Finance Minister Nirmala Sitharaman's presentation of the Union Budget unveiled a visionary plan called 'Viksit Bharat' to pave the way for a prosperous and advanced India. The budget lays emphasis on stimulating growth in various key sectors such as agriculture, employment, manufacturing, urban development, energy security, infrastructure, innovation, research, and implementing progressive reforms for the future. The budget also identifies priority areas to maintain robust growth rates and overcome obstacles that impede progress towards the goal set for 2047.
Earlier this week, Finance Minister Nirmala Sitharaman presented a Union Budget that stood out from her previous budgets. It provided a unique long-term roadmap for the development of India, aligning with the government's vision called Viksit Bharat. Prior to presenting the budget, Prime Minister Narendra Modi stated that it would contribute to the goal of achieving a developed India by 2047.
The significance of this budget lies in the fact that it marks the third budget presented by a government that has been in power for three successive terms, a milestone in itself. PM Modi expressed pride in this accomplishment and emphasized the government's commitment to translating their promises into reality. He considered this budget crucial for the present era and stated that it would set the course for the next five years of their term. Furthermore, PM Modi believed that this budget would serve as a strong foundation for their vision of a developed India.
India has been the fastest growing major economy globally, maintaining a high growth rate over the past four years despite global disruptions. While Sitharaman's budget aims to further stimulate growth, its primary focus lies in strengthening the economy to sustain long-term high growth rates. To achieve this, she identified nine priority areas that will be addressed in this year's budget and subsequent budgets over the next five years.
These priority areas highlight the vulnerabilities within the economy, such as low productivity and a lack of innovation, which could hinder India's progress towards the goal of Viksit Bharat by 2047. Sitharaman outlined these areas and proposed measures to tackle these challenges in the Budget 2024 and the budgets to follow.
Priority 1: Enhancing Agriculture Productivity and Resilience
Due to various factors, the agricultural sector has experienced a decline in productivity. Sitharaman presented a comprehensive vision for streamlining agriculture to achieve higher productivity.
The government will conduct a thorough review of the agricultural research infrastructure to prioritize increasing productivity and developing climate-resilient crop varieties. Funding will be made available through challenge-based mechanisms, including for private sector involvement. The research will be overseen by domain experts from both the government and external sources. Additionally, Sitharaman pledged to introduce 109 new high-yielding and climate-resilient varieties of 32 field and horticulture crops.
Over the next two years, one crore farmers across the country will be trained in natural farming practices, supported by certification and branding. Scientific institutions and willing gram panchayats will oversee the implementation. Furthermore, the government plans to establish 10,000 need-based bio-input resource centers.
To achieve self-sufficiency in pulses and oilseeds, the government will strengthen production, storage, and marketing efforts in these areas.
Building upon the success of a pilot project, the government, in collaboration with the states, aims to implement the Digital Public Infrastructure (DPI) in agriculture to cover farmers and their lands within three years. During the current year, a digital crop survey for the Kharif season will be conducted in 400 districts using the DPI. The details of six crore farmers and their lands will be incorporated into farmer and land registries. Additionally, the issuance of Jan Samarth-based Kisan Credit Cards will be enabled in five states.
Financial support will be provided for establishing a network of Nucleus Breeding Centres for Shrimp Broodstocks. NABARD will facilitate financing for shrimp farming, processing, and export.
The government will introduce a National Cooperation Policy to ensure systematic, orderly, and comprehensive development of the cooperative sector.
Priority 2: Employment and Skill Development
The future growth of India hinges on the employment and skill development of its large youth population, which represents 65% of the fast-growing population. The Economic Survey highlights that a significant portion of the youth lacks the necessary skills demanded by a modern economy. Estimates suggest that approximately 51.25% of the youth are considered employable, indicating that about half of them are not immediately job-ready upon completing their education. However, it is worth noting that this percentage has improved from around 34% to 51.3% over the past decade.
To address this issue, Sitharaman unveiled three schemes under the banner of "Employment Linked Incentives." These schemes will be based on enrollment in the Employees' Provident Fund Organization (EPFO) and focus on recognizing first-time employees while providing support to both employees and employers.
