A message of fiscal stability, growth continuity
For Prelims:
- Fiscal Deficit: Understanding fiscal deficit targets and their implications.
- Gross Domestic Product (GDP): Key growth figures and their significance.
- Micro, Small, and Medium Enterprises (MSMEs): Budgetary provisions and support mechanisms.
For Mains:
- GS III: Economic Development: Fiscal Stability and Growth Continuity - Union Budget FY25
Highlights of the Article
- The FY25 Union Budget emphasizes fiscal stability and growth continuity.
- Expected to maintain fiscal deficit at 4.9% of GDP.
- Significant measures for employment generation and MSME support.
- The budget reflects a focus on inclusive growth, addressing weaker building blocks like employment quality and agriculture.
Context
The FY25 Union Budget, under the new administration, highlights a firm commitment to fiscal stability and sustainable growth. Despite pressures from regional partners and new demands, the government aims to promote inclusive growth, ensuring that benefits reach the broader population and not just the affluent segments.
UPSC Exam Notes Analysis
1. Introduction
The FY25 Union Budget sends a clear message of maintaining fiscal stability while driving inclusive and sustainable growth. This analysis examines the budget's provisions, focusing on key areas like employment generation, support for MSMEs, and the overall economic strategy aimed at achieving a "Viksit Bharat" by 2047.
2. Fiscal Stability and Growth Continuity
- Fiscal Deficit Management: The budget targets a fiscal deficit of 4.9% of GDP for FY25, down from the interim estimate of 5.1%, aligning with the broader objective of reducing the deficit to 4.6% by FY26. This demonstrates a commitment to fiscal consolidation amidst growth measures.
- GDP Growth: The FY24 GDP growth rate stood at 8.2%, though unevenly distributed. The FY25 budget aims to address this disparity through targeted measures supporting the lower end of the income pyramid.
3. Employment Generation
- New Schemes: A significant focus on creating employment opportunities, especially for the youth. New schemes include incentives for first-time workforce entrants with an outlay of ₹10,000 crore, and internships with an outlay of ₹2,000 crore.
- Tripartite Compact: In line with the Economic Survey's recommendations, the budget promotes collaboration between the Centre, States, and the private sector to meet the aspirations of Indian youth.
4. Support for MSMEs
- PLI Scheme: The Production Linked Incentive (PLI) scheme received a 75% budget increase, primarily benefiting the auto sector. This is aimed at bolstering domestic manufacturing and local value addition.
- Financial Assistance: MSMEs will receive facilitated term loans for machinery and equipment purchases without collateral, alongside support for continuous lending even during economic stress.
5. Agriculture and Rural Development
- Atmanirbharta in Agriculture: Emphasis on self-reliance in pulses and oilseeds, alongside significant budget allocations for agricultural research and Digital Public Infrastructure (DPI) to support farmers.
- Housing for All: A 37% budget increase for the urban Pradhan Mantri Awas Yojana (PMAY), with a 70% increase for its rural counterpart, reflecting the government's commitment to housing as a key developmental pillar.
6. Policy and Mitigation Strategies
- Capex and Welfare Spending: The budget maintains the capital expenditure target at ₹11.1 trillion, using gains from the Reserve Bank of India's high dividend transfer to balance welfare spending and fiscal deficit reduction.
- International Scrutiny and Sovereign Rating: With domestic bonds being included in global indices, adherence to fiscal discipline enhances India's prospects for a sovereign rating upgrade.
7.Conclusion
The FY25 Union Budget underscores a balanced approach to economic growth, ensuring fiscal stability while addressing key developmental challenges. By focusing on employment generation, MSME support, and agricultural development, the budget aims to foster inclusive growth and prepare India for future economic opportunities.
The comprehensive approach towards fiscal management and strategic investments lays the foundation for sustainable development, reflecting the government's resolve to achieve a resilient and equitable economic landscape by 2047
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Mains Practice Questions 1. Analyze the impact of the increased budget allocation for the Production Linked Incentive (PLI) scheme on the MSME sector. How do these financial support measures help in enhancing local manufacturing and value addition? 2.Discuss the implications of India's adherence to fiscal discipline on its inclusion in global bond indices and the potential for a sovereign rating upgrade. How does this reflect on the country's economic stability? 3.Discuss the measures taken by Union Government to ensure fiscal stability while promoting sustainable economic growth. How do these measures align with the broader objective of achieving a 'Viksit Bharat' by 2047? |
