TEAM 2

A STUDY ON THE RELATIONSHIP BETWEEN FINANCIAL

DEVELOPMENT AND ECONOMIC GROWTH
OBJECTIVE 1: ANALYZE THE THEOROTICAL FRAMEWORK
CORRELATING FINANCIAL DEVELOPMENT AND ECONOMIC
GROWTH.
How Education Projects Affect the Economy and Development
1. Skill India Campaign and NSDC's Role:
The National Skill Development Corporation (NSDC) was created
in 2008 as a partnership between the government and private
sector to improve skill training for workers in different industries.
○ NSDC’s goal is to make more people skilled and employable,
leading to more job opportunities in areas like tourism,
agriculture, textiles, and IT.
2. Training and Employment by NSDC:
NSDC aims to train 1.5 crore (15 million) people by 2022, which
helps improve skills in the workforce. This training leads to better
job opportunities in key sectors like tourism, agriculture, and IT. ○
More skilled workers mean better productivity, more job creation,
and higher wages, which help industries grow and attract more
investment.
3. Sector-Wise Impact of Skill Training:
Tourism: Training around 50 lakh (5 million) people by 2022 will
improve service quality, making India more attractive to tourists,
which increases GDP.
Agriculture: Training 19.81 lakh (1.981 million) people yearly helps
improve agricultural productivity, supporting the rural economy
and contributing to GDP growth.
Information Technology (IT): Training 1.37 lakh (137,000)
individuals annually boosts India's digital economy. Skilled
 workers in IT help create innovative solutions, which can be sold
globally, increasing exports.
4. Impact on GDP: Studies show that each 1% increase in
employment and productivity from skill training adds significantly
to GDP. More skilled workers lead to higher tax revenue, more
consumer spending, and better overall economic stability.
 - How Capital Market Development Affects Economic
Development
1. Access to Funds and Business Growth: India's capital markets,
like the Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE), allow companies to raise funds for growth and
expansion, which contributes to the country's GDP.
2. Example – Reliance Industries: Reliance Industries Limited (RIL)
raised over ₹1 lakh crore ($13 billion) in 2020 through a rights
issue. ○ This money helped RIL expand its telecommunications
(Jio) and retail businesses, leading to job creation, technological
advances, and industrial growth.
3. Contribution to GDP: The expansion of big companies like RIL
boosts the economy by increasing revenues, building
infrastructure, and creating jobs, which helps India compete
globally.

How the Healthcare Sector Affects the Economy

1. Ayushman Bharat Scheme: Launched in 2018, Ayushman
Bharat offers health coverage to over 500 million people. This
improves access to healthcare services, making people healthier
and more productive.
When people are healthier, they can work better, earn more, and
contribute more to the economy, leading to GDP growth.
Studies show that investing in health can result in 1-2% GDP
growth.

How Improving Infrastructure Affects the Economy

The Bharatmala Pariyojna (meaning 'India Garland Project') is an
ongoing initiative aimed at improving road connectivity across
India, which is also expected to positively impact the economy.
The project plans to link 550 District Headquarters with at least 4-
lane highways, increasing the number of corridors from 6 to 50.
The goal is to shift 80% of freight traffic to National Highways, up
from 40% currently.
Bharatmala is a centrally-sponsored and funded project by the
Government of India and will combine all existing highway
projects, including the main National Highways Development
Project. The improved infrastructure from this project is expected
to enhance trade efficiency, reduce transportation costs, and
support overall economic growth in the country

1. Development of Highways and Roads:

The government is developing highways to improve road
connectivity in border areas, coastal regions, and important
trade routes.
2. Key Infrastructure Projects and Their Impact:
Economic Corridors (9,000 km): These reduce transportation
costs, helping trade and adding to GDP growth.
Inter-Corridors & Feeder Roads (6,000 km): These connect
remote areas, helping farmers and industries reach larger
markets.
35 Multimodal Logistics Parks: These lower logistics costs,
improving trade efficiency.
National Corridor (5,000 km): Improving these corridors saves
fuel, time, and reduces trade costs.
Border Roads (2,000 km): These improve trade with
neighbouring countries, supporting exports.
Coastal & Port Roads (2,000 km): These help tourism, fishing,
and trade in coastal areas. ○ Expressways (800 km): These
reduce travel time, helping industries grow and cities expand.
 Ring Roads (28): These reduce traffic in cities, making logistics
and business more efficient.
3. Financial Investments and Job Creation:
Total investment for these projects is ₹5,35,000 crore, with
₹1,06,000 crore from private investments.
This leads to the creation of millions of jobs and reduces
logistics costs to 8-10% of GDP, making India more competitive
globally.

