The Union Budget 2024 aims to strengthen India’s economic framework and fostering inclusive growth. A central theme and laudable aspect of the budget is the continued emphasis on the development of key demographics such as the poor, women, youth, and farmers. Special focus has been given to employment, skilling, and support for Micro, Small, and Medium Enterprises (MSMEs). By empowering these groups, the budget aims to boost overall economic demand and growth.
The budget’s allocation of Rs 10 lakh crore for urban development underscores the importance of comprehensive infrastructure development. Allocation of funds for city development in housing, transparent rental housing, water and sanitation, street markets, and interest subsidies are aimed at improving urban living standards and boosting purchasing power. These initiatives are expected to drive higher consumption of goods and services, as improved urban infrastructure and living conditions will lead to greater demand for various products.
Also the Budget 2024 admirably underscores the government’s commitment to sustainability and green energy by allocating significant funds for renewable energy projects. These initiatives not only address environmental concerns but also position India as a leader in sustainable development. The emphasis on building digital public infrastructure will create a more efficient and competitive economy, benefiting multiple industries through operational efficiencies and expanded market access, particularly in underserved regions.
In direct tax, FM Nirmala Sitharaman has tweaked the slabs under the new tax regime in a manner that could potentially help taxpayers see a net gain of around Rs 17,500 in a year and even though it is smaller, something is better than nothing. This move is expected to enhance disposable incomes across households, leading to increased consumer spending.
Additionally, the introduction of new employee-linked incentive schemes for job creation in manufacturing is set to stimulate employment and support the industrial sector. This focus on job creation is expected to increase the consumer base for a wide range of products, as a larger, employed population will lead to higher consumption rates.
As per FMCG view, the Union Budget 2024 presents a comprehensive strategy to boost the FMCG sector also by balancing rural upliftment, budget allocation for agriculture productivity & resilience and increasing disposable incomes. These measures are expected to foster a more resilient and dynamic FMCG market, significantly contributing to India’s economic growth trajectory.
The increase in disposable income will particularly enhance the purchasing power of consumers, driving higher demand for FMCG products and ensuring the sector’s continued growth in an increasingly competitive global market. For sustained growth and improving market reach, it is essential to continue investing in rural development and advanced digital infrastructure, which are pivotal for the future success of the FMCG sector. Increased agriculture spending would also significantly enhance the farmer’s income & ultimately increasing the disposable income.
Introduction of the National Cooperative Policy is wise step which is set to fast-track rural development and create employment opportunities by supporting the growth of cooperatives, which play a crucial role in the rural economy. As rural incomes rise, the overall economic activity is expected to increase, thereby expanding rural markets and benefiting various sectors. This policy aims to create a virtuous cycle of growth and development by enhancing the economic capabilities of rural populations.
While the Union Budget 2024 covers a broad spectrum of initiatives, there are a few areas where further enhancements could have been beneficial like firstly an additional measures to support the gig economy and informal sector workers, who constitute a significant portion of the workforce, could have been included to ensure broader social security coverage. Secondly, there is no sign of initiatives to improve ease of doing business, which is critical to attract foreign companies to set up a shop in India and also help Indian enterprise to grow well. Finally, it would have been more appreciative if the financial support approach was taken for all deserving states rather than select few.
CK Ranganathan
Chairman & Managing Director, CavinKare