By Rajesh Mehta
Its clear that after 1991, the budget of 2023 is India’s most consequential. As the world’s eye is on India, its a positive sign to see how the finance minister has lived up to expectations. India continues to be the one bright spot in the global economy as we continue to grow in line to be the third largest economy by 2030 given our strong demographic dividend. The budget gives a lot of reason for excitement to the Indian middle class and the poor. India’s economic growth is forecast to be 6.5% in fiscal 2024 according to the Economic Survey released by the government a day ahead of the Union Budget presentation. This makes India one of the best countries for international investors to invest in especially when it comes to green energy and sustainability projects.
As Prime Minister Modi in his speech previously pointed out that we’re the fastest growth among the major economies, the government has continued its boost of manufacturing to continue the high growth rate. This allows India to capitalise on the China Plus One strategy and generate immense employment for the masses as well as help develop the rural areas of the country. Companies that manufacture in India will receive marked support in the form of exemptions and benefits. MSMEs too have received a sharp increase in investment. Mr Sumeet Anand, President, Indo-French Chamber of Commerce and Industry adds “This budget affirms the India growth story with the Govt’s continued focus on capital expenditure in public infrastructure, sustained support to agriculture to manage inflation and measures to support rural and urban consumption, while retaining its path to improved macro economic indicators. Nothing adverse for foreign investors, only positive”.
This emphasis on Aatmanirbharta is also a welcome development for laying the foundation for future development. There is also emphasis visible in simplifying the ease of doing business thereby making it easier for foreign companies to move to India. India is also investing billions of dollars to boost manufacturing and attract foreign investment in the rapidly growing country. More money is likely to flow into India as advanced economies face “recessionary tendencies” while India’s inflation remains below 6%, the Economic Survey said. This will lead “to an improvement in animal spirits” and increase private sector investment.
The budget has also made major progress towards incentivising renewable energy and more research in green hydrogen. India continues to do its fair share for reducing its carbon footprint and developments in green technology will further accelerate India’s development towards a sustainable future and making it a green energy hub for times to come. This will also allow India to be increasingly unaffected by the carbon tax imposed by Carbon Border Adjustment Mechanism (CBAM) by the EU among others down the line. The CBAM applies a carbon tax to goods imported into the EU that have higher carbon emissions compared to equivalent goods produced within the EU, thus, disincentivizing high carbon output products.
The EUs focus on carbon efficiency is well received in India and the transition to sustainability will allow India & the EU to see eye to eye over the years by making Indian products increasingly competitive with reducing carbon use in creating them. Mr Poul V. Jensen, the MD at European Business and Technology Centre (EBTC) pointed out “For me it was encouraging to see how India’s Net Zero strategy was stitched into the Union Budget, by way of having one of the 7 priority areas being Green Growth. My excitement is for twofold: firstly, with the focus on Green Agriculture, Green Mobility, Green Energy, Green Buildings, and Green Manufacturing, India is contributing to the global climate goals, benefiting all. Secondly, the focus presents immense opportunities for collaboration between India and Europe, at all levels – in technology, finance, business, and project implementation; in these fields India and Europe are a perfect fit, a natural partnership.”
The budget’s focus on electric vehicles is also clearly visible. Electric mobility has continued to be on the government’s agenda and the results are visible in this budget too. The sector has received strong support and encouragement. Stakeholders and companies can expect this market to expand over the years and replace the current stock carbon-fuel powered of vehicles as we go along.
In sum, the budget gives companies a lot to be excited about. In particular the India-EU partnership can find greater footing as sectors such as green energy and manufacturing in India are only set to expand as evidenced by Nirmala Sitaraman’s budget today. Ease of doing business, support to renewables, upskilling of the youth and additional development of digital infrastructure such as Digilocker will all help enhance India’s image in the world. It is also great to see that India is on the road to becoming a global hub for millets and the positive talk on sustainable cities of tomorrow. In addition, the Finance Minister mentioned the saptarishis- inclusive development, reaching the last mile, youth power, financial sector, green growth, unleashing the potential and finally infrastructure & investment that’ll help propel this aspiring country on a high growth, high development trajectory. At the same time, with a current fiscal deficit above 6%, and a reduction in net revenue, the fiscal deficit is set to grow. Yet, the message of the budget remains clear- India remains open for business.
(Author is an international affairs expert focussing on areas like market entry, innovation, geopolitics and public policy. Views are personal.)
