The Indian economy is robust and estimated to have grown 8.2% in real terms in FY24. What is important is that this High economic growth in FY24 came on the heels of growth rates of 9.7% and 7.0%, respectively. Hence this is true growth and not a result of a low base effect. The headline inflation rate is largely under control. Current account deficit for the year is around 0.7% of GDP. In fact, the current account registered a surplus in the last quarter of the financial year. Foreign exchange reserves are ample. Hence, India seems set for becoming the third Largest Global Economy very soon as per the vision of The Prime Minister .

However, this vision cannot be achieved unless the MSMEs are propelled forward, as they remain the chief employment generator and GDP driver for India. For MSMEs, the economic Survey does accept and recognise the need for maximum relief from compliance burdens. Licensing, Inspection and Compliance requirements all levels of the government on these businesses will be relaxed going forward. The Budget on 23rd July may be the start point of this journey which the Economic survey seeks the Government to traverse. Relaxations in TDS/TCS requirements, requirement of 45 day payment from MSMEs to SMEs u/s 43B(h) of Income tax Act, etc may help the MSMEs.

Large Enterprises though are urged to step up hiring and worker compensation in backdrop of a 15-year high profits-to-GDP ratio rose. A tripartite compact is needed between the government, the private sector and academia is envisaged to step up employment. A relaxation in the taxation structure or compliances of high employment sectors like real estate, manufacturing, etc and a revival of Section 115BAB of Income Tax Act for new manufacturing may help in this regard.

Private sector is urged to increase investment in Plant and Machinery and equipment and intellectual property products. The Union government cut taxes in September 2019 to facilitate capital formation. However, in early FY24 capital formation in the private sector continued to expand but at a slower rate. In the short term, import will be the sourcing model for technology and raw materials as many of these are now not available in India. Hence there is a need for relaxation of Import duties in these incase they are used for MAKING IN INDIA. MOOWR Scheme in Customs is a mere duty deferment scheme but it is needed to relax the import duties upfront. The Budget on 23rd July 2024 may see a move on this front.