem-solving, and communication, to enhance the workforce's readiness to meet evolving industry demands. By focusing on these skills alongside technical expertise, MSMEs (Micro, Small, and Medium Enterprises) can cultivate a highly adaptable and innovative labor force, which is essential for boosting productivity and economic resilience. It also focuses on inclusive growth, particularly by providing more opportunities for women, especially in rural areas where the labor force participation rate (LFPR) for women has increased significantly, from 24.6% in 2017-18 to 41.5% in 2022- 23.

With a target on formalising employment and fostering skill development, the ELI Scheme has the potential to reshape India’s job market, particularly within the MSME sector, which includes over 633.9 lakh enterprises, most of them classified as micro-enterprises. This formalisation process is vital for workforce development and economic advancement, as it addresses India’s relatively low LFPR of 40%, compared to the global average of 60%. By creating more structured, secure jobs, MSMEs can significantly bridge the employment gap, contributing to a sustainable and prosperous economy. As the backbone of India’s economy, MSMEs are well-positioned to play a central role in this transformation, helping to unlock the vast untapped potential of India’s young labor force.

New EV policy

In a major initiative to transform the electric vehicle (EV) landscape in India, the government approved the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) on March 15, 2024. The new policy encourages companies to establish EV passenger car manufacturing facilities in India with a minimum investment of Rs 4,150 crore (USD 500 million). In return, these companies will be allowed to import a limited number of vehicles costing USD 35,000 or more at a reduced customs/import duty of 15% for five years, starting from the date the approval letter is issued. Automobile manufacturers applying for the scheme will receive an eligibility certificate from the government to proceed with their plans.

Under the policy, the manufacturing facilities must be operational within three years from the approval date and must achieve a minimum domestic value addition (DVA) of 25% within this period. Furthermore, companies are required to reach a DVA of 50% within five years. This push for local value addition is designed to strengthen India's EV manufacturing capabilities and reduce reliance on imports, supporting the country’s transition towards a more sustainable automotive industry.

PM Internship Scheme

The Prime Minister's Internship Scheme (PMIS), announced in the Union Budget for 2024, aims to offer internships to 10 million young people over the next five years. This initiative seeks to provide practical, real-world business experience by matching youth with 12- month internships at India’s top 500 companies across various sectors. The scheme is designed to give young people exposure to diverse business environments, helping them gain valuable skills and work experience that can significantly enhance their career prospects.

Eligible candidates will have the opportunity to work in a wide range of industries, including IT and Software Development, Banking and Financial Services, Oil, Gas, Energy, FMCG, Telecom, Retail, Pharmaceuticals, Aviation, Defence, Healthcare, and more. By offering internships in these high-demand sectors, the PMIS provides youth with a chance to build industry-specific expertise and boost their employability. This government initiative is a significant step towards equipping India’s young workforce with the skills needed to thrive in the global job market, ensuring that they gain hands-on experience with some of the country’s most prominent companies.

Indexation benefit for immovable assets removed

The Budget 2024 also announced the removal of the indexation benefits on property sales, eliminating the ability to adjust the purchase price of assets to reflect inflation, except for properties acquired before 2001. This change is expected to result in higher capital gains tax on the sale of long-term assets, as taxpayers will no longer be able to reduce their capital gains by factoring in inflation. Indexation had previously allowed property owners to adjust their investment’s purchase price, lowering their tax liability based on how long they held the asset.

Under the previous system, if inflation outpaced the increase in property value—or in cases where property values declined—taxpayers could claim a capital loss. This loss could be used to offset taxes on other capital gains, potentially reducing their overall tax burden. With the removal of this benefit, individuals selling their properties will no longer have the option to inflate the purchase price for tax purposes, leading to an increase in the capital gains tax they are required to pay.

Rooftop solar power

In February, the Centre unveiled a new scheme to promote the installation of rooftop solar panels as part of India’s commitment to triple its renewable energy capacity by 2030. The program allocates 75 billion rupees (USD 9 billion) in subsidies to help install grid- connected rooftop solar systems on approximately 10 million homes. This initiative allows consumers to reduce their electricity bills during sunny periods and earn money by selling excess power back to the grid. The scheme aims to generate 30 gigawatts (GW) of solar capacity in residential areas, significantly contributing to India’s renewable energy targets.

The scheme is expected to cut 720 million tonnes of CO2-equivalent emissions over the 25-year lifespan of the installed systems. To simplify the process, which was previously complex and fragmented, the government has launched a one-stop online portal for applications, making the installation process more seamless. Additionally, subsidies will be directly transferred to beneficiaries, bank accounts, ensuring a smoother and more efficient implementation of the program.





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