Modi 3.0 looks to aim a reforms-led Budget
PM Modi intends make it clear that his agenda has not been curtailed by his less impressive performance in recently held general elections
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Political sources told Bizz Buzz that with a reformist Budget, Modi wants to assert his authority in the National Democratic Alliance (NDA) as well
New Delhi: In the first Budget of his third term, Prime Minister Narendra Modi intends to send across a message that is as much economic as political. He prefers to speed up economic reforms, thus signaling investors and markets that his agenda has not been curtailed by his less impressive performance in the recently held general elections.
By doing this, political sources told Bizz Buzz, he wants to assert his authority in the National Democratic Alliance (NDA) as well.
The reformist steps may include lower taxation for the middle class. The government, the sources said, is mulling the idea of expanding the scope of the production-linked incentive (PLI) scheme to stimulate manufacturing, which is a major employment generator.
Taxation relief for the middle class, which is the Bharatiya Janata Party’s (BJP) major constituency, will not just be electorally beneficial, but also economically good, the sources said. Lower taxes would result in higher purchasing power and thus more spending which, in turn, will improve GST collection.
The government, however, is unlikely to announce any major freebies, against which PM Modi has spoken more than once.
It may be recalled that when it became evident on June 4 that the BJP’s seats would be substantially lower than its tally in the 2019 polls, the stock market suffered a steep decline. Prospective investors were also perplexed about the trajectory economic policy would take. There were concerns about policy continuity.
Apparently to allay such fears, the government is contemplating measures to augment the scope of the PLI scheme to many other sectors. The government introduced the PLI scheme in 2020 with an outlay of Rs1.97 lakh crore for 14 key sectors to enhance manufacturing capabilities and exports.
According to official data, the PLI scheme attracted over Rs1.03 lakh crore of investment till November 2023, leading to production of Rs8.61 lakh crore and employment generation (direct and indirect) of over 6.78 lakh. While the scheme was successful in large-scale electronics manufacturing, pharmaceuticals, food processing, and telecom & networking products, in other sectors its performance was lackluster.
