Question 1

Budget 2024: Prioritising inclusivity and fiscal prudence

Accepted Answer

There was a lot of anticipation before this Budget. As the first major public policy announcement of the new government, it was expected that the Budget would lay down a plan of action for the following five years of the government’s approach towards the larger national vision of Viksit Bharat@2047. Further, while the economy is performing well, there were admittedly a few areas that merited attention, employment being the foremost.
The Finance Minister announced that the Budget would focus on employment, skilling, MSMEs, and the middle class. With the nine priority areas that followed, she articulated the economic policy framework through which the government wishes to bring in the transformation that would accelerate the journey towards Viksit Bharat@2047. By addressing the near-term challenges while keeping an eye on the long term, the speech has ensured that this Budget is growth-oriented, inclusive, and provides opportunities for all sections.
Areas of focus
The first is the focus on agriculture. The world over, the impact of climate change is seen the most in the farm sector. With rise in inflation of agri-products being linked to adverse climate events, it was pertinent that India double up efforts on developing climate-resilient seed varieties. The Budget brings in this focus with a comprehensive review of agri-research set up in the country to increase productivity and introduce climate-resilient seed varieties.
Additionally, national missions for pulses and oilseeds will be strengthened and greater impetus would be given to set up large-scale clusters for vegetable production near major consumption centres. These steps would help in building self-reliance, bring in stability in the inflation trajectory and benefit consumers by arresting the occasional price spikes due to underdeveloped and fragmented supply chains domestically.
The second is the priority accorded to employment and skilling. The government has announced a comprehensive package of three schemes that offer employment-linked incentives. These will boost employment generation both in the manufacturing and services sectors and benefit lakhs of youth.
Additionally, the initiative to set up many more working women’s hostels in the country and creches for care support in partnership with the private sector will facilitate greater participation of women in the workforce. An increase in female labour force participation rate can be an additional lever for our country’s growth, and FICCI had suggested strengthening of the care economy ecosystem in the country in its economic agenda for the new government.
The third is the comprehensive set of measures outlined for the MSME sector. Finance is the lifeblood for any industrial unit, and this is more so for the MSMEs. In a national survey that FICCI undertook last year amongst MSMEs, availability of credit on reasonable terms and without collateral were the key asks. By announcing a new credit guarantee scheme for MSMEs in the manufacturing sector, guiding public sector banks to develop internal assessment models for credit evaluation of MSMEs basis their digital footprints, and having a mechanism in place that provides timely credit to MSMEs even during periods of stress will go a long way to boost MSME units. FICCI is of the view that with these changes, underwriting models will improve and the cost of credit to MSMEs will come down.
Another notable inclusion, which is also a FICCI suggestion, was the lowering of annual turnover threshold for registration on TreDS platform from ₹500 crore to ₹250 crore.
The fourth area includes proposals that focus on sustainability. Promotion of small modular reactors for nuclear energy, continuous support to the national rooftop solar programme, dedicated projects for water supply, sewage treatment and solid waste management in large cities are all welcome measures. Additionally, the setting up of a critical minerals mission is an important step in securing the raw material base for India’s green energy transition.
Deftness on fiscal side
Finally, the government needs to be congratulated for the deftness displayed on the fiscal side. The downward revision in projected fiscal deficit for 2024–25 to 4.9% from 5.1% announced in the Interim Budget reflects the government’s prudent fiscal management.
The Budget has articulated a realistic and actionable policy framework for India’s continued transformation into a developed nation by 2047, and one that is inclusive and sustainable.
 
Originally published in The Hindu. Read the full story here.

