ECONOMICS

PRIORITISING INCLUSIVITY AND FISCAL PRUDENCE

Source: THE HINDU

Introduction

• The Budget 2024 presents a comprehensive framework designed to accelerate India's progress toward the national vision of Viksit Bharat@2047. It focuses on addressing immediate economic challenges while laying the foundation for long-term sustainable growth.

National Vision: Viksit Bharat@2047

• The vision of Viksit Bharat@2047 aims to transform India into a developed nation by its 100th year of independence. The Budget sets out a roadmap for achieving this vision, focusing on economic growth, inclusivity, and sustainability.

Key Focus Areas and Measures

Agriculture and Climate Resilience

• Climate-Resilient Seed Varieties:
  • The Budget prioritizes the development of climate-resilient seed varieties to counteract the adverse effects of climate change on agriculture. This measure aims to stabilize agricultural productivity despite increasingly erratic weather patterns.
  • A comprehensive review of the agricultural research set up in the country is planned to enhance productivity and introduce these resilient seed varieties.
• Strengthening National Missions for Pulses and Oilseeds:
  • Strengthening these missions will reduce dependence on imports, stabilize domestic prices, and promote self-reliance.
  • The emphasis on pulses and oilseeds is critical as these crops are essential for nutritional security and have significant economic implications.
• Large-Scale Clusters for Vegetable Production:
  • Establishing large-scale clusters for vegetable production near major consumption centres will streamline supply chains, reduce wastage, and control price volatility.
  • This initiative aims to increase farmers' incomes and ensure a stable supply of vegetables to consumers.

Employment and Skilling

• Employment-Linked Incentives:
  • Three new schemes with employment-linked incentives are introduced to boost job creation in both manufacturing and services sectors.
  • These schemes are designed to provide substantial employment opportunities to the youth, addressing one of the critical areas of concern.
• Initiatives for Women’s Workforce Participation:
  • Setting up more working women hostels and creches in collaboration with the private sector aims to support and increase female labour force participation.
  • Enhancing the care economy ecosystem will make it easier for women to join and stay in the workforce, contributing to economic growth.

Support for MSMEs

• Credit Accessibility:
  • A new credit guarantee scheme for MSMEs, particularly in the manufacturing sector, is announced to improve access to finance.
  • Public sector banks will be guided to develop internal assessment models for MSME credit evaluation based on their digital footprints, ensuring credit flow even during periods of economic stress.
  • These measures are expected to lower the cost of credit and improve the underwriting models, providing much-needed financial support to MSMEs.
• Reduced Turnover Threshold for TreDS:
  • The annual turnover threshold for registration on the Trade Receivables Discounting System (TreDS) platform is reduced from ₹500 crore to ₹250 crore.
  • This change will make it easier for smaller MSMEs to access credit, enhancing their financial stability and growth potential.

Sustainability Initiatives

• Promotion of Small Modular Reactors for Nuclear Energy:
  • Small modular reactors are promoted to diversify the energy mix and provide a reliable, low-carbon energy source.
  • This initiative aligns with global trends towards safer and more manageable nuclear energy options.
• Support for Rooftop Solar Programs:
  • Continuous support for the national rooftop solar program aims to increase the adoption of renewable energy, reduce dependence on fossil fuels, and lower greenhouse gas emissions.
  • Rooftop solar installations are crucial for decentralizing power generation and promoting sustainable energy practices.
• Urban Infrastructure Projects:
  • Dedicated projects for water supply, sewage treatment, and solid waste management in large cities are proposed to improve urban infrastructure and living conditions.
  • These projects will contribute to better public health, environmental sustainability, and urban resilience.
• Critical Minerals Mission:
  • The establishment of a Critical Minerals Mission ensures access to essential minerals necessary for various industries, including renewable energy technologies.
  • Securing these minerals is vital for achieving sustainability goals and supporting the growth of the green economy.

Partnership with States for Reforms

• Factor Market Reforms:
  • The Budget emphasizes the need for close collaboration with state governments to implement reforms in land, labour, and power sectors.
  • These reforms are essential for reducing production costs, enhancing competitiveness, and promoting overall national development.
  • The partnership with states is crucial for effective implementation and achieving broader economic reforms.

Fiscal Prudence

• The Budget demonstrates a commitment to fiscal prudence by revising the projected fiscal deficit for 2024-25 downward from 5.1% to 4.9%. This indicates the government's dedication to fiscal consolidation, which is expected to positively impact India’s external ratings. Maintaining fiscal discipline is essential for sustaining investor confidence and ensuring long-term economic stability.

