Six Smart Themes That Define Budget 2025-26

The finance minister's eighth budget has an internal consistency, which should help the government pursue and deliver on the targets in its focus areas

- Janmejaya Sinha

I would like to tease out the underlying themes in this year's Union Budget but leave it to the pundits to give their customary budget rating. What I found noteworthy was the underlying internal consistency of the budget in pushing a set of themes in an integrated manner. I highlight the following six themes:

Global volatility and uncertainty: It was a relief to me that despite the drumbeat and chorus to stimulate demand, the finance minister did not get carried away and forego fiscal prudence. Given the level of geopolitical uncertainty and the potential volatility by the actions of the new Trump government, the finance minister's revised estimates for the deficit is below the target of 4.9% at 4.8%. The target for next year has also been adjusted downward at 4.4%, below the earlier announced 4.5%.

This provides some cushion to deal with the volatility in the world today even though it signals maintenance of the spending on infrastructure, forsaking the increase that had been seen in her previous budgets. This has benefits too: It avoids crowding out the private sector from credit markets, reduces the government borrowing requirements and signals a move towards a lower government-debt-to-GDP ratio that might help us in India's negotiations with credit rating agencies for a rating upgrade.