Question 2

Budget 2024: A boost to manufacturing

Accepted Answer

The first full budget of the new government has laid a solid foundation for Viksit Bharat and will propel the nation forward on multiple fronts. A detailed document which outlined 9 priorities has set the tone for the next five years; and, manufacturing has been given its due which is heartening.
India’s economy has shown remarkable resilience, as evidenced by the Economic Survey 2023-24 which outlines optimistic picture. Robust real GDP growth rate of 8.2%, declining inflation at 5.4%, and an improved fiscal balance are all positive indicators of the economy’s health. The current geopolitical landscape, marred with rising tensions and a manufacturing void left by China, presents India with a golden opportunity. These crises have shed light on the importance of resilient and diverse supply chains, and India must grab this opportunity with both hands.
The nation’s industrial growth stands at 9.5% with manufacturing growing at an average of 5.2% per annum over the last decade. However, the journey towards becoming a global economic powerhouse requires continued reforms and strategic investments. The steps taken over the next five years will be crucial in realising India’s ambitions, and we can ill afford to falter in any way.
In this context, the continued stress in this budget on strengthening the domestic manufacturing ecosystem is crucial as it will lead to enhanced export competitiveness. While the Production Linked Incentive (PLI) Scheme has already shown impressive results, attracting investments of over Rs 1.28 lakh crore, generating Rs 10.8 lakh crore in production and sales, and creating 8.5 lakh jobs; complementary interventions and strategies will go a long way in providing a much-needed boost to manufacturing. The budget introduces three new employment-linked incentive schemes, including one particularly designed to boost job creation in manufacturing. These incentives will provide financial support to both employees and employers, benefitting 30 lakh youths entering the workforce and their employers over the next four years.

The budget also places special emphasis on MSMEs which are an integral aspect of the manufacturing ecosystem. A comprehensive package including financing, regulatory changes and technology support aims to help MSMEs grow and compete globally. Initiatives like the Credit Guarantee Scheme for MSMEs, a new assessment model for MSME credit, and credit support during stress periods are set to provide the necessary boost. The establishment of eCommerce Export Hubs in public-private partnership (PPP) mode will enable MSMEs and traditional artisans to sell their products internationally, under a seamless regulatory and logistic framework.
Recognising the importance of minerals and metals in addressing production gaps and reducing dependence on imports, the Critical Minerals Mission is a much-needed step towards boosting domestic production. The Mission outlines recycling and overseas acquisition of critical mineral assets, striking a balance between local and overseas sourcing with a strong emphasis on circularity. This will be significant in ensuring the availability of essential minerals for strategic sectors like renewable energy, defence and high-tech electronics.
Significant investment in infrastructure continues to be a cornerstone of the budget with a provision of Rs 11.11 lakh crore representing 3.4% of GDP. This sustained expenditure will help build world-class infrastructure, with a strong multiplier effect on the economy. The budget also aims to promote private sector investment in infrastructure through viability gap funding and enabling policies, alongside a market-based financing framework.
India’s emergence as the world’s fastest growing large economy has been made possible by a strong focus on enhancing ease of doing business and reducing cost of doing business. Going ahead, broadening and deepening of reforms is necessary to not just maintain but boost the growth momentum. The budget has set the tone by clearly articulating steps in this regard, and the stars look to be aligned for a step change in the growth trajectory.
Subhrakant Panda
Managing Director, Indian Metals & Ferro Alloys Ltd

