SACHIN CHATURVEDI
THE first full Budget of Modi 3.0 was presented by Finance Minister Nirmala Sitharaman with a comprehensive development strategy, in the backdrop of contestations around Trump, Trade and Tariffs.
The Budget is a clear response to the emerging geopolitics, supply chain disruptions, declining global demand, and determination to sustain an inclusive growth momentum. The Budget has identified boosting manufacturing and furthering ‘Make in India’ as major goals, without losing fiscal prudence. The fiscal deficit was estimated at 4.4 per cent of GDP while the revised estimate stands at 4.8 per cent. The Budget has also proposed to focus on generating employment in a major way through dedicated schemes with the central message of employment-led development. In the following section the three specific areas, viz. External Sector, STI, Blue Economy and Ship Building have been discussed to focus on the bandwidth that this Budget has covered.
Support for External Sector
The Budget identified exports as one of the four powerful engines, others being agriculture, MSMEs and investment. The Budget Speech has proposed to launch Export Promotion Mission (EPM) with sectoral and ministerial targets to be jointly driven by Ministries of Commerce, MSMEs and Finance. The idea would be to ensure easy access to export credit, enabling MSMEs to cope up with nontariff barriers and availing cross-border factoring support. The Budget Speech also identified the labour intensive sectors to be supported with the EPM mechanisms. With export of 60,000 crore aquaculture and seafood products, this sector would get a huge support through the proposed enabling mechanism. Similarly, in the leather sector, footwear and other product specific schemes would be worked out for promoting exports.
The FM was quite bold this time to streamline India’s tariff architecture. With the removal of seven tariff lines now only eight are left. Social Welfare Surcharge has also been removed. In several sectors related to critical minerals, textiles, drugs and medicines, electronic goods, lithium ion battery, shipping sector, telecommunication, handicrafts, leather and marine products, basic customs duty (BCD), has either been removed or drastically reduced.
The Government has also exhibited pragmatism on FDI. As suggested by the Economic Survey 2024-25, the foreign investment is essential for the desired GDP growth that Viksit Bharat aspires to have. In this context, the FDI limit for insurance sector is raised from 74 to 100 per cent. The FM has also proposed review of Bilateral Investment Treaties (BIT) for promoting sustained foreign investment and investor friendly policy frameworks.
Science, Technology and Innovation
Throughout the Budget emphasis on leveraging STI across the sectors was quite evident. In the agriculture sector, the announcement of Mission for Cotton Productivity (MCP), Mission for Atamanirbharta in Pulses, National Mission for Edible Oilseeds (MEO) and setting up of the Second Gene Bank for Crops Germplasm with 10 lakh collection, are some of the major announcements. In the previous Budget an ambitious programme for supporting the private sector research, development and innovation efforts was announced. This Budget has provided Rs. 20,000 crore for the same. In addition, a Deep Tech Fund of Funds has also been announced to catalyze coming up of start-ups and new initiatives.
The Budget has also announced 10,000 PM Research Fellowships at IITs and Indian Institute of Science. Another important announcement is the launch of the National Geospatial Mission for Supporting PM Gatishakti, urban planning and for other infrastructure projects. A new National Digital Repository of Indian Knowledge Systems with more than a crore manuscripts has also been announced. The STI component also covered shipping sector.
Blue Economy and Ship Building
The Budget has given a huge impetus to the Blue Economy through a direct support for ship building and ship repair sector. The proposal would aim to provide financial assistance for ship building and creating clusters with additional infrastructure facilities, technology development and creating an ecosystem to support this important area. The most important announcement is to bring in the large ship building activity within the infrastructure harmonised master list. This sector is important as it contributes 16 per cent towards the National GDP but was not able to get enough credit support.
When compared to a sector like agriculture which contributes a similar proportion to the GDP (18.2 per cent), credit towards shipping and ports seems miniscule with a mere Rs. 13.87 thousand crore as compared to agriculture’s Rs. 22 lakh crore. Granting priority status to the shipping and ports industry would facilitate increased flow of funds and investments. Finance Minister has also announced setting up of Maritime Development Fund with a corpus of Rs. 25,000 crore. Almost 49 per cent of this would be provided by the Central Government while the remaining amount would be mobilized with ports and private sector.
