By Dr. Padmalochan Dash
AHAMEDABAD: India’s pursuit of economic ascendancy continues with a strategic focus on building a self-reliant manufacturing sector, bolstering the workforce through skill development, and modernising the nation’s infrastructure. Budget 2025 stands as a testament to the government’s commitment to transforming India into a global economic powerhouse. This analysis delves into the various provisions of the budget and assesses how these measures will drive India’s competitiveness in the global market.
- Empowering the Middle Class: Tax Reforms for Growth
The Budget 2025 brings significant tax relief aimed at boosting the disposable income of India’s middle class. A notable change is the exemption of incomes up to ₹12 lakh from taxation, which directly supports household consumption. By alleviating the financial strain on this crucial demographic, the government aims to stimulate demand across industries, thus nurturing domestic manufacturing and services.
Additionally, the simplification of tax procedures through the new Income Tax Bill will lower compliance complexities, creating a more efficient and transparent system for businesses and taxpayers alike. The extension of the tax filing window is another progressive step towards enhancing financial accountability. While these measures have the potential to increase consumption, their success hinges on effective outreach, especially in rural regions where access to digital infrastructure may still be limited.
- Fostering Growth Through MSMEs and Start-ups
Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India’s economy. Budget 2025 introduces important reforms to uplift MSMEs by raising the investment and turnover thresholds, allowing more enterprises to qualify for government incentives. This move is expected to spur innovation and enhance the competitiveness of MSMEs, enabling them to better integrate into global supply chains.
Furthermore, the ₹10,000 crore allocation to the Fund of Funds will strengthen credit access for start-ups and MSMEs, providing much-needed capital for expansion. While these measures are commendable, the challenge lies in ensuring equitable access to funds, particularly for smaller businesses with limited resources. The implementation of these initiatives must be monitored to ensure that they reach those in greatest need, and bureaucratic obstacles should be addressed to make the process more efficient.
- Strengthening the Industrial Backbone
India’s industrialisation is key to its economic future, and Budget 2025 prioritises strengthening domestic production. A prime example of this focus is the establishment of a fertiliser plant in Assam with a capacity of 12.7 lakh metric tonnes annually, reducing dependency on imports. Similarly, the revival of dormant urea plants will rejuvenate local economies and create employment opportunities.
These efforts align with India’s broader goal of self-sufficiency, yet the success of this strategy depends on the maintenance of high product standards and robust quality control mechanisms. Expanding domestic manufacturing capacity is a step forward, but ensuring that India meets global standards will be vital in boosting its export potential.
- Skill Development: Building a Future-Ready Workforce
India’s demographic advantage can only be fully realised through targeted skill development. The establishment of five National Manufacturing Skill Centres will equip the workforce with the expertise needed to meet the demands of an increasingly digital and automated economy. Additionally, the expansion of educational infrastructure, such as the addition of 6,500 IIT seats, aims to prepare India’s future workforce for sectors like IT, engineering, and healthcare.
While these initiatives lay a strong foundation for a skilled workforce, aligning educational curriculums with the rapid pace of technological change remains a challenge. Continuous industry collaboration is necessary to ensure that the training provided meets the evolving needs of the job market.
- Empowering Women and Marginalised Groups
The budget places a significant emphasis on fostering inclusive growth by empowering women and marginalised communities. Through targeted entrepreneurship schemes and enhanced financial inclusion initiatives like the PM Swanidhi Scheme, the government aims to provide economic opportunities to street vendors and first-time entrepreneurs from underrepresented communities.
These initiatives represent a step towards ensuring that India’s economic growth benefits all segments of society. However, the effectiveness of these measures will depend on their implementation. Overcoming societal biases, improving access to technology, and enhancing financial literacy among marginalised groups will be crucial for ensuring these programmes’ success.
- Transforming Urban India: Infrastructure and Development
The ₹1 lakh crore Urban Challenge Fund marks a significant investment in the development of India’s urban infrastructure. This fund aims to address key urban challenges, including overcrowding, pollution, and inadequate water management. By investing in sustainable urban planning, the government is preparing Indian cities for the future, making them attractive for both domestic and international investors.
In addition, the expansion of regional connectivity through the UDAN scheme and the ₹1.5 lakh crore allocated to PPP-based infrastructure projects will bolster India’s trade and tourism sectors. However, successful implementation will require efficient coordination between central and state governments to avoid bureaucratic delays and ensure timely completion of projects.
- Strengthening Agriculture and Rural Development
Agriculture remains a cornerstone of India’s economy, and the Budget 2025 focuses on improving the sector through various initiatives. The introduction of the Dhan Dhanya Krishi Yojna and the expansion of the Kisan Credit Card scheme will enhance credit access for farmers, facilitating investment in modern farming techniques and enhancing productivity. Additionally, the Atmanirbharta programme in pulses will reduce dependence on imports and increase self-sufficiency.
However, the success of these initiatives will depend on overcoming challenges in implementation, particularly in rural areas where access to information and resources is often limited. Ensuring that farmers are adequately educated about these schemes will be critical to their success.
- Sustainability and Energy Transition
Budget 2025 outlines an ambitious energy transition plan aimed at achieving a sustainable and self-reliant energy future. Key initiatives include the expansion of nuclear energy capacity and the promotion of green hydrogen ecosystems, which are crucial for reducing India’s reliance on fossil fuels. Additionally, the Jal Jeevan Mission’s focus on providing potable water to all households is a significant step towards improving public health.
However, the transition to renewable energy presents challenges, particularly in upgrading infrastructure to support cleaner energy sources. A well-managed approach to energy grid integration will be essential to avoid disruptions in supply and ensure long-term sustainability.
- Digital Transformation and Technological Advancements
The digital sector receives a major boost with the allocation of ₹500 crore to establish a Centre of Excellence in Artificial Intelligence (AI). This initiative will foster AI-driven learning and innovation, particularly in industries such as education and technology. The introduction of the National Geospatial Mission and the reforms in KYC processes further streamline business operations and enhance India’s digital infrastructure.
While these measures are promising, addressing data privacy and cybersecurity concerns will be paramount as India increases its reliance on digital technologies. Ensuring that robust security frameworks are in place will help protect sensitive information and maintain public trust in the digital economy.
- Strengthening India’s Position in Global Trade
India’s aspiration to become a global trade leader is evident through its reforms in foreign direct investment (FDI) and export competitiveness. The increase in the FDI cap for the insurance sector and the reduction of tariff slabs reflect the government’s commitment to making India an attractive destination for international business. At the same time, fiscal discipline, as evidenced by the targeted reduction of the fiscal deficit, ensures macroeconomic stability.
These steps are critical to improving India’s global trade position, but balancing tariff reductions with the protection of nascent domestic industries will be essential. Without safeguards, premature liberalisation could undermine the growth of India’s own manufacturing base.
Conclusion: Strategic Investments for Long-Term Growth
Budget 2025 sets the stage for India’s rise as a global economic leader, with strategic investments in manufacturing, skill development, infrastructure, and sustainability. However, the success of these ambitious plans will require careful execution and a focus on regional inclusivity to ensure that the benefits of growth are realised across all sectors of society. With continued strategic planning and monitoring, India is well-positioned to navigate the challenges of the global economy and secure its future as a competitive force on the world stage.
(The Writer Dr Padmalochan Dash is an Eminent Researcher on Foreign Policy and India’s Ties with South Asian Countries). Views Expressed are personal.
