Budget 2025 is a ‘humble’ Budget. It accepts what has gone wrong and tries to correct it in the best manner possible with available resources. I see the Budget as a combination of 7 Cs — capital, capability, consumption, confidence, currency, competition and collaboration.
Our GDP is a direct function of consumption and capital investment. The tax break for the salaried class is good, but all that money is not going to flow into the next soap or toothpaste or biryani. I feel citizens will first pare a bit of their debt with their surplus money. They might then save and finally spend. Consumers spend more when they feel confident of their jobs and wages! No budget can get away from the job’s scrutiny.
Looking for Capital
Where can capital investment come from? From the government, private sector, FDIs, MNCs operating in India and those about to enter! MNC investment will not move the needle so the onus is on the Government and the Indian private sector. Government investment continues to be strong. The Indian private sector investment needs to flow into the right sectors to create jobs. The top seven private sector conglomerates are what I label ‘MATLABB’. They are Mahindra, Ambani, Tatas, L&T, Adani, Birla and Bajaj, which account for more than 20 per cent of India’s total market cap of $5.1 trillion. We need these national champions to invest significantly for India to grow. But if the growth must be broader, we also need to develop State-level conglomerate champions. This private investment hasn’t happened at the needed level for some time, despite many prods by the government. Understanding and addressing those fears, which are purely emotional, is important.
The next C for me is confidence, which is about trust in the longer-term policy and stability of policy. The Budget mentions establishing a body to rethink the regulatory framework. Can regulators be innovators? No! Consumption is an outcome of consumer confidence, which is an outcome of confidence in prudent policy.
Global competitiveness
For the first time in modern India, we have a surplus of good quality, good value goods and services in every sector. India is no longer a country to peddle shoddy or overpriced goods anymore. The issue is one of competitiveness — some legacy brands are fundamentally uncompetitive which is hurting them. So, local companies must get competitive, and it is good to see the stress on global competitiveness with respect to exports, manufacturing and GCCs. We must have as many dollar-earning businesses with rupee cost structures. We spoke of being a China alternative — that has not played out as per our wishes. The answer is global competitiveness.
Currency is the next C. The rupee has depreciated against the dollar by 2.5-3.5 per cent every year over the last three decades. I don’t expect that to change; it might depreciate more if some trade/tariff issues do not go in our favour. This will make us push exports while cutting imports.
The last C is collaboration. The Budget speaks about State-Centre collaboration, and PPP collaboration in several sectors. We have tried these in the past with middling success. All these partnerships need collaboration of a new order for a new India.
For long, industry has asked the government to do more. This year the government has done more than its fair share. Now the industry must do the heavy lifting. This Budget success will rest on ‘matlabb’ and cooperative federalism.
For long, industry has asked the govt to do more. This year. the govt has done more than its fair share. Now the industry must do the heavy lifting.
Shiv Shivakumar
(The writer is Former Chief, Pepsico India and Nokia India)
