Budget to re-energize economy by lifting sentiments of the middle class and nudging private sector to invest: FICCI

NEW DELHI, 01 February 2025: Commenting on the Union Budget 2025-26 proposals announced earlier today, Mr Harsha Vardhan Agarwal, President, FICCI said, “Through the Budget the government has made a strong effort to address the immediate challenges being faced by the economy, particularly on the consumption front, while keeping an eye on the long-term target of pursuing the vision of ‘Viksit Bharat’. FICCI would like to compliment the Finance Minister for a comprehensive, inclusive and forward-looking budget that encompasses a heavy dose of reforms, fiscal stimulus and a clear focus on the farm sector, MSMEs, youth and women of the country.”

“The Budget proposals will re-energise the economy by lifting the sentiments of the middle class and nudging the private sector to advance its investment plans as demand improves across sectors,” he added.

The Budget was presented at a time when the economy was seeing a slowdown in growth and FICCI had requested the government to consider taking steps that would spur both consumption and investment demand. The changes brought about in the personal income tax structure are noteworthy and will leave more money in the hands of the people translating into higher consumption demand. Likewise, while the increase in the capital expenditure of the government may seem modest compared to the previous years, it is still a good sign.

The agriculture sector once again saw a huge thrust being placed on it with the government announcing a focused program that would cover 100 districts with low productivity, moderate crop intensity and below-average credit parameters. FICCI had requested in its pre-budget submission that an agricultural yields mission for bottom 100 districts similar to aspirational districts programme must be considered by the government and we are happy to note that this suggestion has been taken up in the budget. Additionally, the announcement pertaining to launch of a National Mission on High Yielding Seeds will aid the country’s efforts to mitigate the impact of climate change on the farm sector. Further, the six-year mission focusing on improving yields of pulses will help us address the inflationary pressures seen in this important category of food, which is a primary source of protein for many Indians. The private sector of the country stands ready to partner the government in both these missions and support the same in all possible manner.

The MSME sector of the country also came in for a special mention in the budget. The twin measures of revision of the classification criteria for MSMEs as well as doubling the credit limits with guarantee cover will have a far-reaching effect on the growth of this vital sector that forms the backbone of our economy. Further, the specific measures announced for labour intensive sectors such as footwear, leather, food processing and toys – all of which are dominated by MSMEs – will give a leg up to employment especially in the tier 2 and tier 3 towns and cities of the country.

On the infrastructure side, we saw the budget focus on maritime sector through a new Maritime Development Fund that was announced. This will give a boost to marine economy, especially in the coastal states of the country, creating growth opportunities for both trade and the blue economy related segments. FICCI has also noted with interest the plan to connect 120 new destinations under the UDAN scheme as this too will enable new economic opportunities spurring the newly connected regions of the country as emerging growth centres.

To supplement the efforts towards Make in India for the World, the budget also saw inclusion of a series of measures targeting promotion of exports. Most notable amongst these is the launch of a new digital public infrastructure – Bharat Trade Net – that would be a unified platform for trade documentation and financing solutions for our merchant and merchandise exporters. Our government is increasingly using India’s technical and digital capabilities in new spheres for enhancing the ease of doing business. FICCI hopes that through this new DPI, the various touch points for exporters will be unified enabling seamless exchange of information. This would improve efficiency in the exports process and bring down the cost and time of doing business.

The budget also contained many measures to improve the skilling ecosystem in the country so that our youth get trained on the new emerging technologies that are seeing a rise in demand in the industry. In this context the decisions taken to expand capacity in the country’s premier technical instititution – IITs, expand number of seats under medical education, setting up of 50,000 Atal Tinkering Labs and a new Centre of Excellence for imparting education in AI are indeed commendable. These steps would strengthen India’s credentials as a source of skilled manpower in the world that can cater to demand both at home and abroad.

In addition to the above announcements, FICCI also welcomes initiatives pertaining to introduction of a revamped Central KYC registry, introduction of a new Income Tax Bill, introduction of Jan Vishwas Bill 2.0, further measures for regulatory reforms and reduction in the number of applicable customs tariff rates. All these are geared towards promoting ease of doing business in the country and underline government’s continuous endeavours towards the adage  ‘Minimum Government, Maximum Governance’.