Union Budget 2024: On prudent path, towards long-term sustainability

The overarching takeaway from Tuesday’s pronouncements is the sharp focus on removing bottlenecks to improve the ease of doing business and creating a conducive environment for corporates.

Increasing skilling and job creation, enhancing credit availability for micro, small, and medium enterprises (MSMEs), and building a sustainable energy ecosystem are the crucial callouts.

For the first time, the government has rolled out a package to raise the long-term employability of the country’s youth and incentivise their hiring by corporates.

Skilling initiatives in collaboration with states and industry, upgradation of 1,000 Industrial Training Institutes, providing skilling and education loans and internship at the Top 500 corporates are in consonance with the budgetary discourse.

Implemented well, these can bridge some of the vexing skill set gaps that companies have been staring at for long. The attempt to incentivise corporates for first-time employment through the ‘Employment Linked Incentive’ scheme by partially bearing the wage cost is a notable spur.

There is a conscious attempt to enhance credit access to the MSME sector — another nagging issue. The credit guarantee scheme facilitating term loans without collateral or third-party guarantee, and credit support during stress period are supportive of their growth and will smoothen their operations.

Further, the role of SIDBI has been re-oriented from that of a pure refinancier to also a direct lender, and the limit of MUDRA loans has been doubled. Reducing the turnover threshold of buyers on the TReDS platform will help enterprises, especially the small ones, unlock working capital.

The efforts towards clean energy transition to create a sustainable ecosystem continue. The duty structure on solar cells and modules have been revised favourably, along with those for critical minerals. This will not only support domestic manufacturers but also facilitate India’s energy transition pathway.

The steps towards exploration of public-private partnership in nuclear energy, especially for the development of small modular nuclear reactors, will help scale up India’s clean energy generation quotient and charge the sustainability push.

While these long-term initiatives bode well for India Inc, the finer details of the schemes and their implementation bear watching.

The writer is managing director, CRISIL Ratings Ltd