Interim Budget for FY '25

While this interim budget for FY ’25, has been appropriately labelled as “budget of confidence” by media channels, the key criticism of some eminent personalities, that nowhere has “unemployment” been mentioned even once merits attention.

But, the key thrust on infrastructure via an increase in the outlay by 11.1% as compared to the current allocation, is certainly welcome, and reflects the right priorities of the government, as spending on infrastructure yields the maximum multiplier effects in the economy, which certainly boosts employment generation. Higher capex is largely proposed for sectors like roads, shipping, and railways, which would boost connectivity and improve logistics efficiency thereby reducing cost of doing business. Of course, key assumption being that the implementation of the plan is as per expectations.

The benefits can begin manifesting from day one, by way of “crowding in” of private investments which in turn can boost the ‘propensity to consume’ by individuals due to increased job opportunities and incomes, which in turn leads to better capacity utilization of manufacturing units which further enhances the investment demand, which in turn leads to further investments from private and foreign sectors. This in theory creates a “vicious cycle of investments and employment creation”. Of course, with no shocks of any kind internally and the external sector remaining benign

Other key factor which merits attention is that, the very fact that the markets have already discounted the return of the Modi government after the forthcoming elections, would be a catalyst in itself for job creation, as both the private sector and foreign investors would be maintaining their focus on Indian markets, without having to bother about policy uncertainties and political instability.

And yes, the expectations from a full-fledged budget likely to be presented by the Modi government in July, would only be heightened at this point of time.