Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman recently engaged with economists ahead of the July 23 Union Budget announcement. Their discussions emphasized the need to combat poverty by managing inflation, expanding welfare programs, and boosting job creation through investment and skill development. This budget is crucial as it will set the economic direction for the next five years, aiming to position India as the world's third-largest economy.

In a recent Rajya Sabha address, PM Modi declared the next five years pivotal in eradicating poverty, expressing confidence based on the last decade's progress. Economic growth and social reforms are key government priorities, focusing on rural development, agriculture, infrastructure, health, housing, sanitation, education, and skill training. The BJP's recent electoral performance was impacted by inflation and unemployment, highlighting the need to address these issues.

Job Creation

The government acknowledges an economic slowdown in rural areas, home to 60% of India's population, due to falling real wages and consumption. Addressing the agricultural crisis through fair MSPs (Minimum Support Prices) can increase farmers' incomes. Tackling 'jobless growth,' the government should promote labor-intensive sectors like MSMEs (Micro, Small, and Medium-sized Enterprises), renewable energy, and manufacturing, which are crucial for job creation.

Technological advancements and automation have reduced manufacturing jobs, while skill gaps remain a challenge. Expanding renewable energy can generate millions of jobs, focusing on skilled workers for green energy technologies. MSMEs, contributing over 30% to GDP, can also play a vital role in employment generation. Bridging the skill gap through vocational training, digital upskilling, and STEM education will prepare the workforce for current and future job markets.

Curbing Inflation

High inflation has significantly affected people, despite RBI data showing a decline from 7.8% in April 2022 to 4.8% in June 2024. Food and fuel prices, constituting 70% of the consumption basket, remain high. Retail inflation, measured by the consumer price index (CPI), rose to 5.08% year-on-year in June. Experts emphasize that a lower inflation rate indicates slower price increases, not reduced price levels.

"Although global food inflation is driven by supply chain disruptions, India is particularly vulnerable due to its significant poor population. The government's free grains program has broad coverage, but non-grain inflation remains an issue, necessitating increased supplies," says Jaijit Bhattacharya, president of the Centre for Digital Economy Policy Research.

Relief For The Needy

The Finance Minister might offer major relief to the middle and salaried classes by increasing the standard deduction limit, providing more disposable income. Enhancing tax exemption limits under Sections 80C and 80D could also be considered. "The government can offer direct cash transfers and bolster the Public Distribution System for food security. Expanding MGNREGA and introducing urban employment schemes will create jobs. Skill development programs and SME support can improve employability and sustain businesses," suggests Ashmita Gupta, member-secretary of the Asian Development Research Institute, Patna. "Reducing GST on essentials, providing tax relief, and ensuring favorable interest rates will ease financial burdens," she adds.

Investment in critical nation-building sectors like defense and increased funding for public hospitals and subsidized health check-ups are expected to enhance healthcare services. "We anticipate the government addressing inverted duty structures to make India a manufacturing powerhouse and create jobs, particularly in critical minerals for space and military programs," says Bhattacharya. "We also expect higher tariffs on products like isopropyl alcohol to strengthen our pharma supply chain and achieve self-reliance," he adds. While consolidating fiscal stability and maintaining public spending to drive growth, the government must improve living conditions and focus on farmers, women, youth, the middle class, and the vulnerable. Citizens desire policies that simplify daily life.