Question 3

Your First 100 Days To-Do List, Gov

Accepted Answer

The 18th Lok Sabha polls are almost done and dusted. A new government will be in place once results are declared on June 4. While the incumbent government has done much to enhance ease of doing business and to reduce cost of doing business, there are several reforms which the incoming government must implement to capitalise on the growth opportunities available to India.
Covid and geopolitical crises have driven home the importance of diversified and resilient supply chains at a time when India is ready to step up to the plate to become not just the world’s backroom office, but also its factory. The next five years are crucial for this, as any tapering off of the growth trajectory will cast doubt on India’s ability to live up to potential. Besides, a young population must be gainfully engaged to reap the demographic dividend.
Some steps that the new government should take:
▶ Improve manufacturing competitiveness, including steps that address inefficiencies in factors of production.
▶ Digitise land records and streamline the land acquisition process to accelerate project timelines. This is crucial as supply-side constraints could fuel inflation and lead to lost opportunities.
▶ Implement new labour codes and transition to a ‘living wage’ standard to address the care economy, and enhance female participation in the workforce.
▶ Eliminate cross-subsidy of domestic tariff, which weighs down industry, as India accelerates its energy transition journey to deal with climate change.
▶ Initiate GST 2.0. Introduction of GST was one of the most significant reforms this country has seen. It has proved its worth both in terms of dismantling internal barriers to trade, as well as bringing about greater formalisation of the economy as reflected in the record collection of Rs 2.11 trillion in April. The time has come to move to a three-rate regime covering most items. It will further simplify the indirect tax regime and improve compliance while being revenue-neutral.
▶ Bring more sectors under PLI, since the programme has worked wonders, with mobile phone output growing by leaps and bounds, creating more than 5 lakh jobs. The concept of ‘value addition’ must be considered in addition to incremental production. Design, innovation and R&D will all need a boost for India’s manufacturing sector to flourish and drive economic prosperity.
▶ Help MSMEs’ digitalisation and sustainability journey. While MSMEs are the backbone of the economy, and provide bulk of employment, and multiple state schemes support MSMEs, a focused effort is required for their tech upgrade.
Studies show that the sector has a high degree of awareness in these areas. But their preparedness is limited due to financial and capability constraints. Addressing these gaps will enhance the resilience of MSMEs and ensure that they are an integral part of India’s growth journey.
▶ Stay committed to fiscal prudence while aggressively pursuing growth. The measured approach during the Covid crisis and commitment to a fiscal glide path thereafter is commendable.
Robust direct and indirect tax collections, and the bonanza of a record ₹2.11 tn dividend from RBI to GoI for 2023-24, have laid the foundation for GoI to allocate funds to priority sectors and initiatives while continuing to gradually pare down the fiscal deficit, leaving space for the private sector to borrow for its requirements.
Many of these ideas can be implemented immediately, boosting the manufacturing sector, and enabling India to become a preferred investment destination.
This is not a comprehensive list. Other interventions are required to complete the bouquet. There is no time to lose in pursuing a growth agenda that builds on the nation’s strengths and takes advantage of favourable circumstances. Therefore, the first 100 days of the new government will be crucial for setting the tone for a broader and deeper reform agenda to transform the nation.
The writer is managing director, Indian Metals & Ferro Alloys

Question 4

Budget 2024: Long-term vision in an interim Budget

Accepted Answer

The expectation in the run up to the interim budget was that there would be no extraordinary announcements since it is only a vote on account. However, that did not diminish interest in what the Finance Minister would present before Parliament given that the global economic outlook remains complex and there are pockets of concern that merit attention domestically even as the economy remains strong.
Moreover, with elections round the corner, there is a tendency to open the purse strings. In this backdrop, the FM stuck to convention by not announcing any changes to direct or indirect taxes while listing the government’s accomplishments over the last decade and laying out a path for the future. Most importantly, the commitment to fiscal prudence with the deficit for FY24 being contained at 5.8 per cent and a sharp reduction to 5.1 per cent projected for FY25, struck the right chord.
The continued thrust on capex by way of an 11.1 per cent hike on top of a record outlay in last year’s budget demonstrated the government’s commitment to support economic growth in a meaningful manner; moreover, infrastructure spending has a multiplier effect which permeates throughout the economy. Further, supported by buoyant revenues, the projection of lower borrowings will give the necessary headroom for the private sector to fund its own investment plans. In a manner of speaking, the Finance Minister – after a couple of years of doing the heavy lifting – is elegantly stepping aside to allow the private sector to step up to the plate.
Sustainable Growth
The need of the hour is sustainable and inclusive growth. In this context, the measures to promote green growth through viability gap funding for off-shore wind, emphasis on EV ecosystem, rooftop solar initiative to benefit 1 crore households is noteworthy and will contribute to India’s journey of achieving net zero by 2070. The government has also laid a lot of emphasis on promoting research & development by setting up of a corpus of ₹1lakh crore for offering interest-free loans that will encourage the private sector to scale up innovation in sunrise industries.
Biotechnology, aerospace, defence, space, financial sector are just some of the areas where we are seeing mushrooming of start-ups offering cutting edge solutions. The proposed corpus will support many of these areas and more and be particularly beneficial to the youth of the country who are brimming with ideas.
Greater participation of women in the workforce has been an important area for our government. We saw the focus on this aspect once again last year when India hosted the G20 and pivoted the narrative from ‘women development’ to ‘women led development’. Creating an enabling ecosystem for this requires actions on many fronts including health and nutrition. In this budget, the government has added another layer of support by extending the benefits of Ayushmaan Bharat to all aanganwadi workers and ASHA workers & helpers, while aiming to have 3 crore lakhpati didis. Moreover, an immunisation campaign against cervical cancer for girls in the 9-14 years age group is praiseworthy.
As for the agriculture sector, again there was plenty in the Interim Budget to be happy about. Redoubling efforts for increasing private and public investments in post-harvest infrastructure; plan for achieving self-sufficiency in oilseeds; comprehensive program for dairy development and aquaculture – all these bode well for farmers as they look at both better yields from current production as well as diversification.
Finally, the spirit of cooperative federalism was also visible in the Interim Budget with the provision of ₹75,000 crore for offering fifty-year interest-free loans to support milestone-linked reforms by state governments. This is a reflection of the need for the Centre and states to work together to achieve the vision of Viksit Bharat.
While clearly articulating its vision, focus areas, and directionality, the government has refrained from populist measures in the Interim Budget. This not only imparts credibility but also shows a maturing of the budget process; after all, governance is a continuous process which should not be unduly impacted by a singular event.
[The author is Immediate Past President, FICCI and MD, IMFA]

