Budget lays foundation for Viksit Bharat by 2047: Kumar Mangalam Birla
- The government has sensibly avoided reckless freebies and sops, preferring to focus instead on targeted spending on skill development, job creation, and farmer welfare. A package of measures to help MSMEs tide over hurdles to borrowing is laudable, Birla said.
All budgets are tough balancing acts in India, but the FY25 budget presented by finance minister Nirmala Sitharaman was a remarkable exercise in balancing economic growth with fiscal prudence. While India's macro-economic backdrop was favourable ahead of the budget, it would not be wise to fritter away the hard-fought gains of fiscal consolidation just as it was being recognised worldwide. And yet there was a need to address several constituents—women, youth, farmers, rural and urban poor, consumers, startups, and of course, domestic industry.
It was, therefore, a pleasant surprise to see the budget delivering on all key fronts. It was fiscally prudent, with this financial year’s budget deficit target estimated at 4.9% of GDP, lower than the 5.1% estimated in the interim budget in February this year. The government has sensibly avoided reckless freebies and sops, preferring to focus instead on targeted spending on skill development, job creation, and farmer welfare. A package of measures to help MSMEs tide over hurdles to borrowing is laudable, as it provides the much-needed support to a section of industry that is on the fringes of the formal economy.
For India to transform into a developed economy, a massive spurt in job creation is inevitable. While the industry is doing its utmost through new capacities and expansions, it is heartening to see the government step in with some timely support. The incentives to first-time employment in manufacturing available to both employers and employees is expected to help increase jobs by 50 lakh.
Rapid creation of infrastructure through the building of new highways, expressways, and airports is a major feature of prime minister Narendra Modi’s economic programme.
This budget does not disappoint, with capex spending at ₹11.1 trillion estimated at 3.4% of GDP. The government’s sustained thrust on capital expenditure has been a key driver of economic growth over the last decade. Apart from spending on roads and railways, the budget also sets aside a substantial portion of money for infrastructure development in two of India’s largest states, Andhra Pradesh and Bihar.
The budget also announced expeditious construction of 1 crore houses for the urban poor through an investment of ₹10 trillion and targets the setting up of 12 industrial parks near cities to facilitate industrial investment. A National Critical Mineral Mission to expedite rare earth mineral exploration is a commendable move to ensure self-sufficiency in this crucial sector.
These new initiatives will not only drive consumption of industrial products like cement, and steel, but also promote rapid urbanization.
Tax rationalization and cuts in import duties on precious metals, mobile phones and chargers are expected to sustain consumer demand. Changes under the new tax regime are estimated to put an additional ₹17,500 per month in the hands of the salaried class.
Lower duties on imported copper and other metals will enable affordability of metals crucial for industrialization and energy transition.
India is poised to retain its position as the world’s fastest-growing major economy and this budget helps clear the way ahead with a number of path-breaking moves and initiatives.
Finance minister Sitharaman has promised an overhaul of the Income Tax Act, 1961 to make it simple, lucid and user-friendly. The government has also promised measures to rationalize the GST rates and simplify foreign direct investment (FDI) rules to encourage investments. This, along with the reduction in taxes for foreign companies, is a signal that the country remains attractive to foreign investors wishing to set up shop here.
The unpopular angel tax has been abolished and a commitment has been made to increase the size of the space economy by five times. A venture capital fund worth ₹1,000 crore has been set up for this purpose.
The finance minister has also indicated her intent to reform factor markets—land and labour. That could trigger massive productivity gains in the economy.
The budget promises stability, continuity and consistency. It ushers in dynamism through focused, targeted initiatives aimed at capacity creation. It eases rules for MSMEs while delivering infrastructure build-up across the country. And most importantly, it lays the foundation for realising the ambitious target of Viksit Bharat by 2047.
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