Dress for success

As India stares at a new world order, the budget will determine whether it is ready for the party or not

- BY K. SUNIL THOMAS

All dressed up and nowhere to go? Nirmala Sitharaman will nod her head at that.

After more than half a decade of reforms, the finance minister will still be desperately applying a fresh coat of makeup to make the Indian economy party-ready when she presents the Union Budget on February 1. And therein lies a tale of how critical this juncture is in the Indian economy's coming-of-age story. India's GDP growth rate in the first part of this year was above 8 per cent, with the financial system remaining robust, and consumption, manufacturing, and exports showing some spurts. Yet, Sitharaman is in that unenviable position of waiting to see if the footwear will fit.

"India enters Budget 2026 with robust macro fundamentals, with the GDP projected to grow around 7.4 per cent. Yet the translation of growth into jobs and real household income remains uneven across states and regions," said Vishwanathan Iyer, senior associate professor at Great Lakes Institute of Management, Chennai.

It really shouldn't have been this way. The government had unleashed a series of reforms over the past few years in its gallop towards a $5 trillion economy—and the subsequent goalpost of 'Viksit Bharat' by 2047—such as corporate tax cuts in 2019, production-linked incentives (PLI) to attract investment in crucial manufacturing sectors, structural reforms during the pandemic, and a mega capital expenditure on infrastructure in the following years. The income tax cuts and GST rationalisations last year, intended to speed up consumer spending, rounded off this supposed Ashwamedha.

But the animal spirits have been a bit on the subdued side.