While presenting the budget for 2025-26
amid speculation of a lower growth trajectory in the ongoing fiscal, Union
Finance Minister Nirmala Sitharaman will have to provide special emphasis on
infrastructure growth and improving the performance of the manufacturing
sector, as these two can compensate for the anticipated economic slowdown.
Earlier, it was expected that the Indian economy would grow around seven per
cent in 2024-25 fiscal, but a revised estimate has projected a GDP growth of
about 6.5 per cent. One of the reasons behind this is the performance of the
manufacturing sector, which has alarmingly declined to 2.2 per cent from 7 per
cent, besides affecting the employment scenario. So, to quell the dual
challenges, the government needs to focus on increased consumption, exports and
investments to bolster the growth this sector.
To achieve the objective, the Union
Finance Minister may need to prioritise the labour intensive MSME sector by
extending the production-linked incentive (PLI) beyond the 16 sunrise sectors
that are already getting the benefit. In this regard, introduction of PLI in
the apparel sector may help as the country is yet to be a prominent player in
the global market. It’s a pity that despite having a full value chain starting
from growing cotton to cheap labour, India’s global share is as low as 3.6 per
cent, much behind countries like China, Vietnam and Bangladesh. But with Bangladesh
in turmoil and expected high tariffs of Chinese exports, India may get an opportunity
to grab a larger share in the global apparel market, which will certainly improve
the health of our economy.
The upcoming budget also should offer
some more sops, other than the existing ones, to the MSME sector to help it overcome
the present slump. Furthermore, MSME is always important for the big industries
as it works as perfect ancillaries. It can be safely stated that the
relationship between big industries and MSME sectors is a two-way traffic,
which benefits both sides. While an ailing MSME sector will affect the
production of big industries, MSMEs will not be able to survive if the big
industries are not in good health. Thus a thrust in the MSME sector is the need
of the hour as that will rejuvenate the falling manufacturing sector as a
whole.
On the other hand, India should improve
infrastructural facilities if it is really serious about achieving the
developed nation tag by 2047, for which the basic requirement is an 8 per cent
growth rate or more for the next two decades. This is possible only when India
offers world-class facilities to attract foreign investments. The government
has considerably increased spending in infrastructure over the last couple of
years, but lot more needs to be done. Hopefully, the upcoming budget will not
overlook these crucial factors that imperative for economic growth.