Question 5

India, the Global Growthstar

Accepted Answer

India is a beacon of hope in an uncertain world where growth is slowing down, and geopolitical complexities abound. It is the fastest-growing large economy, expected to occupy the third spot by 2027. This journey is not the outcome of a stroke of luck but a trifecta of three factors:
Size matters
The implementation of GST created a unified domestic market, a fertile ground for businesses to thrive. The size and diversity of the population have provided opportunities to homegrown entities and been a bulwark against external volatility. It has also made it a strategic market for MNCs. Steadily increasing GST collections, which hit an all-time high of ₹1.87 trillion in April and an average of ₹1.66 trillion a month this fiscal, indicate rising economic activity and greater formalisation of the economy. It has also enabled GoI to allocate resources to priority sectors.
Reformative years
India&#8217;s commitment to reforms has been transformative. By focusing on measures to enhance the ease of doing business, reduce the cost of doing business and improve the ease of living, GoI saw an opportunity in the adversity of the pandemic. In addition to GST, several other schemes such as IBC, PLI, PM Gati Shakti National Master Plan, National Logistics Policy and decriminalisation of minor offences have added to India&#8217;s allure as an investment destination.
Even the domestic investment outlook is well-placed with cyclical sectors having deleveraged and average capacity utilisation across the spectrum in manufacturing touching 75%, according to a January 2023 Ficci survey (bit.ly/4acwjUT), setting the stage for private sector investment to gain momentum.
India&#8217;s approach of eschewing an aggressive stimulus early on during the pandemic, while supporting those at the bottom of the pyramid and focusing on structural reforms, proved right. It has since made the job of managing inflation easier compared to advanced economies that went overboard.
Banking on the future
According to a June 2023 IMF working paper (bit. ly/3NbANkr), a sample of 67central banks showed &#8216;median balance sheet increased by 6% in 2020-21. In10% of cases, balance sheets expanded by more than 20% of GDP&#8217;, and, as the study puts it, &#8216;expansion in central bank assets was larger in advanced economies where quantitative easing programmes drove balance sheet expansion&#8217;. Today, those advanced economies are struggling to control inflation.
Dig infra dig
The massive investment in physical infrastructure, with a record outlay of ₹10trillion in the last Union budget, and digital public infrastructure (DPI) has connected and empowered people. It has also enabled far-flung regions to contribute to and benefit from India&#8217;s growth. The JAM (Jan Dhan-Aadhaar-Mobile) trinity laid the base for laser-sharp targeting of recipients and minimal leakage through DBTs.
Innovations such as UPI have led to a nearly 50% share of global real-time digital payments, with PwC predicting that it will achieve one billion daily transactions by 2026-27. Meanwhile, CoWin enabled the world&#8217;s largest vaccination drive, with over two billion doses of the Covid-19 vaccine being administered and digital certificates issued.
Demonstrating demographics
This is a huge factor in India&#8217;s rise and future growth trajectory. At a point intime when the world is ageing, the median age in India is 28.4, and the share of the working-age population in the total population stands at 67%, according toa January 2023 EY report (bit.ly/3NfUdow).
Importantly, the working-age population will continue to outnumber the dependent population for at least another three decades. The report says, &#8216;This young population not only reinforces India&#8217;s competitive advantage in the services and manufacturing sectors, but also unleashes the consumption power of a young population towards discretionary expenditure. &#8216;Access to information, markets and opportunities in the world&#8217;s largest digitally connected democracy have transformed the lives of millions and enabled India to leapfrog legacy constraints. Our economic rise has implications for the world, with IMF stating that India&#8217;s contribution to global growth will increase by 200 bps to 18% over the next five years.
There is no other country with these three factors to lift itself and impact the world&#8217;s growth trajectory.
Ficci has picked the theme, &#8216;The World&#8217;s Growth Engine&#8217;, for its 96th AGM and annual convention today and tomorrow. It acknowledges how far India has come in terms of economic prospects and as a vastly increased sphere of influence. A newfound confidence, bolstered by macroeconomic fundamentals, has reinvigorated India and hastened the pace of change. Today, it stands ready to occupy its rightful place among the world&#8217;s leading nations and help shape the global agenda.

