The Union Budget 2024 like earlier years continues to set upward trajectory for the Indian economic landscape. Infrastructural development and fiscal prudence being the major considerations in the approach, it is set to have a boosting effect, particularly in the logistics industry which stands as a crucial pillar of the nation's economic framework.
At the heart of this budget is a continued focus on capital expenditure which shall provide a significant boost to our economy through the consequent ripple effect. For the logistics sector, this means a 3.5X multiplier impact arising from increased demand and consumption fuelled growth across industries. Further, with the growth in multimodal infrastructure & cargo parks, we anticipate enrichment and redundancy of supply chain networks across the country – promoting the modal shift of freight to greener modes of logistics.
Another standout feature of the budget is its commitment towards enhancing rural infrastructure, providing breakthrough to logistics companies for expanding their cold supply chain footprint and general warehousing capabilities in previously under-served areas. Improving rural connectivity and access will boost demand in ever-widening nascent markets, enabling better economies of scale, enhancing efficiency in supply chain operations and ultimately resulting in reliable customer services.
The budget's focus on Ease-of-Doing-Business (EoDB) for Micro, Small, and Medium Enterprises (MSMEs) is another welcome move. MSMEs form the backbone of India's economy, and their growth directly translates to increased demand for logistics services. Our sector stands to benefit exponentially from the increased flow of goods domestically as well as for exports with smaller businesses becoming more competitive & streamlined.
The establishment of E-Commerce Export Hubs is another exciting development that aligns perfectly with India's aspirations to become a global manufacturing powerhouse. These hubs will not only boost exports but also increase the country's global competitiveness. For logistics providers, this translates to new opportunities in international shipping and supply chain management.
Furthermore, the allocation of ₹2 lakh crore towards five youth-centric schemes is a forward-thinking initiative that promises far-reaching effects, fostering upskilling, employment and private investment; these schemes will strengthen the overall manufacturing ecosystem. For the logistics industry, increased demand for a more skilled workforce is expected as manufacturing & exports ramp up.
The government's commitment to fiscal responsibility, as evidenced by the targeted reduction of fiscal deficit to 4.9% of GDP, promises a stable economic environment for long-term business planning and investment in the logistics sector, where capital-intensive projects are the norm.
As India continues its journey towards a $5 trillion economy, the logistics sector will play a pivotal role in connecting producers with consumers, both domestically and internationally. The Union Budget 2024 has laid clear roadmap for growth of Logistics as envisioned in the National Logistics.
Policy (NLP). It addresses key areas that will enable all logistics players to innovate, expand and contribute significantly to the nation's development.
As the incumbent companies leverage these opportunities, enhanced operational efficiency will also improve our overall Logistics productivity, thereby elevating India's standing in the World Bank Logistics Performance Index (LPI) ranking. Improved global LPI ranking will in-turn trigger a larger virtuous cycle of improving global confidence towards manufacturing in India, strengthening India’s position in the global supply chains, thereby furthering additional economic growth.
In conclusion, the budget's balanced approach to economic growth, infrastructure development, ease-of-doing-business, upskilling and fiscal prudence aims to hit multi-tiered targets with a sharp straight shot! With proper implementation, 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 Transport Corporation of India.
