1. Economic Performance – Total Budget Size – INR 47.66 tn ($574 bn)
- Borrowing and other liabilities have reduced by 6% owing to India’s consistently rising and Income Tax (Individual Income tax by +4%) and GST (Goods and Service Tax)collections(+1%)
- GDP Growth Rate and Deficit Target – India is poised to become the 3rd largest economy by FY26-27; with the Government targeting a fiscal deficit of 5.1% in the upcoming year. India aspires to become a USD 7 trillion economy by 2030.
- Disinvestment and Central Government’s Debt – During FY24-25, the Indian Government expects to raise USD 6 billion from disinvestment of stakes in various state-run companies. As private investments increase, there will be less pressure on the Central Government, leading to greater availability of credit for the private sector.
- Inflation and Interest Rates – CPI (Consumer Price Index )peaked to 7.4% in July which came down to 5.7% in Dec ’23, as RBI (Reserve Bank of India)seeks to achieve inflation target of 4%; RBI has maintained repo rate at 6.5%. Inflation rate for housing, clothing and footwear segments slowed down at 3.6% (YoY% in Dec ‘23). Inflation rate for fuel and light steeply declined from 10.9% in Dec ’22 to -1.0% (YoY%) in Dec ‘23
- Foreign Direct Investment(FDI) – FDI inflows doubled to USD 596 billion during 2014-2023 as compared to inflows recorded during 2005-2014. Sectors Attracting Highest FDI Equity Inflows (FY23-24) – **Services, Construction, Computer-Hardware and Software,Trading, Automobiles,Chemicals-other than Fertilizers and Telecommunication.
**Service sector includes banking, financial, insurance, non-financial business, outsourcing, R&D, courier, technology testing & analysis
3. Infrastructure – Continuous and significant focus on multi-modal connectivity will bring direct positive impact to manufacturing, logistics, agriculture and tourism sector as a whole.
- Railways:
- Highest ever capital budget allocation. Allotted 22.5% of total capital budget in FY24-25,i.e. INR 2.5 tn ($30.1 bn)
- Roadways:
- Received 2nd largest share of total capital budget. Allotted 25% of total capital budget, i.e. INR 2.7 tn($32.8 bn), 60% of this budget allotted to NHAI for Bharatmala Pariyojana.
- Airways:
- Allocation of INR 5 bn ($60 mn) for revival of 22 airports and commencement of 124 regional air routes. With Boeing recently launching its largest engineering & technology facility outside US, India presents numerous untapped opportunities in the aviation sector for foreign companies
4. Energy and Sustainability
- Clean Energy – To achieve India’s Net Zero targets, Government has increased its budgetary allocation for expansion of solar, wind and green hydrogen production capacity
- Rooftop solarisation of 10 mn households – Free solar electricity for low-middle incomes households resulting in annual savings ranging from INR 15,000 ($80) to 18,000 ($217). Surplus energy to be sold to distribution companies
- Support from Central Government in development of offshore wind energy of 1 GW through viability gap funding
- Development of Green Energy Corridor (GEC-II) through budget allocation of INR 6 bn ($72 mn)
- Push for Green Hydrogen Mission to help India achieve its 5 MMT production target by 2030
- Carbon Neutrality – India aims to achieve energy security through reducing its import dependency on alternative fuels and establish a biomass based ecosystem
- Coal gasification & liquefaction capacity of 100 metric tonnes to be setup by 2030 through financial assistance of INR 85 bn ($1 bn)
- Plans to mandate phased blending of CBG(Compressed Biogas) in CNG(Compressed Natural Gas)for transport & PNG(Piped Natural Gas) for domestic usage
- Push for bio-manufacturing and bio-foundries – the government plans to provide environment friendly alternatives like biodegradable polymers, bio-plastics, bio-pharmaceuticals & bio-agri-inputs
7. Inclusive Development: The Government aims for all round development through social and geographical inclusivity measures.
- Geographical Inclusion
- Long-term interest free loans to be provided to states to finance development of tourism centers and global scale branding & marketing
- Women Empowerment
- Target to make women under the Lakhpati Didi Initiative (annual income of INR 0.1 mn or $1200) for 30mn women, by supporting Self Help Groups(SHGs)
- Affordable Housing
- Housing for Middle CLass Scheme – A scheme to be launched for helping the middle class,living in rented houses, slums or unauthorized colonies, to buy / build their own houses.
- Prime Minister Housing Scheme(Pradhan MantriAwas Yojna – PMAY – a budget allocation under PMAY scheme increased to INR 807.0 bn ($9.7 bn) in FY 24-25 to achieve an additional target of 20 mn houses in next 5 years.
- Financial Inclusion
- Credit-linkages for micro food processing enterprises
- Increased budget for wage employment programme
- Budget increased for PM’s People Health Scheme (PM-Jan Arogya Yojana) to INR 75.0 bn($0.9 bn) in FY 24-25 to increase access to health insurance
- Skill Development and Education
- Increase budget allocation to INR 60.5 bn ($0.7bn) in FY 24-25 to transform existing schools under PM-SHRI (Schools for Rising India)
- Plan to set up more medical colleges by utilizing the existing hospital infrastructure for growing medical aspirants. The more number of medical professionals shall boost the healthcare sector.
Disclaimer: India view point.
Source: Government budget documents, Central Statistics Office,RBI,Department of Industrial Policy and Promotion, Press Information Bureau,Press Articles and Releases