Conclusion

• The Budget 2024 presented a clear vision and strategic priorities aimed at promoting inclusive growth and development. By focusing on agriculture, employment, MSMEs, sustainability, and state partnerships, the Budget sets the stage for significant economic transformation. Effective implementation of these measures will be critical to realizing the vision of Viksit Bharat@2047 and ensuring continued growth and prosperity for all sections of society.

ECONOMICS

AN OUTLINING OF URBAN TRANSFORMATION STRATEGIES

Source: THE HINDU

Introduction

• The Budget 2024 lays out a detailed framework for urban transformation in India, recognizing cities as key drivers of economic growth and development. The strategies outlined emphasize sustainable investments, planned development, and citizen participation to address the challenges of rapid urbanization.

Housing and Infrastructure

Pradhan Mantri Awas Yojana (Urban)

• Background: Since its inception in 2015, the scheme has facilitated the construction of 85 lakh housing units for Economically Weaker Sections (EWS) and Middle-Income Groups (MIG), with a total investment of ₹8 lakh crore.
• New Push: The Budget proposes the construction of an additional one crore housing units in urban areas with an investment of ₹10 lakh crore, including ₹2.2 lakh crore central assistance over the next five years.
• Interest Subsidy: Part of the allocation will provide interest subsidies to facilitate affordable housing loans.

Rental Housing for Migrant Workers

• Problem: Migrant workers often live in inadequate housing conditions, such as slums, near their workplaces.
• Solution: New rental housing projects with dormitory-type accommodations for industrial workers, developed through Public-Private Partnership (PPP) with upfront financial support from the Viability Gap Funding (VGF) scheme, will address this issue. The central government will provide 20% of the funding, with possible additional support from state governments.

Core Urban Infrastructure

Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

• Funding: The Budget allocates ₹8,000 crore for water supply, sanitation, roads, and sewerage systems.
• PPP Model: Projects are encouraged to be taken up as commercial ventures in PPP mode, with access to the VGF window to ensure faster and more efficient development of urban infrastructure.

Capital Expenditure for Infrastructure

• Overall Investment: The Budget earmarks ₹11.11 lakh crore for capital expenditure in infrastructure, which includes highways and other sectors. Cities are encouraged to secure a share of this investment for urban projects.
• Interest-Free Loans to States: A provision of ₹1.50 lakh crore in interest-free loans for states is available for infrastructure development, which can also be utilized for urban projects.

Digital and Smart City Initiatives

• Smart Cities Mission: The Budget scales down the support from ₹8,000 crore in 2023-24 to ₹2,400 crore in 2024-25, focusing on completing remnant commitments.
• National Urban Digital Mission (NUDM): With a provision of ₹1,150 crore, NUDM aims to digitize property and tax records and incorporate GIS mapping to enhance urban local bodies' financial management and support property owners.

City Planning and Mobility

• Municipal Finance Commission Grant: Municipalities will receive a normal Finance Commission Grant of ₹25,653 crore.
• Incubation of New Cities: An additional provision of ₹500 crore is allocated for the incubation of new cities.
• Transit-Oriented Development: The Budget emphasizes the development of mass rapid transit systems to facilitate transit-oriented development, with denser developments around transit hubs to avoid traffic congestion.
• Electric Bus Systems: The Budget allocates ₹1,300 crore to encourage the adoption of electric bus systems, promoting an eco-friendly and economical urban transport solution despite higher upfront costs.

Solid Waste Management (SWM)

• Bankable Projects: The Budget stresses the introduction of bankable projects for SWM in collaboration with state governments and financial institutions.
• Indore Model: The success of Indore, Madhya Pradesh, in making SWM financially viable serves as a model for other cities.

Support for Street Vendors

• Street Vendors Act, 2014: Enacted to regulate and protect the rights of street vendors, the Act also includes plans for street-vending zones.
• Weekly 'Haats': The Budget proposes developing 100 weekly 'haats' or street food hubs in select cities, with the potential for expansion based on local needs.

Implementation and Citizen Participation

• Municipal and State Government Role: Municipalities, guided by state governments, are crucial in implementing the provisions and utilizing resources from both the Union Budget and their own funds.
• Citizen Involvement: The active participation of citizens is deemed essential for the success of any city's development strategy, making community engagement a cornerstone of urban transformation.

Conclusion

• The Budget 2024's urban transformation strategies focus on creating sustainable, inclusive, and well-planned urban environments. By addressing housing, infrastructure, digital initiatives, city planning, mobility, waste management, and street vending, the Budget aims to harness the potential of cities as growth hubs. Effective implementation by municipalities and state governments, along with active citizen participation, will be key to realizing these ambitious urban transformation goals.