Finance Minister Nirmala Sitharaman, in her last Budget before general elections in 2024, has presented an all-encompassing, growth focused financial roadmap that is aligned to India’s aspiration of achieving ‘developed economy’ status by 2047.
Growth Oriented Yet Fiscally Prudent
The Finance Minister has adeptly struck a balance between fostering economic growth and maintaining fiscal prudence in this Budget.
To establish itself as a large consumer and a sizeable global manufacturer, India has been investing significantly in infrastructure in recent years. In keeping with this strategy, the FM announced a 11% YoY increase in the capital expenditure target to Rs. 11.11 lakh crore, representing 3.4% of the GDP. This will fund the creation of digital, social, and physical infrastructure such as housing, railways, ports, tourism, and logistics. She also refrained from making significant alterations to tax rates for FY25, while extending the tax benefits to startups by another year.
I would like to laud Ms Sitharaman for being fiscally prudent while budgeting for higher infrastructure spending. She has proposed to bring down the fiscal deficit to 5.1% in FY25 from 5.8% in FY24 in line with the target of reducing the deficit to below 4.5% by FY26.
Boosting Pharmaceutical R&D and Manufacturing
The pharma and biopharmaceuticals industry in India can become a significant value creator for India. It aspires to reach a size of $120-130 billion by 2030 from $50 billion in 2023. As a key stakeholder in the industry, I am delighted to note the government’s recognition of this sector as a sunrise industry. The creation of a corpus of Rs 1 lakh crore for long term financing at zero or low interest for sunrise domains is a welcome move in line with Prime Minister Narendra Modi’s vision of Jai Anusandhan to boost research and innovation. Higher allocation to R&D will allow India to move up the value chain from being a volume player in generics to an innovation hub for novel therapies.
I also welcome the launch of the biomanufacturing scheme aimed at biopharmaceuticals, which will support India’s aspiration to achieve a $150 billion Bioeconomy by 2025.
Towards an Environmentally Sustainable Future
Initiatives such as viability gap funding for harnessing offshore wind energy, financial aid for biomass segregation, promotion of eco-friendly alternatives such as bioplastics and biofuels, rooftop solarization, and push towards green transportation with the expansion of the electric vehicle ecosystem are all important for India’s commitment to reaching its net-zero emission target by 2070.
Prioritizing Healthcare
The Budget was also directionally very positive for India’s gradual move towards genuine universal healthcare. The proposed cervical cancer vaccination for girls and the extension of Ayushman Bharat to ASHA workers, anganwadi workers, and helpers demonstrate a commendable commitment to public health. The consolidation of maternal and child health schemes under a single umbrella is a strategic move that can ensure efficiency in implementation.
Global Engagement
With its demonstrated leadership at the G20, the government said it is negotiating bilateral investment treaties with overseas partners to encourage sustained foreign investment that aligns with the spirit of “building for India and building for the world”.
Women’s Empowerment
Economic empowerment of women is extremely important to bridge the gap of gender inequality. The government has been acting steadily on its commitment to raise women’s workforce participation as is evident from the 28% increase in female enrolment in higher education, including 43% in STEM courses. Focused efforts on entrepreneurship, notably the MUDRA Yojana, have resulted in greatly supporting women entrepreneurs and achieving the goal of “improving people’s capability and empowering them.”
Conclusion
The Finance Minister has taken a pragmatic approach in presenting a Budget that prioritizes stability and consistency over populism. Her commitment to fiscal prudence while investing in the upliftment of poor, welfare of farmers, empowerment of women and skilling of youth is indeed praiseworthy. The Budget’s focus on research & innovation, biomanufacturing, green technologies, infrastructure development and technology-driven digital transformation is in line with the Prime Minister’s commitment to ‘Sabka saath, sabka vikas.’
I believe that the initiatives outlined in this Budget will contribute positively to fostering a business-friendly environment and spur India’s transition to an advanced manufacturing and knowledge-led economy.
Kiran Mazumdar-Shaw, Executive Chairperson, Biocon and Biocon Biologics
(A version of this article appeared in the Opinion section of The Economic Times on Friday, February 2, 2024, with the headline ‘A strong push for India’s journey towards genuine universal healthcare, manufacturing, R&D: Kiran Mazumdar-Shaw’)
