A blueprint for Viksit Bharat: Budget 2025 focuses on growth, reforms

Finance Minister Nirmala Sitharaman has solved the impossible trinity of the Budget. She has given a boost to consumption and relief to the middle class through her taxation proposals along with increasing capital expenditure even as she has continued on the path of fiscal discipline. It is an alchemy that is unheard of in India’s public finance.

 

In recent years, there was rising clamour for relief to the middle class. This was not just a political demand but made immense economic sense as consumption is a key engine of economic growth. It is also a pillar on which the goal of Viksit Bharat is being built. 

 

At the same time, no country can hope to grow faster unless it sets aside a high portion of its output for future investments. The Finance Minister has done this with aplomb in the last five years with ever increasing allocations for capex. The coming fiscal will be no exception. In fact, it is remarkable that effective capital expenditure will go up from Rs 6.4 lakh crore in 2020-21 to Rs 15.5 lakh crore in 2025-26. This is a miracle of economic and political willpower.

 

All this while, the government has stuck to its plan of fiscal consolidation, something of vital importance for the well-being of the Indian economy. Even after meeting a plethora of demands on a limited set of resources, the fiscal deficit for 2025-26 has been pegged at 4.4 per cent of GDP, down from 4.8 per cent this fiscal. This is remarkable to say the least.

 

The Finance Minister has also been cognizant of the need to undertake regulatory reforms that are needed to ensure that the economy does not get bogged down and steams ahead. The announcement of a High Level Committee for Regulatory Reforms to examine all non-financial sector regulations, certifications, licences and permissions along with the new Jan Vishwas Bill is a welcome step. 

 

Our world is changing rapidly and with the advent of artificial intelligence (AI), it is imperative that we don’t fall behind as a country. As the world evolves at a fast clip, especially with the rise of artificial intelligence, an area that keeps witnessing stellar growth worldwide, India must stay ahead in order to sustain its growth momentum. The establishment of a new Centre of excellence for AI in education, along with expanding capacity at IITs, is a forward-thinking move. It is also a segment where there is a great scope for public-private partnerships, especially when it comes to making our own large language models for domestic as well as global use.

 

The proposed National Manufacturing Mission to further the goal of “Make in India” is a commendable step as on-shoring manufacturing is now necessary not just for India’s economic growth, but also for wider strategic interests of the country. Along with this, the continuing emphasis on clean tech manufacturing under the Mission, especially on creating our own ecosystem to manufacture photovoltaic cells, batteries for electric vehicles and other items, is now necessary if we are to be Atmanirbhar in this very important area.

 

A Budget has many moving parts, but what animates is the spirit of taking the country forward. Above everything else, that goal, the goal of Viksit Bharat, shines through all the Budget announcements made by the Finance Minister on Saturday. Managing the millions of expectations is a challenge even at the best of times, but the Finance Minister has shown how that can be met time and time again even as the goals of economic growth and development are not lost sight of.

(The writer is the chairman of RPSG Group)