In her eighth consecutive Budget, a first in independent India, the Finance Minister has presented a timely document that addresses the short-term challenges faced by the Indian economy while maintaining focus on the long-term goal of making India a developed country by 2047.
After three years of robust growth, FY25 saw some moderation in GDP growth, partly due to election-related disruptions in government spending and challenges in private consumption, investment, and the external sector.
The Budget provided a significant boost to consumption through a welcome income tax relief, which is expected to inject around ₹1 lakh crore into consumers’ hands. This will strengthen private consumption, and is also expected to positively impact investment sentiments.
The Budget is also commendable for its commitment to the goal of ‘Viksit Bharat’ by identifying four key growth engines, — agriculture, MSMEs, investment, and exports.
The Budget introduced a slew of measures in the agriculture sector focusing on skilling, investment, technology, agri-infrastructure, and irrigation.
MSMEs will benefit from enhanced credit availability, easing their financial burden. Building on existing reforms and initiatives, the new National Manufacturing Mission can consolidate gains and act as a force multiplier for boosting ‘Make in India’.
The focus on hard infrastructure continues, with announcements that each infrastructure-related ministry will develop a 3-year pipeline of projects to be implemented in PPP mode. The participation of States in driving infrastructure is a welcome step, as this will help with last mile execution of infra projects.
The Budget also emphasizes investment in human capital.
The fourth growth engine, exports, will be supported by an Export Promotion Mission driven jointly by the Ministry of Commerce, Ministry of MSME, and Ministry of Finance.
The Budget not only outlines these four growth engines but also lays out an expansive reform agenda to accelerate them. Tax reforms will reduce the cost of living and doing business, while regulatory reforms will improve ease of doing business.
Overall, the Finance Minister has succeeded in balancing short-term priorities with a long-term growth vision.
This article was written by Mr Chandrajit Banerjee, Director General, Confederation of Indian Industry. It was first published on 2nd February 2025 in THE HINDU Business Line