How Startups Affect Economic Growth

● Startups like Ola, Zomato, Paytm, BYJU'S, and CRED are creating
new business models, generating significant revenue, creating jobs,
and improving living standards. They showcase India’s shift towards a
more digital and service-based economy.
Negative Impact of Financial Development on the Economy
1. Stock Market Crash Effects:
Wealth Effect: When stock prices fall for a long time, investors
lose confidence and feel poorer. This makes them spend less,
slowing down the economy.
Investor Panic: A long decline in stock prices makes investors
panic and withdraw investments. This reduces the amount of
money available for businesses to grow, leading to fewer jobs and
slower economic growth.
Impact on Pension Funds: When the stock market crashes,
pension funds lose value, leading to lower payouts for future
retirees. This makes people spend less to save more for the
future.
Shift to Safer Assets: During a crash, investors move to safer
options like bonds, which have lower returns. This reduces the
money available for businesses that rely on stock investments for
growth.

Conclusion
Education, capital market development, healthcare
improvements, infrastructure upgrades, and the rise of startups
are all essential drivers of economic growth in India.
● Positive Impacts:
Education and Skill Development:
Initiatives like the NSDC enhance workforce skills, leading to
better job opportunities, increased productivity, and higher GDP
growth.
Capital Market Development: Access to funds allows companies
to expand, creating jobs, driving technological advancement, and
contributing significantly to GDP.
Healthcare Improvements: Programs like Ayushman Bharat boost
public health, resulting in a more productive workforce and
supporting economic development.
 Infrastructure Development: Improved roads, highways, and
logistics networks reduce costs, increase trade efficiency, and
connect remote areas, aiding overall economic growth.
Startups: Innovative startups create jobs, generate revenue, and
contribute to India’s shift toward a more digital and service-
oriented economy.
● Negative Impact: Despite these positives, financial development
can also have drawbacks. A stock market crash can lead to
reduced consumer spending, investment withdrawals, lower
pension values, and reduced capital for businesses, slowing
economic.

To analyse the relationship between financial development and

economic growth, particularly in the context of salary funds and
their impact on infrastructure development, we can break this
into several key points-

• Salary funds, especially in the context of public sector salaries

can serve as a significant source of disposable income for workers.
This disposable income can stimulate demand for goods and
services, leading to increased economic activity.
For e.g.- In US, economic growth is often driven by consumer
spending and business investment. If consumers are buying
homes like homebuilders, contractors etc., will experience
business growth. Even businesses when they hire workers and
invest in their businesses.

• Govts can allocate a portion of salary funds towards

infrastructure development projects which can include
investment in transportation, utilities, and social services, which
are essential for sustainable economic growth.
For e.g.- The construction of a new highway might lead to other
investments such as gas stations and retail stores opening to cater
to motorists.

Conclusion-
The theoretical framework correlation financial development and
economic growth suggests that salary funds play a crucial role in
enhancing financial development and infrastructure. By providing
a source of funding for public projects, and increasing disposable
income, salary funds can stimulate demand, create jobs, and
ultimately contribute to economic growth.
The introduction of a new business line can significantly impact
financial development and growth as-

• New business line introduces innovative products that can

stimulate consumer demand and spending. Like entrepreneurs
often create new technologies, develop new products, or process
innovations and open up new markets.
For e.g.- The emergence of health tech startups has increased
consumer interest in wellness products and services, driving
spending in that sector.

• New businesses often require banking services, prompting

growth in local financial institutions, and enhancing the financial
ecosystem. They rely on banking services for capital,
advisory support, cash management, etc. which in turn stimulates
growth in local financial institutions.

Conclusion-
New business lines foster financial development and economic
growth through investment attraction, job creation, innovation
etc. This relationship highlights the critical role of
entrepreneurship in driving economic progress.

Women Empowerment significantly contributes to financial

development in India through various channels:

1. Increased workforce participation:

Empowering women leads to higher participation in the
workforce thereby driving the economic growth and
productivity.
2. Women entrepreneurship:
It contributes to job creation and innovation enabling women
to start businesses thereby stimulating the local economies.
3. Financial inclusion:
Empowering women improves their access to banking and
financial services. Microfinance initiatives targeted at women
help them to secure loans for business ventures, leading to
increased economic activity.
4. Savings and investment:
Women often prioritize family needs and savings (proved
when random pile of notes (rupees) were found and came out
during demonetization; this shows the saving capacity of a
household women). Their financial literacy leads to better
management of household finances, promoting savings and
investment in productive ventures.

