Author: Mr. PB Balaji, Group CFO, Tata Motors Ltd.
The Hon’ble FM has delivered a growth-oriented budget that reaffirms the government’s commitment to attain the larger purpose of ‘Viksit Bharat’ with progressive policies to step up domestic consumption whilst driving long-term transformation. Key aspects that stand out:
1. Turbocharging domestic consumption growth.
The single most important highlight of this budget is the increase in income tax exemption to Rs 12 lakh, which will raise disposable income, particularly benefiting the middle class. This move, apart from spurring consumption, is also a message to the larger population that the benefits of a larger tax base and better compliance is lower taxes for everybody. This augurs well for the future. Additionally, the fast-growing MSME sector has been given priority through measures such as enhancing credit guarantee cover and increasing investment and turnover limits which provides continuity in long term policy. Banking on domestic consumption is a prudent strategy to cope with the rising global challenges.
2. Continuing fiscal consolidation
The budget sets a revised fiscal deficit target of 4.8% of GDP for FY25, with an ambitious goal of 4.4% for FY26. This continued focus on fiscal consolidation ensures that inflation remains in check and investors continue to support the prudent growth story of the country. Keeping inflation in check is important to ensure that the gains on tax savings are not wiped out by rising costs.
3. Fillip to Capex and Infrastructure
The budget has allocated a record Rs 11.2 lakh crore towards capital expenditure. This substantial outlay will strengthen India’s infrastructure development and also stimulate private sector investment. Additionally, the Rs 1.5 lakh crore in 50-year interest-free loans to states will catalyze vital infrastructure development across the country reinforcing the government’s commitment to robust public investment for economic expansion.
4. Emphasis on Green Energy & Mobility
A dedicated Nuclear Energy Mission with Rs 20,000 crore investment for R&D in small modular reactors (SMRs) underscores the government’s commitment to sustainable energy. Moreover, the removal of customs duties on battery manufacturing equipment, cobalt powder, and lithium-ion battery waste will accelerate the growth of India’s electric vehicle (EV) sector. This policy aims to foster a self-reliant, green economy by incentivizing domestic production and attracting investments in the EV ecosystem.
5. Building the Nation’s Talent Pool
Recognizing that India’s growth will be driven by a skilled workforce, the budget emphasizes initiatives to enhance skills development. The establishment of five National Centres of Excellence for skilling, along with partnerships for global expertise, will equip India’s workforce for the "Make for India, Make for the World" manufacturing initiative. Additionally, the expansion of IIT capacities and the creation of a Centre of Excellence in Artificial Intelligence are vital steps to address the evolving demands of the global technology and innovation landscape.
In conclusion, this budget responds to the challenges faced by the economy and doubles down on the potential offered by India whilst continuing to invest in the long-term imperatives.
Published: 2 February 2025 | The Hindu
