The Indian Finance Minister Nirmala Sitharaman presented the first budget under the Modi 3.0 government on 23 July 2024.
As part of the financial year 2024-25 (FY24-25, April 2024 to March 2025) budget (FY25 budget), Sitharaman announced nine key focus areas, including employment and skilling, inclusive human resource development and social justice, manufacturing and services, urban development, energy security, and infrastructure.
In her latest budget speech, the minister reported that India’s inflation continues to remain low and stable, and is moving towards the 4% target.
The central government has made significant investments over the previous years in building and improving infrastructure, which has had a strong multiplier effect on the economy.
The government aims to continue focusing on infrastructure development over the next five years, in conjunction with other priorities and fiscal consolidation.
The government proposed to maintain the capital expenditure target at Rs11.1trn ($133.7bn) in FY24-25, as proposed in the interim budget that was announced earlier in February 2024.
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By GlobalDataThe central government reported that it will encourage state governments to provide support of a similar scale for infrastructure projects, based on their development priorities.
To support the states in their resource allocation, the government has announced a provision of Rs1.5trn for long-term interest-free loans in FY24-25.
Additionally, private sector investments in infrastructure will be promoted through viability gap funding and enabling policies and regulations.
With urban development being one of the key focus areas, the government plans to facilitate the development of ‘Cities as Growth Hubs’, through economic and transit planning, and orderly development of periurban areas.
It plans to formulate Transit Oriented Development plans, along with an implementation and financing strategy, for 14 large cities with a population of more than three million.
The government will address the housing needs of ten million low- and middle-income families, through an investment of Rs10trn, as part of the Awas Yojana Urban 2.0 programme.
Of this total, central government assistance of Rs2.2trn will be provided over the next five years.
The government also envisages to provide an interest subsidy to facilitate loans at affordable rates.
As part of the latest budget, the government unveiled a comprehensive set of initiatives to facilitate the country’s transition to a more sustainable energy landscape.
It announced a strategic framework that includes the promotion of renewable energy sources, advancement in nuclear energy technologies, and measures to enhance the use of cleaner and more efficient energy solutions in traditional industries.
In line with the announcement made in the interim budget, the government announced the PM Surya Ghar Muft Bijli Yojana.
This initiative aims to install rooftop solar panels enabling ten million households to obtain free electricity of up to 300 units every month.
The government has also approved private sector participation in the development of nuclear power as part of India’s energy mix.
The government will partner with private companies to set up Bharat Small Reactors, support research and development (R&D) of Bharat Small Modular Reactor, and support R&D of newer technologies for nuclear energy.
As part of the inclusive human resource development and social justice priority, the government will formulate a plan – Purvodaya – for the all-round development of the eastern region of the country, which covers the states of Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh.
The plan will cover areas such as human resource development, infrastructure, and the generation of economic opportunities.
To boost industrial development in the eastern region, the government will support the development of an industrial node at Gaya, on the Amritsar Kolkata Industrial Corridor.
It will also support the development of road connectivity projects such as the Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, Bodhgaya, Rajgir, Vaishali and Darbhanga spurs, and an additional two-lane bridge over the river Ganga at Buxar, at a total cost of Rs260bn.
It will also invest Rs214bn to implement power projects, such as the new 2.4GW power plant at Pirpainti.
Additionally, the government will also build new airports, medical colleges, and sports infrastructure in the state of Bihar.
The government has announced funding of Rs150bn to the state of Andhra Pradesh for the current fiscal year, to support the establishment of a capital city.
To promote industrial development, as part of the Andhra Pradesh Reorganisation Act, the government will provide funds for building critical infrastructure such as water, power, railways, and roads in the Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor, and the Orvakal node on the Hyderabad-Bengaluru Industrial Corridor.
The latest budget also includes significant support for the housing, industrial, tourism, and water and sewage sectors.
The government announced that it will make necessary allocations to build 30 million additional houses under the PM Awas Yojana in rural and urban areas.
It will also facilitate the construction of rental housing with dormitory-type accommodation for industrial workers, through a public-private partnership.
The government will facilitate the development of investment-ready industrial parks with complete infrastructure in or near 100 cities.
This will be done with the help of state governments and the private sector.
It will also sanction 12 industrial parks under the National Industrial Corridor Development Programme.
In an attempt to boost the tourism sector, the government will support the development of Vishnupad Temple Corridor and Mahabodhi Temple Corridor.
Additionally, the government will support the development of Nalanda as a tourist centre, improve Nalanda University, and provide assistance to support tourism development in the state of Odisha.
Through the Accelerated Irrigation Benefit Programme and other sources, the government will provide financial assistance for projects with an estimated cost of Rs115bn.
States such as Assam, Himachal Pradesh, Uttarakhand, and Sikkim will receive financial assistance for flood management and related projects.
Additionally, in partnership with state governments and multilateral development banks, the central government will promote water supply, sewage treatment and solid waste management projects and services for 100 large cities.
