By N. Venu, MD and CEO – India & South Asia, Hitachi Energy
When the interim budget was announced on February 1, 2024, India was gearing up for the 18th Lok Sabha elections. Amidst fervent electoral preparations, the interim budget emphasised fiscal prudence with a firm focus on growth capex. A lot has changed since then, both expectedly and unexpectedly. Prime Minister Narendra Modi has received the people’s mandate for a historic third term and is now the leading a coalition government. Therefore, it is essential to build on the strengths projected in the interim budget and significantly enhance the economy’s current high growth trajectory towards Vikasit Bharat in 2047.
To achieve this potential, concerted efforts are required to grow and nurture the manufacturing ecosystem in the country, encompassing both traditional and sunrise sectors. This will strengthen India’s position in the coming years. Sunrise sectors such as electric vehicles, BESS and semiconductors have witnessed some traction with government support mechanisms such as production-linked incentives. Associated schemes can further incentivise innovation-led manufacturing. In India, we produce 1.5 million engineers every year, and this number is only set to increase. Systematically harnessing such a skilled workforce towards bolstering traditional manufacturing sectors while also training the next generation for the needs of newer sectors would mean effective utilisation of the engineering intellect/talent in the country.
The budget should sustain the momentum and continue the trend of significant public capex in the country. In addition, we need to address the fact that foreign direct investments (FDI) into the country have dropped by more than 60 per cent over the last fiscal. Arresting this trend will necessitate changes in the policy framework which, in turn, will boost FDI coming not only in traditional sectors but also in newer sunrise sectors. Such measures will go a long way in holistically growing the Indian economy while also providing a sense of stability. This growth must also be democratic, ensuring the trickle-down effect benefits of these measures for the social sector, creating new jobs, generating employment and opening newer avenues for investments.
Enabling the energy transition is an important chapter in the country’s growth story. Keeping pace with the global energy transition, India has consistently reiterated its commitment to a sustainable future across global platforms such as the G20, WEF and the UN. As a country, we are working towards ambitious objectives such as integrating 500 GW of renewables in our national grid, halving our carbon intensity by 2030 and achieving complete carbon neutrality by 2070.
The increased electrification, integration of intermittent renewable energy and rapid proliferation of digitalisation, AI/ML and data centres will put immense pressure on grid systems everywhere. Grid upgradation – strengthening, flexibility and security – will be essential in fortifying the path to carbon neutrality while fostering inclusive economic expansion for all citizens. Therefore, among other considerations, there must be a dedicated push in the budget towards energy transition in India.