Neutral policy, predictable rules needed

The backdrop in which the Budget is presented tends to set the tone.

- PRANJUL BHANDARI

But this year it all seems rather confusing. There are enough indicators to suggest that growth is both weak and strong.Some argue that growth is on an upward path. Real gross domestic product (GDP) growth prints have been strong, and credit growth is rising across several sectors.

Others lament that the best is over. 2025 benefited from a series of onetime boosts — good rains, falling oil prices, moderating inflation — which were particularly beneficial for the informal sector. Significant policy easing — tax rate cuts helping consumption, as well as interest rate and regulatory easing — added to the mix. All of these may be largely behind us. This group points out that nominal GDP growth has been extremely weak, and foreign inflows have been insufficient to fund the trade deficit. Recent Purchasing Managers’ Index prints, too, have started to slow after a strong run.