Though the tabled information was limited, I highly appreciate the government’s continued emphasis on fiscal consolidation. It is encouraging to note that despite being an election year, budgetary estimates were free of any form of populism to garner vote banks. Instead, the finance minister remained steadfast on nurturing India’s long-term potential of a Viksit Bharat. The time spent on reiterating India’s economic achievements and reforms over the last 10 years underlined the relentless work put in to take India to new highs.
I am glad to note that during FY24, when a lot of focus was on public capex which helped India attain the fastest economic growth among large economies, the government did not lose sight of fiscal prudence. Consequently, compared to the targeted fiscal deficit of 5.9% of GDP, the revised estimate was at 5.8%. Lower-than-expected deficit could release ₹30,000 crore of additional funds, at a time when systemic banking liquidity is facing a record high deficit. A fiscal deficit target of 5.1% for FY25 too is positive news for liquidity, as this will lead to reduced government borrowing and consequently lower borrowing costs for corporates. This, coupled with a likely shift in RBI‘s monetary policy outlook later this year, should systematically lower capital costs for banks and NBFCs, which will be passed on to their customers.
It is heartening to note the focus on developing a robust ecosystem for MSMEs to represent India on a global scale. Innovations ensuring timely and adequate finances, relevant technologies and appropriate training have been a core policy area for the government. As we progress towards a Viksit Bharat, NBFCs can take the lead in lending to MSMEs, as vast sections of these small borrowers have been historically unattractive to banks owing to higher risk perception. NBFCs are well placed to harness the India Stack in ensuring last-mile credit delivery to the smallest business or remotest retail customer. For this, NBFCs will have to expand their capital base, and diversify across other sources of credit like debt markets and public deposits. Public deposits can be a cheap source of capital for upper layered large NBFCs, the benefits of which can be passed on to borrowers.
The government’s commitment to comprehensive development is evident through the consolidation of maternal and childcare schemes into a unified programme, promoting synergy in implementation. Upgrading Anganwadi centres under ‘Saksham Anganwadi and Poshan 2.0’ underscores the dedication to enhancing nutrition delivery and early childhood care. Furthermore, the government’s readiness to assist states in the development of aspirational districts and blocks align with the collective goal of creating ample economic opportunities.Our vision at Piramal Foundation harmonises with the government’s development agenda.To summarise, staying true to the commitment of a Viksit Bharat 2047, the finance minister did a splendid job in balancing fiscal consolidation while laying the long-term vision for key developmental areas including infrastructure, MSMEs, financial sector, agriculture and energy transformation.