Prioritising inclusivity and fiscal prudence

There was a lot of anticipation before this Budget. As the first major public policy announcement of the new government, it was expected that the Budget would lay down a plan of action for the following five years of the government’s approach towards the larger national vision of Viksit Bharat@2047. Further, while the economy is performing well, there were admittedly a few areas that merited attention, employment being the foremost.

The Finance Minister announced that the Budget would focus on employment, skilling, MSMEs, and the middle class. With the nine priority areas that followed, she articulated the economic policy framework through which the government wishes to bring in the transformation that would accelerate the journey towards Viksit Bharat@2047. By addressing the near-term challenges while keeping an eye on the long term, the speech has ensured that this Budget is growth-oriented, inclusive, and provides opportunities for all sections.

Areas of focus

The first is the focus on agriculture. The world over, the impact of climate change is seen the most in the farm sector. With rise in inflation of agri-products being linked to adverse climate events, it was pertinent that India double up efforts on developing climate-resilient seed varieties. The Budget brings in this focus with a comprehensive review of agri-research set up in the country to increase productivity and introduce climate-resilient seed varieties.

Additionally, national missions for pulses and oilseeds will be strengthened and greater impetus would be given to set up large-scale clusters for vegetable production near major consumption centres. These steps would help in building self-reliance, bring in stability in the inflation trajectory and benefit consumers by arresting the occasional price spikes due to underdeveloped and fragmented supply chains domestically.

The second is the priority accorded to employment and skilling. The government has announced a comprehensive package of three schemes that offer employment-linked incentives. These will boost employment generation both in the manufacturing and services sectors and benefit lakhs of youth.

Additionally, the initiative to set up many more working women’s hostels in the country and creches for care support in partnership with the private sector will facilitate greater participation of women in the workforce. An increase in female labour force participation rate can be an additional lever for our country’s growth, and FICCI had suggested strengthening of the care economy ecosystem in the country in its economic agenda for the new government.

The third is the comprehensive set of measures outlined for the MSME sector. Finance is the lifeblood for any industrial unit, and this is more so for the MSMEs. In a national survey that FICCI undertook last year amongst MSMEs, availability of credit on reasonable terms and without collateral were the key asks. By announcing a new credit guarantee scheme for MSMEs in the manufacturing sector, guiding public sector banks to develop internal assessment models for credit evaluation of MSMEs basis their digital footprints, and having a mechanism in place that provides timely credit to MSMEs even during periods of stress will go a long way to boost MSME units. FICCI is of the view that with these changes, underwriting models will improve and the cost of credit to MSMEs will come down.

Another notable inclusion, which is also a FICCI suggestion, was the lowering of annual turnover threshold for registration on TreDS platform from ₹500 crore to ₹250 crore.

The fourth area includes proposals that focus on sustainability. Promotion of small modular reactors for nuclear energy, continuous support to the national rooftop solar programme, dedicated projects for water supply, sewage treatment and solid waste management in large cities are all welcome measures. Additionally, the setting up of a critical minerals mission is an important step in securing the raw material base for India’s green energy transition.

Deftness on fiscal side

Finally, the government needs to be congratulated for the deftness displayed on the fiscal side. The downward revision in projected fiscal deficit for 2024–25 to 4.9% from 5.1% announced in the Interim Budget reflects the government’s prudent fiscal management.

The Budget has articulated a realistic and actionable policy framework for India’s continued transformation into a developed nation by 2047, and one that is inclusive and sustainable.