The Union Budget 2024 continues to set an upward trajectory for the Indian economy, as in previous years. Infrastructural development and fiscal discipline are the key aspects of the budget and it will have a stimulating effect, especially in the logistics sector, which is a crucial pillar of the Indian economy.
At the heart of this Budget is the continued focus on investments that are expected to provide a significant boost to our economy through the resulting ripple effect. For the logistics sector, this means a 3.5x multiplier effect resulting from increased demand and consumption-led growth across all industries. In addition, with the growth of multimodal infrastructure and freight parks, we expect to enrich and redundancy of supply chain networks across the country – encouraging the shift of freight transport to more environmentally friendly modes of logistics.
Another outstanding feature of the budget is its commitment to improving rural infrastructure. This is expected to enable a breakthrough for logistics companies in expanding their cold chain and general storage capacity in previously underserved areas. Improving rural connectivity and access will increase demand in ever-expanding emerging markets, enable better economies of scale, increase efficiency in supply chain operations and ultimately lead to reliable customer services.
The Budget's focus on ease-of-doing-business (EoDB) for micro, small and medium enterprises (MSMEs) is another welcome step. MSMEs form the backbone of the Indian economy and their growth directly leads to increased demand for logistics services. Our sector will benefit exponentially from the increased flow of goods domestically as well as in exports as smaller businesses become more competitive and streamlined.
The establishment of e-commerce export hubs is another exciting development that fits perfectly with India's ambitions to become a global manufacturing power. These hubs will not only boost exports but also increase the country's global competitiveness. For logistics providers, this means new opportunities in international shipping and supply chain management.
Moreover, the allocation of Rs 2 lakh crore to five youth-focused schemes is a pioneering initiative that promises to have far-reaching impact and promote skills development, employment and private investment. These schemes will strengthen the entire manufacturing ecosystem. The logistics sector is expected to see increased demand for more skilled workers as production and exports increase.
The government's commitment to responsible fiscal management, reflected in the targeted reduction of the fiscal deficit to 4.9 percent of GDP, promises a stable economic environment for long-term business planning and investments in the logistics sector, where capital-intensive projects are the norm.
As India continues its journey towards becoming a $5 trillion economy, the logistics sector will play a pivotal role in connecting producers and consumers at home and abroad. The Union Budget 2024 has laid out a clear roadmap for the growth of logistics as envisaged in the National Logistics.
Policy (NLP). It addresses key areas that enable all logistics players to innovate, expand and make a significant contribution to the country's development.
If incumbents capitalize on these opportunities, improved operational efficiency will also boost our overall logistics productivity, thereby improving India's position in the World Bank's Logistics Performance Index (LPI). An improvement in the global LPI ranking will, in turn, trigger a larger virtuous circle that will increase global confidence in manufacturing in India, strengthen India's position in global supply chains, and thus promote further economic growth.
In conclusion, the Budget's balanced approach to economic growth, infrastructure development, ease of doing business, skill development and fiscal discipline aims to achieve multi-pronged objectives with a clear, direct shot! If implemented properly, these initiatives will create a long-term win-win situation for businesses and consumers in India and the world.
Vineet Agarwal is Managing Director of the Transport Corporation of India.
