Fuelling India's ride to developed economy stop

The budget underscores the government’s steadfast commitment to growth without compromising on fiscal discipline. The overarching message is clear: progress for all segments of society through equal opportunity. This blueprint addresses critical sectors such as manufacturing, services, agriculture, and startups, while providing targeted support for women and job seekers. An unwavering resolve to elevate India to a ‘developed economy‘ status by 2047.Setting a fiscal deficit target of 4.9% for FY25, a 20-basis points differential from previous projections, and aiming for 4.5% by the end of FY26, should help reduce cost of capital in the economy on a structural basis. One could say the undertone was clear even during the pandemic. A strict adherence to a path of fiscal consolidation thereby strengthening India’s case for a sovereign rating upgrade in the coming years, making it a prime destination for long-term capital inflows.

A notable highlight in the current budget is the reduction of the corporate tax rate for foreign companies from 40% to 35%, aligning it more closely with domestic rates. This further enhances India’s appeal for ease of doing business and is a significant step towards positioning the country as an attractive investment destination. The abolition of the angel tax is another groundbreaking reform. This measure breathes new life into our burgeoning startup ecosystem, making India an even more enticing hub for private capital and fostering innovation and entrepreneurship.

The government’s emphasis on capital expenditure is a cornerstone of its economic strategy. Allocating ₹11.11 lakh crore for FY25 aligns with the Economic Survey’s findings that India is amidst a private capex upcycle, propelled primarily by government initiatives. This budget provides a clear signal to the private sector on the need to contribute significantly to the development agenda.

Investment in education, employment, and skilling underscores the government’s commitment to holistic development. The allocation of nearly ₹1.5 lakh crore for these sectors, alongside a new scheme to skill 2 million youth and an enhanced model skilling loan scheme, prepare India towards becoming a global manufacturing powerhouse. The budget also introduces pivotal changes to capital gains taxation, with LTCG increasing to 12.5% and STCG on select assets rising to 20%. These adjustments are designed to foster a more patient and mature investment climate, aligning with long-term economic goals. In an era marked by global uncertainties, this budget propels India towards growth while maintaining robust economic fundamentals. The strategic initiatives outlined will not only spur immediate economic benefits but also bolster India’s global standing and credit ratings. This forward-thinking approach sets a promising trajectory for India’s economic future, ensuring we remain on the path to becoming a developed economy by 2047.(The author is CEO, Deutsche Bank Group, India)