A highwire walk that must balance between economic growth and people's welfare needs

As India approaches the close of FY24-25, the economy finds itself at a crossroads.

- Avani Kapur

The National Statistics Office (NSO) projected a GDP growth rate of 6.4%, the slowest expansion in four years and lower than FY18-19. To this end, the budget speech 2025 hit all the right notes. Recognizing the need to reform agriculture—which saw a modest 3.8% increase in FY24-25 real GVA, the budget rightly mentioned the need to enhance agricultural productivity, facilitate credit, and focus on crop diversification. The emphasis on pulses through the Mission for Atmanirbharta in Pulses also signals a much-needed reform to our agriculture production and farmer incentives. The recent Household Consumption and Expenditure Survey (HCES) 2022 showed a decline in the share of pulses in overall monthly per capita expenditure in rural areas. Hopefully, moving farmers to pulse cultivation will pave the way for the critical need to revamp the public distribution system to finally move away from providing just rice and wheat.

Similarly, the budget takes cognizance of sluggish manufacturing sector growth—enhancement of credit guarantees to MSMEs, credit cards to micro-enterprises and the new National Manufacturing Mission seem sensible to boost supply. Even enhancements in tax exemption limits to spur private consumption were more than expected.

But budget numbers tell a slightly different story—one marked with mid-year contractions.

Take agriculture. Allocations for the ministry of agriculture and farmer welfare have declined by 3% compared to the revised estimates (RE) and are only 4% more than last year's budget estimates (BE).