Conclusion
Women empowerment is not just a social issue but a critical
driver of financial development in India. By integrating women
into the economy through education, entrepreneurship and
financial inclusion, India can unlock significant financial and
economic growth.
 OBJECTIVE 2: ANALYZE THE INFLUENCE OF FINANCIAL
DEVELOPMENT ON KEY ECONOMIC INDICATORS.
There are various aspects that show the level of depth and the
efficiency of the financial system while evaluating the financial
development in India. Such indicators include credit provided to the
private sector, the extent of financial inclusion, the degree of capital
market development, the expansion of the banking sector, and the
provision of digital financial services. These indicators of financial
development are critical in economic growth, investment,
employment, and productivity among others. Let's take a look at
these indicators of economic development and determine what role
they play in the development of the economy, investments and
employment:
Key Financial Development Indicators in India
1) Credit to the private sector :
What it measures: Credit availability from banks and non-banking
institutions (NBFCs) to households and businesses.
Influence
GDP Growth: Private sector credit-GDP ratio of the country has been
in the range of 50- 60% in India, which is below the world average.
Higher growth of credit to the private sector will come with a higher
growth in GDP and contribute to more than 2-3% growth in output
every year.
Increased investment levels: Access to credit facilitates private
sector investments, mainly in manufacturing, real estate, and
infrastructure with an annual increase of 3-5% of gross investment.
Employment: This credit to SMEs would consequently increase
employment. Especially in sectors with labour-intensive industry,
such as in retail or services, employment increases by 1-2% for better
access to finance.
Productivity: Credit access increases firm-level productivity between
10% and 15% through investments in productivity-enhancing
technologies for firms.
2) Banking Sector Growth
What it measures: Expansion and health of the banking system,
including the number of branches, loans, and deposits.
Influence:
GDP Growth: The banking sector reform — in the form of public
sector banks recapitalization and financial inclusion drives — has
helped to keep up the GDP growth at around 6–7% over last few
years. Gross Capital Formation will be influenced as the banking
sector grows and more corporate and retail borrowing is
undertaken, so an expanding banking sector will also trigger a
marked increase in Investment Levels. In 2022, India's domestic
credit increased by 8.6%, which helped boost business
investments.
Employment: The expansion of banking sector, especially due to
programmes like Pradhan Mantri Jan Dhan Yojana (PMJDY), has
ensured financial inclusion and led to the creation of 2-3 million
jobs every year in rural and semi urban areas.
Higher productivity: Better banking networks enables firms to
access working capital, leading to an increase in efficiency and
productivity by 1–2% per annum as the financial infrastructure
improves.

3) Financial Inclusion
What it measures: Percentage of population use financial
services (have a bank, credit or insurance account)
Influence:
GDP Growth: Initiatives like PMJDY and Aadhaar-enabled
payment systems has increased GDP by 0.5 to 1 % annually Since
 2014, under PMJDY, more than 50 crore bank accounts have been
opened expanding economic access.
Investment: Increased access to savings accounts and credit
increases household/personal savings which indirectly leads to
more investments in the economy.
Employment: Financial inclusion efforts have been instrumental
in tightening employment figures, especially in rural India where
microloans and self-help group (SHG) initiatives have led to a 1-
3% upswing in employment rates. Increased productivity:
Financial inclusion is expected to enhance entrepreneurship and
innovation leading to a 10-15 per cent increase in productivity,
particularly among small-scale industries.

4) Capital Market Development:

What it measures: The growth and liquidity of the equity and
bond markets, including the stock market's capitalization and
bond market depth.
Influence:
GDP Growth: Capital Markets play a crucial role as they provide
alternative forms of financing for companies, thereby reducing
the dependence on traditional banking. A mature stock market,
the value of which can be estimated at 1-2% of GDP growth.
Employment: Own job creation is supported by the development
of capital markets, especially in sectors of IT, finance or
infrastructure. The market rises that have resulted have created 1-
2m of job growth in high growth sectors, supporting indirectly
relatively low skilled work.
Investment Levels: The growing Indian equity markets, with their
two main exchanges BSE and NSE emerging as major investment
outlets globally, helps companies raise money by listing in both
the Bombay Stock Exchange and the National Stock Exchange of
India. This has me expecting annual investment levels to soar 2–
3% forever more.
 R&D investment: Firms that can access equity or debt capital
markets to raise funds for R&D tend to invest more, resulting in
15-20% productivity growth in technology-based industries.

