The budget will help drive India's expansion in challenging times

Its triumvirate of consumption support, increased capex and fiscal prudence lays a path for sustainable economic growth

- CHANDRAJIT BANERJEE

Finance minister Nirmala Sitharaman has presented a strong Union budget for 2025-26. It comes at a time of high uncertainty linked to global events, slowing domestic demand and a challenging fiscal outlook. Not only does it recognize the challenges, but also lays a roadmap for strong, inclusive and sustainable economic growth needed to become a developed economy.

A strategic focus on four key drivers - agriculture, micro, small and medium enterprises (MSMEs), investment and exports - rightly identifies the policies that will best boost growth, and significant measures have been unveiled to ensure that these are accelerated effectively. Further, there has been a strong emphasis on knowledge, innovation and meeting requirements of the future. Above all, it is a budget for citizens at large. Its focus on reviving consumer demand and boosting economic activity is commendable. The slew of tax measures, including no income tax on annual income of up to ₹12 lakh, should drive spending. Further, the rural economy will get a boost through measures like the Prime Minister Dhan Dhanya Krishi Yojana. These steps have high potential to kick-start a virtuous cycle of consumption and investment.

This has been accompanied by a continued thrust on capital expenditure, which has been budgeted at ₹11.2 trillion for 2025-26, a rise of 10.9% from the revised print of ₹10.1 trillion in 2024-25. This is expected to have a multiplier effect on growth next year and help crowd in private investment. The budget has simultaneously reiterated the Centre's push for cooperative federalism by continuing with its ₹1.5 trillion interest-free-loans scheme for state capex for next year as well.