Dr. Arun Singh

Global Chief Economist

Dun & Bradstreet

From uplifting the underprivileged to energizing the nation's infrastructure development, the Government has outlined its vision to propel India's advancement and achieve a 'Viksit Bharat' by 2047 in this interim budget. Noteworthy positives in the budget include achieving a lower-than-targeted fiscal deficit for FY24 and setting a lower-than expected fiscal deficit target for FY25, proposing dedicated commodity corridors and port connectivity corridors, providing long-term financing at low or nil interest rates to the private sector to step up R&D in the sunrise sectors.

Achieving a reduced fiscal deficit of 5.8% in FY24 and projecting a lower than- anticipated fiscal deficit of 5.1% are positive credit outcomes for India. This showcases the country's capability to pursue a high-growth trajectory while adhering to the fiscal glide path. Despite committing to a lower fiscal deficit, the government has allocated a substantial capital expenditure of `11.1 trillion, marking a 50% increase from FY23. The enhancement of port connectivity, coupled with the establishment of dedicated commodity corridors (energy, mineral and cement), is poised to enhance manufacturing competitiveness. This strategic move aims to fulfil India's export targets and substantially reduce logistics costs.

According to a Government of India report, India successfully lowered its logistics cost to 7.8-8.9% during FY22, compared with 8.7-9.9% in 2011- 12. This aligns with the national logistics policy, aiming to bring down costs from 14% to the global best practices benchmark of 8%. Offering long-term, zero-interest financing to the private sector in sunrise sectors is expected to catalyze significant research advancements. This initiative is particularly noteworthy considering that, in FY21, India allocated 0.64% of its GDP to research and development, with the private sector contributing 36.4%.

• Three pivotal railway corridor initiatives, encompassing energy, mineral & cement corridors, port connectivity corridors and high traffic density corridors, are set to be executed under the PM Gati Shakti programme, fostering multi-modal connectivity, enhancing logistics efficiency and lowering costs.
• A corpus of Rs 1 bn will be established with 50-year interest-free loans to provide long-term financing or refinancing with long tenors and low or nil interest rates to scale research and innovation in sunrise domains.
• The Government plans to set up coal gasification and liquefaction capacity of 100 MT by 2030, which will help reduce imports of natural gas, methanol and ammonia.
• The Government plans to formulate a strategy of “Atmanirbhar Oilseeds Abhiyaan” to achieve self-reliance for oil seeds such as mustard, groundnut, sesame, soybean and sunflower.
• The Government will launch a new scheme for strengthening deep-tech technologies for defence purposes and expediting 'atmanirbharta'
• The Government has planned to encourage vaccination for girls in the age group of 9 to 14 to prevent cervical cancer.
• In the next five years, an additional 20 mn houses will be undertaken as part of PM Awas Yojana (Grameen) to meet the demand of rural families.
• Allocation for PM Vishwakarma scheme has been hiked to Rs 48.2 bn in FY25 (BE), compared with Rs 9.9 bn in FY24 (RE).
• The Government plans on expanding and strengthening the e-vehicle ecosystem by supporting manufacturing and charging infrastructure. Greater adoption of e-buses for public transport networks to be encouraged through payment security mechanisms to assure long duration gross cost contractors of on-time payment.
• There has been an increase in budgetary allocation for the Modified Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India to Rs 69 bn in FY25 (BE) from Rs 15 bn in FY 24 (RE).
• Estimated expenditure on the Production-Linked Incentive (PLI) Scheme for Automobiles and Auto Components has been increased substantially to Rs 35 bn in FY25 (BE) in the Union Budget from Rs 4.8 bn in FY24 (RE).
• Allocation to PLI Scheme for National Programme on Advanced Chemistry Cell (ACC) Battery Storage increased considerably from Rs 0.12 bn in FY24 (RE) to Rs 2.5 bn in FY25 (BE).
• Production-Linked Incentive (PLI) Scheme for White Goods (ACs and LED Lights) has There has been an allocation of Rs 14.44 bn in FY25 (BE), as against Rs 11.5 bn in FY24 (RE), to Production-Linked Incentive Scheme in the Food Processing Industry.
• Been increased to Rs 3 bn in FY25 (BE), compared with Rs 0.6 bn in FY24 (RE).