5) Digital Financial Services (FinTech)

What it measures: The growth of digital payment systems,
mobile banking, and FinTech solutions in India.
Influence:
GDP Growth: The wide-ranging advent of digital financial services
such as UPI, Aadhaar Pay, mobile wallets have added 0.5-1% to
the GDP growth thanks to streamlining the transactions and
inclusion into formal economy.
Invested Levels:
Digital financial services have lifted annual small business and
startup investments by 5-10% due to increased household
savings, as well as access to credit.
Employment Digital: Creation of at least 1–2 million jobs in the
service & e-commerce sectors, thanks to the digital payments
systems and online platforms (UPI has even expanded financial
inclusion).
Higher productivity: The use of digital payments and banking has
helped improved transaction efficiency and reduce cash leakages,
enhancing productivity across sectors by about 2-3% annually.

A good financial system in an economy is like giving the correct

sunlight and water to a plant. If you have your banks and means
by which people can access money easily, then your entire
economy will grow better.

• For example, when loans can be accessed or people are willing

to pump in money, businesses begin or expand. That means that
people will have better employment, and therefore the
unemployment figures lower. And the more people who are
employed, the more they end up spending the money because, at
the end of the day, it looks good for the economy.

• Also, because of the proper financial arrangement, people are

more confident in the system. So, they can invest their money in
something like opening of new business ventures or investment in
already running ones. It only expands the money flow around,
and that's all right for the country.

• The same applies to productivity-if business people finally get

the money, they can definitely acquire better equipment and
tools to work faster and smarter. In other words, they produce
more things without requiring more workers or time.

• But then, sometimes it goes wrong. If people borrow too much

or invest in things that aren't actually safe, it can eventually
become a whole problem for all of us. So, balance is the keyword
here.

• In a nutshell, it fosters the economical growth of a country,

offers space to corporate organizations and more options to the
people, and in general, forms a more attractive land. Nonetheless,
it needs to be managed beautifully so that things are not let to go
wrong.

Conclusion
Financial development in India plays a crucial role in driving
economic growth, investment, and employment. Key indicators
such as credit to the private sector, banking sector growth,
financial inclusion, capital market development, and digital
financial services collectively enhance the efficiency and
accessibility of the financial system. By facilitating access to credit
and promoting investment, these elements contribute to higher
GDP growth and productivity. However, maintaining a balanced
approach is essential to mitigate risks associated with over-
borrowing and investment in unsustainable ventures. Ultimately,
a well-managed financial system not only stimulates economic
activity but also fosters a more inclusive and resilient economy.

OBJECTIVE 3: EXPLORE FUTURE TRENDS IN FINANCIAL

DEVELOPMENT AND THEIR POTENTIAL IMPACT ON ECONOMIC
GROWTH.

FINANCIAL DEVELOPMENT THROUGH TECHNOLOGY

The key future trends in financial development, how they are
expected to influence growth, including particular key
emerging themes: fintech, digital banking, and green finance.
Report on the emerging shifts and innovations in global
finance based on budgetary priorities. Financial development
is evolving at a rapid pace through technology, policy shift,
and awakening towards sustainability. It has important trends
like fintech, digital banking, and green finance that transform
the financial landscape into promising new opportunities for
economic growth against the current financial challenge. This
report will look into these future trends; their potential
impacts on economic growth, along with insights from the
Indian Union Budget 2024-2025.

