As the Finance Minister presented the Union Budget for the fiscal year 2024-25, India’s economic narrative unfolded as a compelling story of growth, consolidation, and sustenance. The budget, a comprehensive document shaping the financial landscape of the nation, reflects the government’s vision and strategy for steering India towards economic prosperity.
The budget places a strong emphasis on fostering economic growth through strategic investments and policy measures. Initiatives aimed at boosting key sectors such as healthcare, infrastructure, education, and technology underline the government’s commitment to catalyzing growth engines.
Increased allocations for research and development, innovation, and skill development reflect a forward-looking approach to propel India into a knowledge-driven economy.Robust economic expansion with 7.2 percent GDP growth in 2023. Remember that this growth is followed by an equally impressive 2022 (back-to-back growth years).
This growth has been managed with a controlled inflation – a sweet spot combo that developed nations (read USA and Western Europe) are struggling to achieve. India’s growth rate was the second highest among G20 countries (Saudi Arabia currently tops). Our growth rate is twice the average for emerging market economies [World Bank Report]. We will shortly become the fastest growing economy and will remain there for some years to come [S&P Global Market Intelligence]. Even as an erratic monsoon led to a spike in inflation last quarter of 2023, consumer demand, which contributes about 60 per cent of GDP growth, remained strong.
A significant portion of the budget is dedicated to infrastructure development, recognising its pivotal role in economic growth. Investments in roads, railways, airports, and digital infrastructure aim to enhance connectivity, reduce logistics costs, and create a robust foundation for overall development. Indian physical infrastructure growth has been at a mind-boggling pace. From airports to inland water ways to highways, the growth is visible. Infrastructure investment levels the playground between urban and rural and paves the way for a more inclusive growth.
Fiscal consolidation is a critical aspect of the budget, emphasising prudent financial management. Striking a balance between spending and revenue generation, the government aims to reduce fiscal deficit, ensuring financial stability. Measures such as disinvestment, rationalization of subsidies, and efficient resource allocation contribute to the overall consolidation agenda, fostering economic resilience. ‘Banking the unbanked’ and bringing in larger populations into the financial mainstream has been strongly continuing in 2023. Current 3 out of 4 Indians are within the banking umbrella. It was 38 per cent in 2011.
In driving sustainability and slowly climate change, India is emerging as a world leader. 92 per cent of India’s newly added power generation capacities (yes, a whopping 92 per cent) has been on solar and wind – the zero carbon alternate fuel routes. Only 5 per cent of the new ones are coal-based.The budget underscores the importance of sustainability across various dimensions. Environmental sustainability is a focal point, with allocations for green initiatives, renewable energy, and conservation projects. Social sustainability is addressed through inclusive policies, ensuring equitable access to healthcare, education, and social security. Economic sustainability is emphasised by promoting self-reliance, supporting small and medium enterprises, and fostering a resilient economic ecosystem.
The budget places a strong emphasis on health and education, recognising them as fundamental pillars for a thriving nation. Increased allocations for healthcare infrastructure, disease prevention, and healthcare accessibility contribute to building a healthier society. Similarly, investments in education focus on improving learning outcomes, fostering research and development, and creating a skilled workforce for the future.
Acknowledging the transformative power of technology, the budget allocates resources for promoting innovation, research, and digital infrastructure. Initiatives supporting emerging technologies, startups, and digital literacy are designed to position India as a global technology hub.
The budget recognises the importance of India’s role in the global economic landscape. Policies encouraging exports, attracting foreign direct investment, and fostering international collaborations contribute to India’s integration into the global economy.
Our performance in the 2023 Olympics has been our best in several decades. The Chandrayaan’s lunar touch-down and the highly successful G-20 Presidency were two icings on the 2023 Indian cake.
The crux of the game is this country’s new narrative. Failures, frustrations, and fears are a thing of the distant past. 3 per cent growth rates are history. Double-digit inflation is history. Our airports today are more crowded than our railway stations. And we have many such airports.
India is today home to 111 Unicorns. Our first Unicorn was born just 10 years ago.
Strengthening trade across multiple currencies (particularly rouble), vigorously pitching for ‘vocal for local’, improving tourism within India (“See India first” – The Modi slogan), maintaining the pace of infrastructure development, not taking the pedal off from alternate power generation, furthering inclusivity (we still have ¼ population outside the inclusive net), teaching younger India our value by introducing Indian Knowledge Systems (IKS) – all these will ensure that 2024 will be a bigger repeat of 2023.
The India Balance Sheet for 2023 encapsulates a narrative of growth, consolidation, and sustenance. The budget reflects a holistic vision, addressing key challenges while laying the groundwork for a resilient and prosperous future. As the nation navigates through the fiscal year, the implementation of budgetary measures will be closely watched for their impact on India’s economic trajectory.