Budget 2025 preview — Part 4: Manufacturing, agriculture, jobs and bankruptcy resolution
Subscribe to enjoy similar stories. Part 1 covered fiscal deficit, foreign direct investment, disinvestment, and India's energy transition. Part 2 covered IT hiring and AI, internal migration, and the government's pension expenses. Part 3 covered skilling and jobs, exports, and middle-class woes. One of the major economic-policy initiatives of the BJP-led government over the past decade has been its production-linked incentive (PLI) scheme, intended to encourage onshoring of manufacturing across sectors.
The past few years have seen companies across the world attempt to diversify production bases away from China, an effort that might well intensify under an American president who is noticeably more hostile to China than his predecessor. While multinationals such as Apple have multiple units in India to assemble devices, it will take more to move headline numbers, especially since the post-covid bump has now all but dissipated. In four of the past seven years, growth in manufacturing has trailed overall economic growth.
Also read: Budget to offer blueprint of reforms under Modi 3.0 Another lever available to the government to push manufacturing is its own capital expenditure. In 2024-25, between April and November, industrial production of capital goods grew at an average of 4.5%, against 6.3% in 2023-24. So, the challenge for the government is manifold: take advantage of the global restructuring of the manufacturing sector to attract more business to India, and boost domestic capex to a greater extent than has happened so far.
India exported $13.2 billion worth of rice and sugar in 2023-24. Both are water-intensive crops—a kg of sugar needs 1,500-2,000 kg of water. They use up about 70% of India’s irrigation capacity,
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