1 Emerging Patterns in Financial Growth

Fintech Innovations
Fintech refers to mobile payments, blockchain, and AI-
based financial services. All such innovations change the
model of delivering financial services. Based on the 2024
Union Budget and more focus on DPI in agriculture and
other areas indicates that the government would commit
itself by integrating technology with financial services. This
is likely to improve financial inclusion and reduce the
economic gap by offering financial services in areas that
have not been well-covered in the service.
Influence on Economic Growth:
Higher Productivity: Fintech reduces the cost of
transactions and increases efficiency of services; hence, it
increases productivity in the economy.
Financial Inclusion: Fintech services can expand the
consumer base and increase spending to the extent that it
increases GDP.
2 Digital Banking and Payment Systems
Another significant trend is digital banking that finds policy
support in the form of India's initiative for digital public
infrastructure and enhancements in mobile banking
services. Digital banking would serve as the backbone for
financial services with government backing through
initiative programs like India Post Payment Banks and
expansion of the e- commerce ecosystem.
Impact on Economic Growth
Lower entry costs: digital banking helps small businesses
grow, thereby boosting employment and further
diversifying the economy
Speed of capitals: enhancing economic money velocity
through speedy services offered by real-time payment
systems, which in turn boosts investment and
consumption.
Green Finance
Globalizing Green Finance: Green energy, green venture,
and eco-friendly technology investments are blooming
across the world. The Union Budget brings India closer to
the trend of green finance by investing in renewable energy
and climate-resilient agriculture.
Economic Growth Impact: For example, financing clean
energy and green technology can shift the direction of
greener economic models as it reduces dependence on
fossil fuel as well as climate exposure risks.
- New Industries and Job Opportunities: Green finance can
eventually build new industries and job opportunities,
which are comparatively sustainable, thereby creating new
avenues for economic growth.
3 Financial Development and Its Results on Economic
Growth
General Economic Stability and Growth Possibility
The integration of fintech and digital banking into the
financial system enables increasing the resilience of
financial institutions through diversifying revenue sources
and reducing the reliance on the traditional model of
banking. Long-run stability of the economy and its rate of
growth will most likely exceed what was there before due
to the power of technological disruption.
Empower SMEs
The area of focus for the Union Budget is on the upliftment
of SMEs through access to credit and infrastructural
development. Addition of fintech and digital banking would
facilitate SMEs by enabling them to increase their avenues
of credit, payment of cross border transactions, and
management of funds.
Financial Inclusion
Such digital public infrastructure will speed financial
inclusion for millions of people and micro and small
enterprises that would gain access to credit, insurance, and
savings products. This would improve household welfare
and boost local economic activities in a wide-ranging effect
into the economy.
Environmental and Social Impacts
The growing attention to green finance will, therefore, not
only create a pedestal for the sustenance of economically
sustainable development but also align financial markets
with some of the broader societal goals, such as reducing
inequality and poverty. Economies leading in sustainable
finance will attract international investments that boost
their growth potential.
4 Challenges and Considerations
Regulatory and Security Issues
Although highly promising growth opportunities in the
financial sector, both fintech and digital banking carry a
significant amount of regulatory and cybersecurity risks.
Governments need to balance innovation with proper
regulation so as not to generate fraud but to protect data
privacy and consumers.
Transitioning into Green Finance
Since green finance is a bright avenue for growth, there will
be considerable needs for investment in technology,
training, and infrastructure from traditional finance models
to come of age into green finance. Policymakers should
incentivize private sector participation and bring the
regulations to assist in sustainable growth.
Conclusion
Financial development is a dynamic field with emerging
trends that promise to reshape the global economy. The
2024-2025 Union Budget unveiled Indian government
policies that are driving the country towards fintech, digital
banking, and green finance. Much-needed trends, they are
expected to boost growth in the economy, but more
importantly, they will be able to address some of the most
pressing issues in the country: financial inclusion and
environmental sustainability. Innovating while facing
regulation and integrating it into technology are two needs
for the maximization of benefits. It starts with an overview
of trends in financial development as envisaged in the
future, including an anticipated impact on economic
growth. The arguments resonate well within the changing
policy landscape and describe how fintech, digital banking,
and green finance will drive growth within the sector.

