India’s Interim Budget 2024-25: A path to economic resilience & inclusive growth

From the editor’s desk

By Rabindra Mukherjee

India's economic journey has drawn both international attention and admiration. In light of global economic challenges and domestic imperatives, India’s Interim Union Budget for 20242025, presented by India’s Finance and Corporate Affairs Minister Nirmala Sitharaman, outlines a strategic framework aimed at fostering economic resilience, driving sustainable growth, and promoting inclusive development.

Capital expenditure & economic expansion

A significant feature of the budget is the substantial increase in capital expenditure, witnessing an 11.1% rise to Rs 11,11,111 crore, constituting 3.4% of the GDP. This increased allocation underscores the government's commitment to bolstering infrastructure, enhancing productivity, and stimulating employment generation across various sectors.

It builds upon the substantial tripling of capital expenditure outlay observed over the past four years, stimulating economic growth and job creation.

Resilient economic fundamentals & growth projections

Despite facing global headwinds, India's economy has displayed remarkable resilience and maintained robust macroeconomic fundamentals.

The projection of a 7.3% Real GDP growth rate for FY 202324 reflects strong economic momentum, buoyed by robust growth in key sectors. Reputable institutions such as the Reserve Bank of India (RBI) and the International Monetary Fund (IMF) have revised their growth forecasts upwards, indicating growing global confidence in India's economic capabilities.

Global recognition & projections

India's economic progress has earned international recognition, with the IMF projecting India to become the third-largest economy by 2027. Various global agencies, including the World Bank, IMF, OECD, and ADB, have forecasted India's growth trajectory, with estimates ranging between 6.1% and 6.7% for 2024-25. This widespread acknowledgment underscores India's emergence as a significant driver of global economic growth and stability.

Revenue collections & fiscal discipline

The buoyancy in economic activity has resulted in robust revenue collections, with GST collection surpassing the Rs 1.6 lakh crore mark for the seventh time. The budget estimates for 2024-25 reflect a balanced approach between receipts and expenditures, focusing on fiscal consolidation. Despite the estimated fiscal deficit of 5.1% of GDP for 2024-25, the government remains committed to reducing it below 4.5% by 2025-26, aligning with the path of fiscal discipline.

Empowering states & driving reforms

A notable announcement in the budget relates to the continuation of the fifty-year interestfree loan scheme for capital expenditure to states, totalling Rs 1.3 lakh crore. This initiative underscores the government's dedication to empowering states and supporting reforms aimed at fostering inclusive growth and development. Additionally, strategic initiatives like the PM Awas Yojana and rooftop solarization aim to address housing and energy needs while spurring economic activity.

Focus on inclusive development & social justice

At the core of the budgetary vision lies a steadfast commitment to inclusive development and social justice. The government's focus on empowering marginalized sections of society, including the 'Garib' (poor), 'Mahilayen' (Women), 'Yuva' (youth), and 'Annadata' (farmer), reflects an inclusive approach to governance. Development programs targeting each household and individual, coupled with efforts towards 'Sabka Saath', underline the government's commitment to leaving no one behind.

Stimulating innovation & infrastructure development

The budget provisions earmarked for stimulating innovation and infrastructure development underscore a forward-looking approach to economic growth. Initiatives such as establishing a corpus of Rs 1 lakh crore with a fifty-year interest-free loan aim to incentivize research, innovation, and private sector participation in emerging sectors. Additionally, investments in critical sectors such as railways and aviation demonstrate a concerted effort towards building a modern, resilient, and sustainable infrastructure ecosystem.

Charting a path towards Viksit Bharat

India's Interim Budget 202425 reflects the government's unwavering commitment to steering the nation towards progress, prosperity, and equity. As stakeholders across sectors collaborate and innovate, India is poised to realize its aspirations of becoming a global economic powerhouse while ensuring inclusivity and sustainable growth. The Interim Budget lays down a comprehensive roadmap for India's transformation into a 'Viksit Bharat' by 2047, characterized by economic vibrancy, social equity, and sustainable development. As the government continues its agenda of nation-building with renewed vigour, the budgetary proposals set the stage for a new era of growth and prosperity for all Indians.

The White Paper on Indian Economy- a reflection

The White Paper tabled by India’s Finance Minister Nirmala Sitharaman stands as a comprehensive testament to India's economic journey over the past decade. Through its candid assessment of the pre2014 era and the subsequent strides made under the Narendra Modi government, the document offers invaluable insights into the nation's economic evolution, triumphs, and tribulations.

The White Paper paints a vivid picture of the economic landscape inherited by the Modi government in 2014—a landscape marred by fragility, financial indiscipline, and widespread corruption. It sheds light on the formidable challenges faced, including a mountain of bad loans, fiscal deficits, and doubledigit inflation, all of which cast a shadow on India's economic prospects. Amidst this turmoil, the imperative to restore hope, attract investments, and institute much-needed reforms loomed large—a clarion call for decisive action and unwavering commitment.

The document serves as a stark reminder of the legacy of the previous regime, characterized by policy misadventures, scandals, and a systemic erosion of trust. From the banking crisis to the specter of retrospective taxation, the UPA government's tenure was fraught with challenges that undermined India's economic resilience and global standing.

The White Paper's candid appraisal underscores the magnitude of the task at hand—a task compounded by a legacy of missed opportunities and flawed policies.

However, amidst the gloom, the White Paper heralds a narrative of resurgence and renewal under the leadership of the Modi government. Armed with political and policy stability, the government embarked on a trajectory of bold reforms and strategic interventions aimed at nurturing sustainable economic growth. From addressing the banking crisis to recalibrating fiscal policies, the government's approach has been defined by pragmatism, foresight, and a steadfast commitment to national interests.

Central to this narrative of resurgence is a paradigm shift in economic governance—one marked by a focus on long-term sustainability, inclusivity, and resilience. Unlike its predecessor, the Modi government prioritized investments in the foundations of the economy, laying the groundwork for sustained growth and prosperity. The results speak volumes—India's ascent to becoming one of the top five economies, its robust foreign exchange reserves, and the tangible reduction in inflation underscore a narrative of tangible progress and economic resilience.