Decoding the Recent Budget: A Comprehensive 10-Point Analysis

Key Takeaways:

1. Increased capital expenditure outlay signifies a positive development in infrastructure, an aspect that has seen a significant push in this budget.
2. A significant focus on boosting tourism, though it emphasizes the need for increased international tourism for sustained economic benefit.
3. Initiatives in Deep Tech and renewable energy show promise, but clearer communication and resolution of infrastructure issues are necessary.

Let's break down the main talking points one by one.

Increased Capital Expenditure Outlay

The budget has increased the capital expenditure outlay by 11.1% for the financial year 2024-25—an increase to 11.1 lakh crores! Now, what does this mean exactly?

• Capital expenditure is pivotal for economical growth, typically funding things like infrastructure.
• This growth is 1.1 lakh crore more than last year (2023), showing a forward stride in the economy's expansion.

Focus on Infrastructure Development

The increased attention to infrastructure raises a key question: how critical is it for India right now?

• Air travel demand has surged 4-5 times in the last decade. Meanwhile, the number of airports and aircraft have only doubled, resulting in ticket prices shooting through the roof.
• Therefore, India urgently needs to amp up its infrastructure, especially in transport, making the budget's focus timely and significant.

Harnessing the Power of Tourism

Tourism holds a vast economic potential for India, especially in states like Goa, where almost 35% of the population depends on it.

• A central challenge lies in attracting foreign tourists for significant economic gains since domestic tourism doesn't bring in new money.
• There are two critical factors in enhancing tourism: the quality of infrastructure and civic sense. Both need a sizable boost.

Deep Tech Initiatives

Deep Tech finds a mention in the budget, but the sector faced significant disruption recently when RBI imposed a ban on PM Payment Bank. This has raised concerns.

• This, along with other issues in Deep Tech start-ups, has led many professionals to leave India for places like Dubai, Singapore, and Portugal.
• To improve the VC ecosystem, effective communication on such issues becomes essential, along with fostering an entrepreneurial climate through mentorship.

Solar Energy Push

The budget endorses a shift towards renewable energy, primarily through solar power, in alignment with India's Net Zero by 2070 vision. Let's break it down:

• Solar production costs have drastically reduced from INR 12/kilowatt in 2015 to INR 1.99/kilowatt now, pushing up solar energy competitiveness.
• However, infrastructural holdbacks like procurement and construction costs dampen solar energy's mass adoption.

The Downside

While the budget's strides can be commended, it falls short on certain fronts.

• Unemployment: The budget fails to address India's surging unemployment rates—some of the highest since the COVID-19 pandemic started.
• Public Sector Units (PSUs): Over the last decade, zero PSUs have been created as the government progressively reduces its stakes in businesses to let private sector flourish. This could lead to an oligarchic system, detrimental to economic competition.
• Tax Relief: No new tax relief measures have been introduced, a factor that could've been considered given India's high tax rates.

The implications of the budget on the stock market, specifically infrastructure industries and banks, are also worth exploring.

Conclusion

Understanding the intricacies of the budget helps comprehend its broader impact on daily life—from infrastructure to travel, employment, and even personal finance. While positives like capital expenditure and infrastructure development are welcomed, other areas like unemployment and tax relief need attention.