: UNION BUDGET FINANCIAL SECTOR DEVELOPMENT

Future Trends in Financial Development and Their

Potential Impact on Economic Growth
This analysis focuses on distinct trends within the Union
Budget 2024-2025 that provide insights into the financial
sector’s development trajectory and its wider implications
for economic growth. The report examines additional
trends not covered in the previous analysis.
Taxation Reforms and Their Role in Financial Development
The Union Budget has introduced significant reforms in
corporate and individual income tax regimes, aiming to
simplify the tax structure. The increase in the standard
deduction for salaried individuals (from ₹50,000 to
₹75,000) and enhanced deductions for family pensions are
notable examples of reducing the tax burden.
- Impact on Growth: By increasing disposable income,
these tax reforms are expected to boost consumer
spending, a crucial driver of economic growth. Simplified
tax compliance will also attract foreign businesses,
particularly with reduced corporate tax rates for foreign
companies (from 40% to 35%). This opens up opportunities
for higher capital inflows, supporting industrial expansion
and job creation.
Rural and Inclusive Development through Financial
Inclusion
The allocation of ₹2.66 lakh crore for rural development
includes a focus on financial inclusion, particularly through
the expansion of India Post Payment Bank branches in the
North East and tribal regions. This is part of a larger effort
to ensure financial services are accessible to underbanked
populations.
- Impact on Growth: Financial inclusion initiatives will
improve access to credit, savings, and insurance products
for rural and marginalized communities. This will stimulate
rural entrepreneurship and consumption, reducing regional
income disparities and integrating remote regions into the
formal economy, thus contributing to a more balanced and
inclusive growth model.
Boost to the Start-up Ecosystem and Innovation
The abolition of the Angel Tax for all classes of investors is a
landmark decision aimed at promoting the start-up
ecosystem in India. Additionally, the budget facilitates
venture capital through a dedicated fund for the space
economy and encourages research through the
Anusandhan National Research Fund.
- Impact on Growth: Removing barriers like the Angel Tax
makes India more attractive for venture capitalists and
angel investors, fostering innovation and entrepreneurial
activity. This will likely lead to the emergence of high-
growth industries, particularly in technology,
manufacturing, and services, enhancing overall
productivity and job creation in the economy.
Focus on MSME Development
Special attention is given to Micro, Small, and Medium
Enterprises (MSMEs) through initiatives like enhanced
guarantee coverage up to ₹100 crore and the creation of E-
Commerce Export Hubs. Public sector banks are also tasked
with building in-house capabilities to assess MSME
creditworthiness, reducing reliance on external ratings.
- Impact on Growth: Strengthening the MSME sector will
have a multiplier effect on economic growth. MSMEs are
key contributors to employment and exports, and easier
access to credit will enable them to expand and innovate.
This growth in the MSME sector will increase
manufacturing output, reduce import dependency, and
drive exports, contributing to overall economic expansion.

Next-Generation Financial Regulations

The government’s commitment to next-generation reforms
is reflected in plans to revamp labor laws, digitalize tax
administration, and simplify foreign direct investment (FDI)
regulations The development of a taxonomy for climate
finance is also a key forward- looking initiative.
- Impact on Growth: Streamlining FDI regulations will
reduce red tape, encourage foreign investment, and
improve ease of doing business. A taxonomy for climate
finance signals India’s increasing role in green finance
positioning the country as a hub for climate-related
investments. Both will support sustainable economic
growth, attract global capital, and facilitate long-term
financial stability.
Support for the Services Sector and Digital Economy
The budget continues to emphasize the digitalization of the
economy, with policies aimed at supporting the services
sector, particularly through GST rationalization and the
digitalization of customs and tax processes. It also proposes
reducing the compliance burden on trade and industry
through further rationalization of the GST tax structure.
- Impact on Growth: Digitalization will improve operational
efficiency and reduce compliance costs for businesses,
particularly in the services sector, which is a significant
contributor to India’s GDP. Simplified tax structures will also
make it easier for businesses to operate and expand,
driving growth in domestic trade and increasing India’s
global competitiveness in services like IT, tourism, and
healthcare.
Custom Duty Reforms for Critical Sectors
The budget has made notable changes to custom duties for
critical sectors, including reductions in duties for precious
metals, solar panel manufacturing, and rare earth minerals,
while increasing duties on PVC flex banners and
ammonium nitrate.
- Impact on Growth: By reducing duties on solar panels and
rare earth minerals, the government is incentivizing
domestic manufacturing in the renewable energy and
electronics sectors. These are high-growth industries that
are crucial for modernizing India’s economy. Additionally,
the increased duties on environmentally harmful products
(like PVC banners) align with India’s focus on sustainable
development, which will further attract investments in
green technologies and industries.
Expansion of Housing and Urban Infrastructure
Under PM Awas Yojana Urban 2.0, ₹10 lakh crore is
allocated for addressing urban housing needs. This is
complemented by investment in water supply and
sanitation projects in large cities, in partnership with
multilateral development banks.
- Impact on Growth: Investments in urban infrastructure,
particularly housing, water supply, and sanitation, will not
only improve the quality of life for urban populations but
also drive construction and real estate sectors, creating
jobs and boosting economic activity. These sectors have
strong linkages with other industries like cement, steel, and
consumer goods, amplifying their impact on GDP growth.

Conclusion
The Union Budget 2024-2025 outlines a forward-looking
framework that targets multiple aspects of financial
development, ranging from taxation reforms and MSME
support to digitalization and green finance. The initiatives
set forth are likely to have a profound impact on economic
growth, enhancing financial inclusivity, boosting
innovation, and fostering sustainable development. These
trends position India as a global leader in areas like
renewable energy, digital services, and inclusive finance,
driving sustained economic growth in the years to come.