As the Indian government prepares to present its budget on February 1, 2025, there are high expectations across several key sectors that are poised to shape the nation’s economic trajectory.
1. Export
Trump 2.0 (read enhanced tariffs) and the ongoing geopolitical flares will continue to keep global trade volatile. Nothing that the Indian government does will guarantee that our exports are sat safe in querencia. India will have to sweat it out to get to its $2 trillion export target by 2030, and reduce the over $200 billion trade deficit in the near term. We expect the government to announce steps on the following:
· Increase export competitiveness not just through the rupee devaluation, which might have already reached an inflection point beyond which it start hurting growth, if not already.
· Higher focus on manufacture of equipment and machinery – both for exports and for enabling increased multifactor productivity, especially in farm/agricultural sector. India’s Digital stack is doing its job in increasing productivity but now it is the hardware that will be needed to make the difference.
·Thrust on exports from manufacturing (while keeping the momentum on the services sector), especially through decluttering and simplifying the delivery mechanisms of the government schemes like PLI or schemes to support to MSMEs which are currently in a quagmire of red tapes of the bureaucracy and the banking systems.
2. Increased spending power
More disposal income in the hands of the consumers will give a fillip to growth. We expect the following from the government:
· Steps to tame inflation, especially food inflation, to spur rural demand.
· Rationalization of the tax structure – bringing larger population within a tax net while reducing burden on the low, middle-income groups.
· Mechanisms to cut the current interest rate structures, which are a big deterrent to borrowing to increase consumption.
3. Infrastructure spending
This is key component for increasing the multiple factor productivity of the economy and yet the areas which need most attention – poor infrastructure in the cities like Bangalore which could be burning over $1 billion dollar in traffic jams , is not suitably addressed. This is in the State-List but clearly, the local delivery vehicles have failed. It is expected that the Budget will figure out a way to address this issue.
4. Climate Financing:
India is one of the most affected countries by climate change; billions are spent in dealing with the aftermath of climate change. Some form of carbon pricing or carbon tax, however small, to change behaviors of the players in the hard to abate sectors – Steel, Cement, and Power will be needed.
This will be key to ensuring projects in carbon capture and storage are implemented and enough is available for innovation and R&D in technologies that help reduce the costs in this sector. The pusillanimous attitudes towards dealing with the need for carbon capture and storage to combat climate change (beyond wind and solar) need to be changed ASAP. This Budget can make a start.
(The author is Group CEO, Nauvata Energy Transition (NET) Enterprise)
For detailed information and further insights, please refer to BioEnergyTimes.com, which provides the latest news about the Biomass Industry
