With inflation-adjusted GDP growth pegged at 5% and global geopolitical headwinds weighing considerable downside risks on export trade earnings, the Indian economy is in a slowdown mode. Sagging consumer demand and falling private sector investment coupled with deceleration across core industry verticals have added to the gloomy sentiment.

Bolstering domestic spending, tackling inflationary pressures and boosting investor confidence to revive the economy will be the key challenge areas before Finance Minister Nirmala Sitharaman as she presents her second budget on February 1.

Addressing cyclical measures in the form of favourable monetary and fiscal policy rates may provide a short term push to the economy. However, strong structural changes are pivotal to directing the economy on a sustained growth trajectory and achieving inclusive economic development.

The budget must place priority focus on enhancing the competitiveness of the Indian manufacturing sector and expanding its potential to generate large-scale jobs for the country's workforce. The onus must be on increasing the share of the manufacturing sector to 25% of GDP from the current 16% and accelerating the integration of India with global value chains.

The emphasis will need to be on leveraging crucial infrastructure linkages for speeding industrial development and create productive employment. The government will need to roll out suitable policy reforms to facilitate the expansion of manufacturing units to tier-II and tier-III cities in the country to uncork the untapped demand potential of these regions. Local economies can be spurred leading to the creation of jobs and business opportunities.

The trade war between the US and China has left some scars and could prove to be a windfall for India. Companies from both countries will seek to relocate to overseas destinations for setting up export bases.

India could emerge as a favourable port of call for the companies to hedge their businesses in the face of global trade volatilities. This is an opportunity India cannot miss and should take full advantage of the situation.

India could open up new supply lines to both the US and China and expand its global trade and business footprint.  The government should provide trade concessions and ease FDI norms considerably to facilitate big-ticket companies from both countries to set up huge assembly lines and production bases in India in a hassle-free manner.

India will also need to create an investor-friendly trade regime which will invigorate the investment climate in the country, spur momentum in the manufacturing sector and signal the transition from expenditure-led economic growth to demand-led economic growth. The government should also take steps to further enhance the ease of doing business to optimise the competencies of Indian companies.

Creating an investor-friendly regulatory environment, ensuring single-window clearances for businesses and removing tax roadblocks can go a long way in easing business sentiment in the country.

The unveiling of the National Infrastructure Pipeline (NIP) reiterates the government's commitment to steer the infrastructure sector on a higher growth curve through increased capex. The mechanism should not become another policy document but prove instrumental to help get mega infrastructure projects off the ground and ensuring that there are no time and cost overruns in their execution through easy assessment and approval of sanction processes.

Private players and government agencies need to synergise their capabilities in a coordinated manner to ensure optimum utilisation of assets and resources and avoid overcapacities, leading to a cycle of non-performing assets. Long-pending projects like the Dedicated Freight Corridor (DFC) already running behind schedule should not be delayed inordinately and be executed in accordance with specified timelines.

The national logistics policy (NLP) should be implemented without any further delay. Through the creation of a digital portal linking different stakeholders, the NLP will facilitate cooperation and synergy rather than unhealthy competition among players. Boosting supply chain efficiencies, the NLP can position India as a prominent global logistics player. 

Steadfastly treading the path of economic reforms, implementing investor-friendly policy interventions and ensuring speedy implementation of infrastructure projects is key to realising India's vision of becoming a $5 trillion economy by 2024.