Initiatives for both manufacturing and service during Geopolitical instability

With over 60% of emerging economies and 40% of advance economices nearing 100% debt-to-GDP levels, these nations face significant interest payments, limited space for development expenditure, and ‘higher-for-longer’ inflaction.

Combined with the geopolitical instability and capital outflows to advanced economies, these countries face a high risk of slowdown and macro-economic instability. India, however, remains in a more comfortable position. Nirmala Sitharaman’s 6-years fiscal roadmap reassures that the country is likely to maintain this stability.

This budget outlines a 7% increase in spending compared to the current year, signalling GoI’s commitment to growth through strategic investments. The short-term priority is to stimulate consumption. The FM’s aim is to unlock the potential for higher disposable incomes for a large portion of the population through a wholesale revision of I-T rates, enhanced credit flow to farmers, urban street vendors, fisher men and women entrepreneurs, as well as a strong package of measures to leverage the tourism sector.

There has been on going about whether India should prioritise manufacturing or services as its primary growth driver. Given India’s success in electronics manufacturing and the software sector, both industries have significant growth potential. GoI has wisely pursued a balanced approach by announcing initiatives for both manufacturing and services.

Incentives for capital goods manufacturing are particularly noteworthy. India needs to start producing machines that enables final-stage assembly in sectors such as pharmaceuticals, clean energy and auto.

The budget’s emphasis on boosting agriculture, unleashing entrepreneurship and manufacturing, increasing exports and undertaking critical reforms positions India well to navigate global economic challenges, while paving the way for future balanced growth. Budget 2025 sets a strong foundation for growth, innovation and resilience.

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