February 17, 2025
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A JOB WELL DONE
IT was not expected to be an ordinary budget. The first full budget after the Narendra Modi government took charge for a third consecutive time, it had the hopes of an entire nation riding on it. Would it arrest the slowdown of the Indian economy and put it on the high growth path to Viksit Bharat? Would the country be able to face the headwinds caused by the second Donald Trump presidency in America, especially on the export front, after he dubbed India as the tariff king? China, meanwhile, has launched a war of a different kind with DeepSeek, its cheaper, more efficient answer to America's ChatGPT. What must India do to ensure it's not left behind in Industrial Revolution 4.0? But the loftier imperatives apart, Budget 2025 first had to strengthen the hands of its own people. The Long Covid of the economy had taken a toll on the country's middle classes, the chief protagonists of India's consumption story since liberalisation in 1991 and now the key drivers of the economy. Biting that bullet, Union finance minister Nirmala Sitharaman decided to forgo Rs 1 lakh crore in government revenue and provide income tax relief instead to the salaried class, so that those earning up to Rs 1 lakh a month escape its ambit altogether, while others pay less in tax. This, experts hope, would lead to a virtuous cycle of consumption and investment, and lift India's sagging growth that is estimated to be 6.4 per cent in FY25 and between 6.3 and 6.8 per cent in FY26, not enough to generate employment for millions of youthThough the taxation proposals stole the limelight, the government did not take its eyes off other areas requiring attention. The finance minister laid due emphasis on what she called the four power engines of
NOW PUSH THE PEDAL HARD
NO one missed the piece de resistance of Budget 2025--the tax concession to the country's middle class, easing some of the burden of income tax. It marked a directional shift in the Modi government's strategy from one on overreliance on capital expenditure to stimulate growth to backing it with a massive consumption boost. The budget also signalled the government's intentions to pump up the flagging manufacturing sector that accounted for only 17 per cent of India's Gross Domestic Product (GDP), far short of the 25 per cent by 2025 target fixed five years agoThe announcement of a National Manufacturing Mission in Budget 2025 was welcome, especially its focus on lifting the Micro, Small and Medium Enterprises (MSMEs) out of the low-growth rut they had fallen into. So too was the government's intention to reduce the regulatory cholesterol that has choked entrepreneurship, for which it has proposed forming a high-level committee to review the maze of rules, certifications, licences and permissions in the non-financial sector that cause enormous delays in setting up enterprises, not to mention the escalating cost and corruption. For higher growth, there is a need to push through these as well as a clutch of other reformsMany of these imperatives are staring the government in the face. While it provided