Union Budget 2024-25: Building India’s next consumer class

The Union Budget 2024-25, presented by Finance Minister Nirmala Sitharaman, has provided some concrete steps to bolster India’s economy through its focussed nine priority areas, which address the four key pillars of India: Poor, Women, Youth, and Farmers. With this, the government has outlined a comprehensive framework to foster economic growth, enhance social welfare, and bolster infrastructure development. The India@100 vision aims to turn the country into a much stronger, more resilient, and inclusive economic superpower.

A Budget for Rural India

India’s rural markets have demonstrated resilience and continue to represent a considerable long-term growth opportunity. Hence, rural development and agricultural enhancement were expected to be high on the priority list. The immediate focus on building resilience and productivity in the agricultural segment is extremely crucial and would be highly beneficial when implemented effectively. With Rs 1.52 lakh crore set aside for agriculture and allied sectors, this Budget showcases the government’s intent to support farmers while ensuring that the country is more atmanirbhar. It also highlights the need for self-sufficiency in pulses and oilseeds, working towards strengthening their production, storage, and marketing. The initiative of training and certifying 10 million farmers in natural farming and establishing 10,000 need-based bio-input resource centres is a concrete step towards building a sustainable Bharat.

The recent introduction of 109 high-yielding, climate-resilient seed varieties indicates a significant advancement, poised to mitigate production volatility in the medium term. This development is particularly vital given the rise in adverse weather events over recent years. The establishment of digital agriculture infrastructure, including an annual digital crop survey, will also improve credit risk assessment and could increase formal credit penetration in the sector.

Preparing the Next Generation

A notable aspect of this Budget is the focus on job creation and skilling for the youth, who are emerging as the new consumer class. By outlining funds and policies such as the employment-linked incentive scheme, encouraging internship programmes, and skilling initiatives, this Budget has focussed on future-proofing the growth engines for the next generation. From the FMCG perspective, these measures will ensure higher levels of disposable incomes for a longer period.

Focus on Infra

Infrastructure development is crucial for India’s economic progress and global competitiveness. One of the most significant announcements of this Budget has been the allocation of 3.4% of India’s GDP towards the growth of infrastructure—all with the focus of making the country a global manufacturing hub. These measures will enhance supply chain efficiency, facilitating wider distribution networks.

With its focus on urban and rural infrastructure development, the government is signalling its focus on strengthening India’s road, water, and air transport mechanisms, making the movement of goods much easier. Particularly, the transit-oriented development plans for 14 large cities, with a population above 3 million, as well as the proposals for more industrial parks, the government is not only creating jobs but also improving connectivity for transportation across India.

Further, the launch of Phase IV of the Pradhan Mantri Gram Sadak Yojana will provide all-weather connectivity to 25,000 rural habitations. Moreover, investments in digital infrastructure are poised to strengthen India’s digital economy, supporting e-commerce, and digital governance initiatives.

A longer shopping list

Reviving consumer demand has been given visible emphasis. This Budget has directly and indirectly proposed policies to boost consumption by increasing the levels of disposable income. The revision of the tax slabs and increase in the standard deduction to Rs 75,000 is likely to enhance purchasing power among the salaried and middle classes.

Households will have more discretionary spending, resulting in more products in their shopping carts. The allocation of funds for rural development will spur rural demand, indirectly boosting consumption in non-metro markets. With the PM Surya Ghar Muft Bijli Yojana, which proposes to enable 10 million households to obtain free electricity up to 300 units every month with solar panels, the government is enhancing consumers’ spending ability, thus circulating money back into the economy.

If executed well, the nine-point agenda laid out by the government will address key concerns. The proposed initiatives need to be monitored throughout to ensure a positive and long-term impact on the sectors and the economy at large.

The writer is MD and CEO, Marico Ltd. Views are personal