Press Release
Aashnaa
The Center for the Study of Finance and Economics (CSFE), IMPRI Impact and Policy
Research Institute, New Delhi, hosted an interactive panel discussion on the topic “New
India’s Economic Transformation and Union Budget 2024-25″ on 26th July 2024, under the
IMPRI 5th Annual Series of Thematic Deliberations and Analysis of Union Budget 2024-25.
The focus was on key policy shifts, transformative initiatives, and visionary strategies shaping the country’s economic trajectory. This analysis highlighted the pivotal changes and innovative measures driving India’s growth and development.
Prof. Mukul Asher, Visiting Distinguished Professor at IMPRI and former Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore (NUS), offered a detailed analysis of India’s Union Budget 2024. He described the budget as fiscally prudent, maintaining macroeconomic stability—a critical factor for India’s credit rating and its ongoing
internationalization efforts. A key feature of the budget is the introduction of numerous
initiatives aimed at enhancing India’s comprehensive national power (CNP). The budget projects a nominal GDP of 326.4 trillion INR for 2024-25, with a growth rate of 10.5%. This projection signifies a strategic shift from targeting fiscal deficits to focusing on debt-to-GDP ratios, a move that aligns with international fiscal standards.
Prof. Asher also emphasized that GDP alone is not a sole measure of CNP. Comprehensive
national power encompasses economic strength, future economic prospects, self-reliance, and
technological advancements. Among the key priorities, the budget focuses on enhancing
productivity and resilience in agriculture to achieve a developed India (Viksit Bharat). Prof.
Asher noted that the debate between prioritizing manufacturing versus services is becoming
increasingly irrelevant, as both sectors are crucial for India’s development. These priorities,
linked to the broader definition of CNP, demonstrate the budget’s strategic approach to achieving comprehensive national power.
Dr. Radhika Pandey, Senior Fellow at the National Institute of Public Finance and Policy
(NIPFP), New Delhi, and Visiting Senior Fellow at IMPRI, identified significant differences
between the interim budget and the Union Budget 2024. Despite a dynamic political landscape
and varied sectoral expectations, the focus on fiscal consolidation remains strong, aided by
higher-than-expected dividends from the Reserve Bank of India (RBI).
The budget effectively balances fiscal consolidation with increased spending. It introduces a new fiscal framework aimed at reducing the debt-to-GDP ratio, with portions of the RBI’s dividends allocated to key initiatives like the Pradhan Mantri Awas Yojana and employment-linked incentive schemes. This approach aims to enhance fiscal transparency, attract foreign investment, and lower borrowing costs, strengthening India’s economic power globally.
Dr. Pandey observed a gradual decline in revenue expenditure alongside a rise in capital
expenditure (capex). Provisions for 50-year interest-free loans to state governments are designed to boost capex and improve state infrastructure. However, she expressed concerns about the limited time left in the fiscal year and the government’s ability to fully utilize the allocated capex, especially given the muted capex during the election cycle. Despite these concerns, Dr. Pandey considers the revenue assumptions in the budget reasonable and achievable, providing a solid foundation for the outlined fiscal plans.
Prof. A Amarender Reddy, Joint Director at the School of Crop Health Policy Support
Research (SCHPSR), ICAR-National Institute of Biotic Stress Management (NIBSM), Raipur,
provided valuable insights into the agricultural sector and rural development in India’s Union
Budget 2024. He highlighted the government’s awareness of significant productivity gaps
between the agricultural and non-agricultural sectors. Despite rapid growth in the
non-agricultural sector, a large portion of the population remains dependent on agriculture,
necessitating increased productivity.
Prof. Reddy emphasized the critical role of research, development, and innovation in driving
agricultural productivity. Most agricultural research is currently conducted within the public
sector, and the government aims to revamp this by incentivizing private sector participation.
Addressing regional disparities, particularly in rain-fed areas and eastern India, is a key focus
due to stagnant farmers’ incomes in these regions.
The budget prioritizes increasing the productivity of pulses and oilseeds to reduce import
dependency and enhance self-sufficiency. By targeting technological adoption and productivity
improvements, the government aims to strengthen economic resilience and boost India’s
competitiveness in global markets. Natural farming is also a significant focus, aiming to reduce
subsidy costs for both farmers and the government. Additionally, the budget highlights the
importance of digital infrastructure to facilitate value addition for farmers.
Prof. Reddy emphasized the need to bridge the gap between research labs and practical
implementation on farms. It is essential to address the disconnect between government policies and state-level execution through improved digital infrastructure for effective outcomes.
Prof. Prabir De, Professor at the Research and Information Systems for Developing Countries (RIS), New Delhi, emphasized the crucial role of international trade and global engagement in realizing India’s economic goals.
He stressed the need for India to adapt its international trade strategy to the changing global economic landscape, arguing against protectionist policies in favor of stronger global connectivity and trade networks. While acknowledging the rise in India’s exports, Prof. De highlighted the importance of diversifying beyond primary goods to sectors such as pharmaceuticals and electronics.
Prof. De identified digital technology as a transformative force in India’s economy. He noted that advancements in digital payment systems and e-commerce are reshaping the economic
environment, with digital services expected to significantly contribute to GDP growth and alter
the structure of India’s exports and services.
A critical area highlighted by Prof. De is the necessity for a substantial increase in capital
expenditure, particularly in infrastructure. The current annual infrastructure budget of $1.63
trillion needs to nearly double to $7 trillion by 2047 to support India’s growth and development, as high-quality infrastructure is essential for economic expansion. Additionally, he underscored the importance of pursuing strategic free trade agreements (FTAs) to bolster India’s global trade position. These agreements aim to enhance trade and align with India’s broader economic and strategic goals. Successful FTAs would improve market access and support India’s aspiration to become a leading global economy.
The Union Budget 2024-25 reflects a cohesive strategy to support India’s vision of ‘Viksit
Bharat.’ The array of measures, including reductions in customs duties, increased capital
expenditure, and targeted support for MSMEs and e-commerce, are not isolated actions but
integral parts of a broader plan to drive sustainable economic growth and infrastructure
development. By addressing key areas such as manufacturing, digitalization, and regional
cooperation, the budget aims to foster a comprehensive economic transformation, paving the way for India to achieve its aspirations of becoming a developed nation.
MPRI’s 5th Annual Series of Thematic Deliberations and Analysis of Union Budget 2024-25
IMPRI’s 5th Annual Series of Thematic Deliberations and Analysis of Union Budget 2024-25
Watch the event at IMPRI #Web Policy Talk
New India’s Economic Transformation and Union Budget 2024-25
Acknowledgement- This article was written by Aashnaa, Research intern at IMPRI