Sitharaman presented a plan to generate employment opportunities for approximately 4.1 crore (41 million) young people over the next five years. To support this initiative, the government has allocated Rs 2 lakh crore (2 trillion rupees).
Furthermore, the finance minister proposed allocating Rs 1.48 crore (148 million) for skill development, aiming to create job opportunities and skill 20 lakh (2 million) youths over a five-year period. She also announced the upgrade of 1,000 industrial training institutes. As part of the employment incentives, Sitharaman suggested providing a one-time wage to all first-time employees across various sectors via Direct Benefit Transfer (DBT). Additionally, the finance minister disclosed plans to launch internship opportunities in 500 companies for one crore (10 million) young people over five years. These interns will gain exposure to real-life work environments and receive a monthly allowance of Rs 5000. The training costs will be covered by the companies, with 10% of the expenses sourced from corporate social responsibility (CSR) funds.
The challenge of unemployment holds significant importance in India's economy, as it necessitates the creation of a substantial number of jobs. With 65% of the population under the age of 35 and over 50% under the age of 25, addressing the issue of employment is at the forefront of the country's priorities.
Priority 3: Promoting Inclusive Human Resource Development and Social Justice
A significant portion of India's population continues to face exclusion from the mainstream economy, primarily due to poverty, social factors, and the historical isolation of remote areas like the Northeast. The government has already taken substantial measures to integrate India's economy, such as the implementation of the Goods and Services Tax (GST) and digital payment systems, along with various targeted schemes.
To address this priority area, the government intends to introduce more focused schemes aimed at achieving comprehensive and inclusive development for all individuals. The budget emphasizes a saturation approach to education and healthcare, ensuring that these essential services reach every corner of society. Additionally, specific schemes will be implemented to support economic activities among craftsmen, artisans, self-help groups, scheduled castes, scheduled tribes, women entrepreneurs, and street vendors. Several ongoing schemes, including PM Vishwakarma, PM SVANidhi, National Livelihood Missions, Stand-Up India, PM Awas Yojana, and Mudra loans, will be further strengthened and expanded.
The government's commitment to inclusive human resource development and social justice is reflected in its targeted initiatives, which aim to bridge the gaps in accessing education, healthcare, and economic opportunities. By prioritizing the empowerment of marginalized communities and fostering entrepreneurship, the government seeks to create a more equitable and inclusive society.
Priority 4: Advancing Manufacturing and Services
The foremost component of this priority area is the development of medium, small, and micro enterprises (MSMEs), which serve as the backbone of the Indian industry. MSMEs contribute approximately 30% of the country's GDP, 45% of manufacturing output, and provide employment to 11 crore (110 million) people in India. However, the MSME sector faces challenges related to credit access, labor issues, and limited innovation.
The government has taken proactive steps to promote the growth of the MSME sector. Initiatives such as the allocation of Rs 5 lakh crore through the Emergency Credit Line Guarantee Scheme (ECLGS) for businesses, including MSMEs, and equity infusion of Rs 50,000 crore through the MSME Self-Reliant India Fund have been implemented. The classification criteria for MSMEs have also been revised, and the Raising and Accelerating MSME Performance (RAMP) program, with an outlay of Rs 6,000 crore over five years, has been introduced.
To further support MSMEs, particularly labor-intensive enterprises, Sitharaman presented a comprehensive package encompassing financial and regulatory changes, as well as technological support. The package includes facilitating collateral-free term loans for MSMEs to purchase machinery and equipment, a new credit assessment model for MSMEs, credit support during periods of stress, the establishment of Small Industries Development Bank of India (SIDBI) branches in MSME clusters, e-commerce export hubs, and an increase in Mudra loans from Rs 10 lakh to Rs 20 lakh for individuals who have successfully repaid previous loans under the 'Tarun' category.
Sitharaman also outlined several measures to boost manufacturing, including the creation of investment-ready "plug and play" industrial parks with complete infrastructure in or near 100 cities, the development of rental housing for industrial workers through public-private partnerships (PPP), the implementation of Digital Public Infrastructure (DPI) applications at a population scale to enhance productivity, business opportunities, and innovation in the private sector, the establishment of an Integrated Technology Platform to improve outcomes under the Insolvency and Bankruptcy Code (IBC), voluntary closure options for Limited Liability Partnerships (LLPs) to reduce closure time, and reforms and strengthening of the IBC tribunal, appellate tribunals, and debt recovery tribunals.
