Last week I covered Pakistan’s 2024-25 budget’s deficiencies and how in turn it has left a feeling of not-so-feel-good with the Pakistanis, whereas, in contrast, our larger neighbour India continues to regularly roll out annual budgets that are rapidly making the Indian economy to emerge as one of the strongest in the world – 2024-25 budget for India has been no different. In trying to gauge the underlying strategy of India’s economic success under the BJP-led NDA alliance, the single factor that clearly stands out is that in essence, the focus has been on ushering Stakeholder Economics into the Indian market economy. Meaning, that the NDA’s record in the last 10 years in office suggests that it pursued a strategy of supply-side economics, rather than demand-side (the hallmark of the previous regime of the Congress-led United Progressive Alliance). This meant creation of an unprecedented level of capacity in infrastructure, digital economy, and access to basics like banking, cooking gas, drinking water, electricity, housing, and so on. This so far has worked very well for India, as not only over the last decade has it emerged as the single most credible challenger to China’s industrial might and output, but also with its deft foreign policy manoeuvres with the West, it has been successful in pulling away a significant chunk of Chinese business/manufacturing and landing it into the Indian industry. However, the current general elections in India have propped an obvious new message to the policymakers, which is that while all this investment has been great, it cannot come at the expense of the demand side. Implying, that owing to the aftermath of a series of global crises: the COVID-19 pandemic, the Ukraine War, the Middle-East outbreak, global runaway inflation, and the Indian government’s own disconnect with India’s poor and minorities, it is time to now focus on providing relief where it is needed the most – bettering average person’s life and lifting people out of poverty by direct interventions. That is now with macroeconomic stability on track, it is time to turn to micron economic stability where this time people directly get to feel good about the economic policies! Like any smart government, the NDA alliance has taken cognisance of this message and has unleashed policies that while recognise fiscal prudence, also at the same time concentrate on ensuring that people are able to maintain their historical living standards and on eradicating poverty. And this is precisely the area where our budget In Pakistan failed us the most because surely smart cum necessary financial measures sometimes are necessary, but they can’t be undertaken with a total disregard for human suffering, fairness and reciprocity, apathy, and by eradicating prevalent social standards. In addressing the house and the electorate, the Indian budget speech highlighted the promise of continued economic reforms and the pursuit of economic growth—reassuring foreign and domestic investors. However, at the same time, it carefully emphasised the intent to eradicate poverty. The next five years according to the prime minister will be a decisive battle against poverty. This period of next five years according to him will witness the fight of the poor against poverty and only through this lens will the level of the government’s economic success be gauged. The finance minister on her part was clear that the mission remains to transform India into a leading global developed economy by 2047 and this will happen when we pursue both, growth and poverty eradication simultaneously and not separately.
The investment in people and relief to the poor via direct intervention and an opportunity corridor will ensure that India’s growth is fully inclusive at the same time, she announced that every stakeholder should be clear that this initiative will in no way come at the expense of any particular stakeholder since the government will see to it that the Indian growth engine is not derailed. Naturally, the budget announcements tend to back her claims by: a) keeping the investment and taxation policies consistent in order to calm the nerves of any jittery domestic and foreign investors who may have been apprehensive of any abrupt pivot away from fiscal prudence and pursuit of growth; b) carried significant relief for the angry middle class, which has been the key contributor of tax revenues, yet remained under sustained economic duress and were denied fiscal relief in recent years; c) A big support package for the stressed rural India, which has been struggling with rural distress, stagnant farm economy and growing instances of extreme weather; d) A strong focus on women led initiatives cum women empowerment, something she felt has long been neglected and needs to be addressed as a pre-requisite for a dynamic economy; and e) Last but not least, unleashing some landmark measures to improve ease of doing business in India, especially given the growing complexity of an indirect tax regime and red tape that the government intends to minimise through continuous reforms. What more could the Indians ask for than all these efforts enhanced by a very cleverly designed image/perception building drive where we see a grand gala Ambani wedding, which in effect is nothing, but a deliberate and conscious showcasing of India as a country that no longer should be synonymous with poverty, but instead with immense wealth!
Dr Kamal Monnoo
The writer is an entrepreneur and economic analyst. Email: kamal.monnoo@gmail.com