Foundation laid for continued growth

If India is to move away from its lower-middle-income status and realise its dream of becoming a developed economy by 2047, the centenary of our independence, we need to take action on multiple fronts simultaneously.

The first budget of NDA 3.0 does this admirably. Admittedly, the economy has benefited from some tailwinds. GDP growth clocked in at 8.2% in FY 24 and inflation is largely under control at around 4%. Aided by lower prices for imported energy, the trade deficit was lower in FY24 and the CAD was manageable at around 0.7%.

That said, formulating a policy for long-term economic growth for a country as large, complex and diverse as India is a huge challenge. The finance minister should be commended for a job well done.

In her budget speech, the Minister of Finance identified nine areas as priorities: agricultural productivity and resilience, employment and education, inclusive development and social justice, manufacturing and services, urban development, energy security, infrastructure, innovation and R&D and finally the next generation of reforms.

In each of these areas, the Budget has made significant forays. Like the fabulously successful production-related incentives, it has announced employment-related incentives. It has initiated a scheme to train 20 lakh youths over a period of five years and has also given one crore youths the opportunity to intern in 500 of India’s largest companies.

The Economic Survey 2024 was candid about the country’s skills shortage. It pointed out that while 65% of India’s population is under 35, only about 50% of young people are employable straight out of college.

While strengthening the credit system for SMEs, the budget has also announced the creation of a critical minerals mission, which is likely to play a crucial role in the energy transition and e-mobility. Setting up plug-and-play industrial parks in 100 cities, as well as promoting urban areas as engines of growth, are crucial initiatives to boost manufacturing and services.

On the production side, the Budget places a lot of emphasis on helping MSMEs, including providing credit guarantees, higher MUDRA loan limits and helping with trade receivables. Given that MSMEs account for nearly 35% of GVA in India, any measure to help the sector would go a long way.

The decision to develop small and modular nuclear reactors together with industry is an important step towards the right energy mix for Viksit Bharat in 2047.

The centenary of our independence is still more than two decades away, and our journey there may well take several economic cycles. But the path the FM has laid out should serve us well.

Kumar Mangalam Birla
Chairman, Aditya Birla Group