Nirmala Sitharaman became the first Finance Minister to present the 7th consecutive budget in a row and gave her shortest budget speech of 86 minutes. This budget continues to uphold the government’s fiscal management principles to reduce the fiscal deficit to 4.9 percent of GDP from 5.1 percent of GDP presented in the interim budget.
Expenditures are strategically directed towards nine strategic priorities. The primary focus of the budget is on employment, internship, and skill development programmes, which have the potential to somewhat address one of India's most pressing issues: providing work for the world's largest youth population. Programmes focused on the farm sector, which contributes approximately 20 percent of India’s economy but employs about half of the workforce, are also highlighted. Women’s participation is only 23 percent as of 2023 in the workforce, and this budget aims to start bridging the gender gap.
The Union Budget has adeptly guided policy continuity for sustainable economic growth with a strong infrastructure spend of 3.4 percent of GDP. There is a concerted policy push in key sectors such as digitalisation, agriculture, urban infrastructure, energy, MSMEs, and skill development for inclusive long-term growth. There is a special focus on labour-intensive manufacturing in the budget and also an introduction of credit guarantee programmes for micro, small, and medium-sized firms.
Energy security is one of the priorities in the Union Budget. The government is committed to ensuring the availability, accessibility, and affordability of energy. A notable feature of the budget is its comprehensive approach to all modes of energy generation. Policy measures outlining suitable energy transition pathways that harmonise the needs of employment, economic growth, and environmental sustainability are to be framed.
The government is prioritising advanced and higher efficiency projects for thermal power plants. The fiscal support for Advanced Ultra Super Critical (AUSC) thermal power plants is a positive development. Nuclear energy could play an important role in the country’s energy mix in the coming years. The budget proposes public-private partnerships for setting up Bharat small reactors and associated research and development in nuclear power. The announcement of initiatives to bring one crore farmers under natural farming, establish 10,000 bio-input resource centres, and support FPOs for agri-product marketing are commendable steps that will significantly benefit the biogas sector.
The larger goal of energy transition requires the smooth integration of intermittent renewable power. Introducing a policy that promotes pumped storage projects for electricity storage is a big step towards energy security and energy independence. This will facilitate the seamless integration of the increasing share of renewable energy, despite its variable and intermittent nature, into the overall energy mix. At JSW Energy, we have a locked-in capacity of ~80GWh of hydro pump storage and have undertaken significant work to execute 40GWh of storage before 2030.
Custom duty levied on solar glass may have a marginal impact, as custom duty on capital goods used in solar cell/module manufacturing is exempted. The Union Budget expanded the country's list of exempt capital goods used for solar cells and panels. This strategic move will promote indigenous manufacturing and advance self-reliance in solar panel production. The large-scale adoption of the rooftop solar scheme introduced in the interim budget continues to be well received.
I also applaud the removal of custom duties on lithium and certain rare earth metals, which are critical for battery manufacturing and, in turn, for renewable energy. This will provide a significant boost to the processing and refining of such minerals and help secure their availability for these strategic and important sectors.
A roadmap for moving the ‘hard to abate’ industries from ‘energy efficiency’ targets to ‘emission targets’ will be formulated. With appropriate regulations for the transition of these industries from the current ‘Perform, Achieve and Trade’ (PAT) mode to ‘Indian Carbon Market’ mode, will be put in place. This will further propel the decarbonisation of the economy, moving towards the country’s target of carbon neutrality by 2070. At JSW Energy, we have a target to be carbon neutral by 2050.
In conclusion, the budget addresses the entire value chain and solving near-term challenges for better long-term outcomes for the power sector. Overall, the budget touches all aspects that can deliver India's ‘Panchamrit’ goals at state, sector, and industry levels for a Viksit Bharat by 2047.
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