Question 6

More to India's Power

Accepted Answer

India’s rise offers hope to not just our own citizens but the rest of the world.
India’s economic rise, especially over the past decade, is both envied and admired. At a time when global growth has slowed down, the world’s fastest-growing large economy is moving towards the five trillion dollar mark and third spot in the pecking order before the end of the decade. A combination of a large domestic market, sustained reforms, and favourable demographics is the foundation on which a remarkable transformation is taking place with a clear aim to become a developed nation by 2047.
There is, however, more than just an economic angle to India’s transformation. Given its rich history and diverse culture, not to mention new-found confidence, the nation’s “soft power” is taking rapid strides, too. This is visible across domains.
While a successful G20 Presidency set high standards and delivered a joint declaration in a complex geopolitical environment, India’s recent performance in various sporting events has also been a source of pride. Even as leading nations of the world look to engage with us through FTAs, our movies – not just from Bollywood – are capturing people’s imagination. Similarly, the Quad and Indo-Pacific Economic Forum (IPEF) serve to further our national security and economic interests even as the celebration of World Yoga Day is an ode to our traditions which are relevant even today.
Sports in our country used to largely mean cricket; today, it is not just the Indian Premier League (IPL) which grabs eyeballs but also the Indian Super League (football), Pro Kabaddi League, Premier Badminton League, and Hockey India League, among others, which see large footfalls and have substantial budgets. The Centre and state governments have invested heavily in sports infrastructure as well as supporting and incentivising sportspersons to pursue medals on the global stage. The country’s first gold medal in athletics at an Olympic Games – Neeraj Chopra’s stupendous performance in javelin throw – was unthinkable just a few years ago. India is now seriously considering a bid to host the Olympics as more competition to showcase its rise.
India’s film industry among the oldest and produces the largest number of films, many of which are world-class. (Culturally expressive movies like RRR (2022) – the first Indian movie song to win an Oscar – have taken our stories to a global audience and will serve as a bridge to connect different cultures across societies.)
Active participation in global discussions and strong advocacy for equitable solutions has seen India emerge as the voice of the Global South. Our experience in addressing developmental challenges through technological advancements, such as digital public infrastructure, offers valuable insights to other nations.
Prime Minister Narendra Modi has first coined the term ‘Lifestyle for the Environment’ (LiFE) at COP26 in Glasgow, calling upon the global community to start an international mass movement to protect and preserve the environment. By following through on various commitments related to addressing climate change, India has acquired immense credibility as we step up to a leadership role on the global stage.
Today, India is seen as a voice of reason even as we firmly protect our national interests while helping shape the international agenda on issues like sustainability, energy security, and resilient supply chains.
The responsibility to build and capitalise on this influence cannot be the government’s alone. It requires collective effort from all sections of society such as business associations, professionals, and the Indian diaspora. The diaspora, too, plays a vital role in reinforcing our brand and values. India’s success offers hope not just to our own citizens but the rest of the world; it also incentivises our business network; it also incentivises our businesses at home to integrate globally. As we step into the spotlight, catalysing on “soft power” will enable India to be a force for positive change.

Subhrakant Panda

Managing Director, IMFA | Past President, FICCI

Subhrakant Panda

Managing Director, IMFA | Past President, FICCI

Op-Ed