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Announced against the backdrop of headwinds in the global economy, the Union Budget 2025 aims to balance the ambitious growth targets and financial prudence, and will take a course on India’s economic trajectory over the next few years Set. Faced with the double challenge of maintaining economic momentum (Amidst GDP growth forecast slowing to 6.4% in FY2024-25), we are committed to addressing external vulnerabilities such as current account deficits (CAD). The government prioritizes strengthening the domestic business environment. Foreign investment. There are two focuses on the budget. It seeks to stimulate economic growth through targeted fiscal measures, while promoting comprehensive development and structural bottlenecks that hinder productivity.
By strategically balancing the dynamics of internal and external trade, the company seeks to strengthen India’s global trade footprint through initiatives aimed at reducing import dependence, diversifying export markets and strengthening manufacturing competitiveness. I am.
Budget 2025 has made a major advance across the country, praised as a catalyst for stimulating consumer demand, the fundamental driving force behind India’s growth story. The focus on increasing domestic spending through tax cuts, targeted grants and welfare programs underscores the government’s commitment to fostering consumption-driven growth. However, this focus on domestic demand does not reduce the robust budget thrust against export-driven growth. By strategically balancing the dynamics of internal and external trade, the company seeks to strengthen India’s global trade footprint through initiatives aimed at reducing import dependence, diversifying export markets and strengthening manufacturing competitiveness. I am.
Tackling current account deficits (CAD)
India’s checking account deficit (CAD) is an important measure of economic health, reflecting the balance between exports and imports of goods, services and capital. As of late 2024, India’s CAD shows signs of stricture. During the July-September quarter, CAD was US$11.2 billion (1.2% of GDP), a slightly improved from US$11.3 billion (1.3% of GDP) in the same period last year. This reduction is largely due to an increase in service exports, particularly in sectors such as computers, business, travel and transportation services. However, the trade deficit in goods remained a concern driven by an increase in gold imports, fluctuations in global commodity prices, and depreciation rupee, which made imports more expensive.
The Atmanirbhar Bharat initiative aims to play an important role and expand local manufacturing in sectors such as electronics, semiconductors and pharmaceuticals.
Budget 2025 addresses these challenges not only as a defensive move, but also by focusing on reducing import dependence as a way to boost domestic industries, create jobs and strengthen economic independence. I tried that. The Atmanirbhar Bharat initiative aims to play an important role and expand local manufacturing in sectors such as electronics, semiconductors and pharmaceuticals. The budget also encouraged diversification of export markets to reduce reliance on traditional trading partners. Increased export value in traditional textiles, toys, automobiles and agribusiness sectors was central to this strategy. Import substitutions, particularly in energy, defense and capital goods, were encouraged to curb the trade deficit and build long-term resilience to global supply chain disruptions.
Growth engine that promotes trade balance
India’s economic growth strategy outlined in Budget 2025 relies on four major engines: agriculture, MSME, investment and exports. These engines work together to strengthen the economy, reduce current account deficits and promote sustainable growth. Agriculture, the foundation of the Indian economy, has received great support through initiatives like “Prime Minister Dan Danya Krisyyojana”. The program focused on increasing productivity, diversifying crops and achieving self-sufficiency in key areas. An outstanding example is the creation of a board for Makana, aimed at increasing production and exports of Makana. By reducing dependence on agricultural imports and promoting exports, these initiatives helped to improve the trade balance. Investments in irrigation, post-harvest infrastructure and rural credit further strengthened the agricultural sector, placing Indian farmers in competition in the global market.
The MSME sector, often referred to as the backbone of the Indian economy, was supported through expanded credit guarantees, technology upgrades and support for export-oriented businesses. Traditional industries like textiles and toys have attracted special attention, along with policies designed to help them grow and compete internationally. MSMES played an important role in reducing import dependence and boosting exports thanks to its adaptability and capabilities of innovation. Both public and private, investments have formed the third growth engine with a focus on infrastructure, technology and industrial capabilities. The budget is prioritized for human capital development, digital connectivity and renewable energy projects, all aimed at reducing production costs and increasing the global competitiveness of Indian companies. This wave of investment has created a ripple effect that directly supports the fourth engine.
MSMES played an important role in reducing import dependence and boosting exports thanks to its adaptability and capabilities of innovation.
Exports were at the heart of India’s external sector strategy. Initiatives such as the Export Promotion Mission and Balatradenet aim to more effectively integrate Indian businesses into the global supply chain. The focus was on building a resilient supply network, creating sector-specific export hubs, and expanding market reach using digital platforms. Combined efforts in agriculture, MSME and investment have allowed India to reduce its dependence on imports, boost domestic production and increase exports. This comprehensive approach has not only improved the trade balance, but also created a sustainable pathway to reduce CAD and strengthen economic resilience.
Finally, addressing structural challenges, strengthening domestic industries and promoting exports, Budget 2025 set the stage for a more balanced current account balance and sustained growth. Coordinated efforts across agriculture, MSME, investment and exports highlighted a future-looking vision. India is confidently facing global challenges, increasing its economic resilience and preparing to appear as a major player at the global stage.
Soumya Bhowmick is a Fellow of the Observer Research Foundation
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