Comprehensive National Power - The Budgetary Path To New India’s Economic Transformation - IMPRI Impact And Policy Research Institute

Press Release

Mannat Ghumman

The Center for the Study of Finance and Economics (CSFE), IMPRI Impact and Policy
Research Institute, New Delhi, hosted an interactive panel discussion on the topic “New
India’s Economic Transformation and Union Budget 2024-25″ on 26th July 2024, under the
IMPRI 5th Annual Series of Thematic Deliberations and Analysis of Union Budget 2024-25.

Prof. Mukul Asher‘s opening address highlighted how the 2024-25 Union Budget aligns
with the concept of Comprehensive National Power (CNP) as defined by Rumel Dahiya. CNP
encompasses various elements such as economy, military strength, governance, and human
capital. Prof. Asher began by highlighting the fiscal prudence demonstrated in the 2024-25
Union Budget. He emphasized that this budget not only aims to maintain India’s credit
rating but also seeks to bolster the country’s international standing—both crucial aspects
of enhancing CNP.

The budget’s strategic shift from focusing on the fiscal deficit to improving the debt-to-GDP ratio reflects a broader vision of macroeconomic stability, which is essential for strengthening national power. Central to Prof. Asher’s discussion was the long-term vision for India, aiming to transform the nation into a developed economy by 2047.

The use of the Rule of 72 to project a doubling of India’s GDP to nearly USD 8 trillion
by 2031 underscores the budget’s focus on robust economic growth—a fundamental
component of CNP. As Prof. Asher noted, this growth is integral to advancing India’s
international objectives and enhancing its overall strategic capabilities.

The lecture also touched upon various factors constituting CNP as outlined by Dahiya,
including internal cohesion and governance. Prof. Asher’s emphasis on managing high
revenue expenditure and ensuring efficient tax utilization aligns with Dahiya’s perspective
on the importance of governance in national power. By improving infrastructure and capital
expenditure, which currently stands at 3.4% of GDP, the budget aims to bolster internal
stability—a crucial factor in achieving long-term strategic goals.

Dr. Radhika Pandey, Senior Fellow at NIPFP and Visiting Senior Fellow at IMPRI, provided a thorough analysis of the 2024-25 Union Budget and its alignment with the concept of Comprehensive National Power (CNP). Her insights reveal how the budget’s fiscal strategies
contribute to India’s broader strategic goals. Dr. Pandey highlighted the budget’s focus on
fiscal consolidation amid evolving political realities, noting a reduction in the fiscal deficit
target from 5.1% to 4.9%. This adjustment, largely due to higher-than-expected RBI
dividends, reflects a crucial component of CNP: economic stability. By creating additional
fiscal space, the government can bolster productive expenditures in employment,
education, and housing—key elements of internal cohesion and human capital
development.

A significant shift in the budget is the transition from focusing solely on fiscal deficit to
targeting a reduction in the debt-to-GDP ratio. This new framework aims to improve fiscal
transparency, attract foreign investment, and lower borrowing costs, all of which are
essential for enhancing India’s economic power on the global stage. Dr. Pandey’s analysis of
the declining fiscal deficit from 9.2% during the pandemic to an estimated 4.9% highlights
progress in economic stability, a core aspect of CNP.

The budget’s increased allocation for capital expenditure, including interest-free loans to state governments, aligns with CNP’s emphasis on infrastructure and governance. By prioritizing capital investment, the budget supports long-term economic growth and internal stability, both crucial for pursuing national strategic objectives. Dr. Pandey also noted changes in tax policies, such as the reduction in corporate tax growth and increased income tax collections. These adjustments, alongside the focus on improving expenditure quality by reducing subsidies, contribute to a more efficient and resilient economy—key for enhancing national power.

Prof. A. Amarender Reddy’s lecture on the agricultural sector’s challenges and
government strategies provides valuable insights into how enhancing agricultural
productivity contributes to Comprehensive National Power (CNP). As Reddy highlighted,
addressing the productivity gap between agricultural and non-agricultural sectors is crucial
for strengthening India’s overall national power.

The significant productivity gap, with agriculture still employing around 45-46% of the population despite rapid growth in other sectors, underlines the need for a robust strategy to boost agricultural output. Increasing agricultural productivity through research and development (R&D) and innovation directly impacts economic stability and growth—key elements of CNP. Regional disparities in productivity, particularly in Eastern India and rainfed areas, also reflect broader issues of internal cohesion and governance within CNP. By targeting improvements in technology adoption and productivity in these regions, the government aims to reduce import dependency and enhance self-sufficiency in crucial areas like pulses and oilseeds. This focus not only strengthens economic resilience but also contributes to India’s
competitiveness in global markets.

Efforts to reduce production costs through natural farming practices and digital
infrastructure highlight another aspect of CNP: improving efficiency and innovation. By
promoting digital initiatives like PM-Kisan and Prime Minister’s Fasal Bima Yojana, and
creating natural farming clusters, the government seeks to enhance value addition and
market linkages for farmers. These initiatives aim to boost agricultural productivity while
reducing reliance on subsidies, thus improving fiscal health and governance.

Prof. Prabir De’s presentation on India’s goal of achieving a $30 trillion GDP by 2047
highlights a strategic roadmap that aligns closely with the concept of Comprehensive
National Power (CNP). His insights reveal how enhancing various elements of CNP is
critical to realizing this ambitious target.

Prof. De emphasized the importance of a sustained annual growth rate of about 10% to reach the $30 trillion goal, reflecting the necessity for robust economic expansion—a core component of CNP. The significant increase in capital expenditure, particularly in infrastructure, from $1.63 trillion to $7 trillion by 2047 underscores the need for high-quality infrastructure to support economic growth. This focus on infrastructure development aligns with Dahiya’s view of economic capability as a pillar of CNP.

The need for an evolved international trade strategy is another key aspect. Prof. De stressed
that India must enhance its global connectivity and trade networks rather than relying on
protectionist policies. Expanding beyond primary exports to include secondary and tertiary
sectors, such as pharmaceuticals and electronics, supports the broader goal of increasing
economic influence and global standing—central elements of CNP. Digital technology’s role
in transforming India’s economy, including advancements in digital payment systems and
e-commerce, is crucial for economic modernization and efficiency. Strengthening global
trade through strategic free trade agreements (FTAs) is another critical area. This focus on
global engagement and strategic partnerships is integral to advancing CNP.

Finally, addressing challenges such as supply chain disruptions and geopolitical tensions through international infrastructure connectivity projects like the International North-South
Transport Corridor (INSTC) highlights the importance of resilience and strategic
planning—key factors in maintaining and expanding CNP.

The panel discussion on “New India’s Economic Transformation and Union Budget
2024-25″ showcased how India’s strategic approach to economic development is intricately
linked to the concept of Comprehensive National Power (CNP). Each expert highlighted key
facets of CNP, demonstrating how they underpin India’s ambitious goals and strategic
objectives.