These measures collectively aim to support the growth, competitiveness, and global expansion of MSMEs, as well as enhance manufacturing capabilities and infrastructure across the country.
Priority 5: Enhancing Urban Development
The budget emphasizes the continuation and intensification of initiatives aimed at transforming cities into thriving growth hubs. This vision will be realized by implementing strategies for economic and transit planning, as well as promoting well-structured development in peri-urban areas through town planning schemes. Key measures to achieve this include the implementation of Transit Oriented Development, increased housing projects under the PM Awas Yojana Urban, the introduction of enabling policies and regulations to foster efficient and transparent rental housing markets, and the reduction of stamp duties for properties purchased by women, among other initiatives.
Priority 6: Ensuring Energy Security
In order to maintain a high level of resource-efficient economic growth and ensure energy security in terms of availability, accessibility, and affordability, the government will introduce a policy document outlining suitable pathways for energy transition. These pathways will strike a balance between the imperatives of employment, economic growth, and environmental sustainability.
The plan includes several components to achieve energy security. These components encompass initiatives such as the PM Surya Ghar Muft Bijli Yojana, which aims to provide free electricity to households, the implementation of a Pumped Storage Policy, the development of small and modular nuclear reactors, the establishment of Advanced Ultra Super Critical Thermal Power Plants, and the formulation of a roadmap for "hard to abate" industries. These measures collectively contribute to the objective of attaining energy security while addressing the challenges of sustainable development and meeting the energy needs of various sectors.
Priority 7: Enhancing Infrastructure
Infrastructure development has been a focal point of the Modi government's economic accomplishments. The government has achieved remarkable progress in constructing roads, highways, railway stations, airports, tunnels, bridges, and more, at an impressive pace. Budgetary allocations for this sector have consistently been substantial in recent years. The construction and improvement of infrastructure have yielded significant economic benefits through its multiplier effect. The government intends to continue providing robust fiscal support for infrastructure development over the next five years.
The plan includes various components to enhance infrastructure. These components encompass long-term interest-free loans to states for infrastructure creation, the establishment of a market-based financing framework, the provision of viability gap funding, and the implementation of enabling policies and regulations to encourage private sector participation. These measures collectively aim to strengthen infrastructure development by fostering collaboration between the public and private sectors and ensuring sustainable financing models.
Priority 8: Advancing Innovation, Research & Development
In order to propel India towards becoming a developed nation, it is crucial to amplify efforts in innovation and research and development (R&D). The government will take tangible steps to operationalize the Anusandhan National Research Fund, which will support fundamental research and prototype development. Additionally, a mechanism will be established to stimulate private sector-led research and innovation at a commercial scale, with a financing pool of Rs 1 lakh crore. Furthermore, to expand the space economy by fivefold within the next decade, a venture capital fund of Rs 1,000 crore will be established. These initiatives collectively aim to foster a thriving culture of innovation, drive scientific research, and stimulate technological advancements in India.
Priority 9: Advancing Next Generation Reforms
The Modi government has consistently pursued economic reforms, both significant and incremental, as a central theme. Reforms such as the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), and Direct Benefit Transfer (DBT) have been instrumental in transforming the economy. Sitharaman highlighted that the focus of Modi 3.0 is to reform all elements of production. In line with this vision, the Budget announced the formulation of an Economic Policy Framework to outline the comprehensive approach to economic development and define the scope of the next generation of reforms.
The government will initiate and incentivize reforms aimed at enhancing the productivity of various factors of production and fostering greater efficiency in markets and sectors. These reforms will encompass all key factors of production, including land, labor, capital, entrepreneurship, and technology as a catalyst for improving overall factor productivity and bridging inequality. One such reform that holds significant importance for the government is the proper identification and mapping of urban and rural land, along with the digitization of land records.
These forthcoming reforms reflect the government's commitment to driving sustainable economic growth, promoting efficiency, and leveraging technology to create an inclusive and equitable society.
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