Consumption led growth, deregulation & reforms is what the Budget attempts smartly
Prime Minister Narendra Modi-led Government’s first full Budget in its third term has deftly managed numbers, stuck to fiscal prudence & consolidation path, reined in fiscal deficit and put the economy on a consumption overdrive by providing huge tax relief of Rs 1,02,660 crore.
The vast middle class taxpayers who are also biggest consumers of goods and services will dance home with the goodies provided by Finance Minister Nirmala Sitharaman.
Relief in personal income tax through rejig in both slabs and rates is the highest provided by any Government in post-Independence history of Bharat. And, there’s a big political message as well.
Stick to the right of centre BJP-led National Democratic Alliance without drifting away. And, you will only be happy. This message is particularly important after Prime Minister Modi-led alliance managed a wafer thin majority in Lok Sabha during last general elections.
Also, Prime Minister Modi, BJP and NDA seem to be in no mood to let up the consolidation drive undertaken in Assembly elections of Maharashtra, Haryana and elsewhere post-Lok Sabha elections in June 2024. Also, in National Capital Region, with Delhi’s Assembly elections set for February 5, BJP has targeted the middle-class voters who are also taxpayers in a big way.
There may be naysayers that point fingers at huge tax exemptions and the strategy to spend Rs 50.65 lakh crore to perk up growth in medium term in especially challenging conditions internationally.
The FM has definitely not announced any ‘run away’ spending but put money where it is seriously required to avoid the much feared ‘middle income trap’, keep the economy competitive, combative and at the same time expand smartly.
Taking stock of regulations and lifting controls has been the corner stone of the Government’s liberalisation programme when economic liberalisation was fine-tuned by Atal Bihari Vajpayee regime two decades back.
Fresh overtures to reform, deregulate and thereby liberalise the economy is something the Modi Government would pursue to realise its full potential as it readies the journey to ‘developed nation’ status free from poverty by 2047.
Focusing on agriculture, investments, micro, small & medium enterprises (MSMES) apart from exports as four growth engines is refreshing and a departure from traditional ways of looking at four economic pillars.
At a time when assorted Left leaning farmer groups hit the ground seeking legal guarantee for minimum support prices (MSP) for their produce, Modi Government has presented a different model to make farming a profitable enterprise, push up rural prosperity and take the famed Bharat growth story to hinterlands.
Apart from sprucing up agricultural credit, mission for pulses, cotton, developing 100 agriculture-based districts, Makhana mission and initiative for vegetables and fruits are noteworthy.
Focusing on micro, small and medium enterprises as growth engine is something that will gel well with the BJP’s core constituency of small businesses. And, it makes eminent sense to take these over 4.5 crore small enterprises up the value chain and align them to export markets to deliver both goods and services.
Fund of Funds for start-ups, prioritising footwear, leather and toys, extending first time entrepreneurship to five lakh scheduled caste and tribes women and ‘make in India’ for the world schemes would expand the landscape of these enterprises that have become hallmark of Bharat’s industry in last ten-odd years.
The two growth engines that are significant are investments and exports given global uncertainties especially in Europe, return of Donald Trump as American President and China and Russia getting closer on geo-political front.
Setting up global capability centres in different states and Bharat trade net for easing documentation related issues for exporters would only add to ease of exporting Bharat’s goods and services to global consumers.
Government led investments in infrastructure, mobilising global resources for large signature projects would trigger private and foreign fund commitments. One big opportunity would be 100 gw nuclear power projects that would eventually replace the heavily polluting coal-fired power plants. Nuclear mission will provide an opportunity for foreign players apart from putting together a regulatory framework given that the sector is being opened up for first time.
For the first time in last few years, Bharat has opened the insurance sector wider for foreign investments with 100 per cent ownership in both life and non-life areas. An interesting rider to push up foreign ownership in insurance companies from current threshold of 74 per cent was to re-invest the entire premium amount in India.
Over all, the budget offers hope, lays firm path to prosperous Bharat. Finance Minister Nirmala Sitharaman did pull off a few punches and did not give her political rivals any room to make substantive points on her ability to steer the economy.
(Author is Director and Chief Executive of New Delhi based non-partisan think tank, Centre for Integrated and Holistic Studies)
