India's Budget 2025: A strategic Misstep?
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FEBRUARY 2025
India’s Union Budget 2025, amounting to a staggering ₹50 lakh crore, is one of the largest financial exercises the country has undertaken.
While budgets traditionally serve as economic roadmaps, this year’s fiscal plan raises pertinent questions about its strategic intent and execution.
Beyond the headline numbers and surface-level analyses, a deeper dive into the budget reveals a troubling picture of misaligned priorities, ineffective fiscal allocations, and missed opportunities.
The Bigger Picture: A Budget Beyond Bookkeeping
A national budget is not merely a ledger balancing government accounts. It is a strategic document reflecting a country’s economic vision and societal priorities.
India’s budget should ideally act as a catalyst for sustainable economic growth, innovation, and social stability.
However, the current fiscal strategy appears to be missing this broader vision.
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Even domestic investors are increasingly looking for safer investment destinations overseas.
This absence of a coherent long-term strategy is not just a domestic concern; it affects India’s global standing as well. The budget is intricately linked to the country’s social fabric and international perception. It reflects India’s soft power, influencing both domestic tranquility and global investor confidence.
Yet, instead of fostering economic inclusivity and long-term growth, the 2025 budget seems to favor short-term political gains while neglecting critical structural reforms.
The Fading Foreign Investor Confidence
India’s declining foreign direct investment (FDI) paints a worrisome picture.
The reluctance of international investors is not an isolated phenomenon—it mirrors broader concerns about policy unpredictability, regulatory bottlenecks, and governance inefficiencies.
The exodus of capital from India to more stable economies underscores the growing unease.
Even domestic investors are increasingly looking for safer investment destinations overseas.
This issue is further compounded by the actions of India’s own business elite. A case in point is the migration of India’s top industrialists, including Mukesh Ambani, who have moved their optional family bases outside the country.
This reflects a deeper systemic issue: if India’s own business leaders are hesitant about its economic future, why should global investors feel any different?
The budget does little to address these concerns, failing to introduce concrete measures to enhance investor confidence or ease the business climate.
The Transparency Deficit: A Census That Never Happened
Accurate data is the bedrock of effective policy-making. However, India’s persistent delays in conducting the 2021 Census raise concerns about the government’s commitment to transparency.
Originally postponed due to COVID-19, the Census should have been conducted in 2022 or, at the latest, 2023.
Yet, as we step into 2025, there is still no official timeline for this critical exercise.
This delay has direct implications for budgetary planning. Without updated demographic and economic data, how can the government ensure that budgetary allocations are accurately targeted?
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Will an additional ₹70,000 truly alter spending patterns or boost consumption in a meaningful way?
The lack of reliable statistics undermines the effectiveness of fiscal planning, leaving policymakers to navigate blindfolded. In the absence of credible data, how can we be sure that economic benefits reach the right sections of society?
Who Really Benefits? The Middle-Class Mirage
The budget claims to uplift the middle class, but the reality tells a different story. The middle class remains an ambiguous term, varying vastly based on geography and income levels.
With only 9.5 crore Indians filing income tax returns out of a population of 140 crore, and six crore of them declaring zero taxable income, the tax net remains worryingly narrow.
While, the government has promised tax relief amounting to approximately ₹70,000 annually for 2 crore taxpayers. However, this sum is unlikely to create any significant economic ripple effect.
Will an additional ₹70,000 truly alter spending patterns or boost consumption in a meaningful way?
The answer is doubtful. Instead of providing superficial relief to a small segment, the government could have focused on broader fiscal reforms such as rationalizing the Goods and Services Tax (GST).
A mere 1% reduction in GST rates could have provided a consumption boost across all socio-economic groups, with far-reaching economic benefits.
Unutilized Funds: The Illusion of Government Spending
One of the most striking revelations from the budget analysis is the vast proportion of unutilized funds allocated to government schemes.
Of the 105 schemes announced, nearly 70-80% of funds remain unspent year after year.
Even flagship programs such as Swachh Bharat and the National Rural Jal Jeevan Mission have seen only 50% and 30% fund utilization, respectively.
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If funds remain unused, where do they go?
This raises a fundamental question: Is the government genuinely inefficient in executing its spending plans, or is there a deliberate strategy of over-promising and under-delivering?
When funds are allocated on paper but remain unspent in reality, it creates a misleading narrative of fiscal commitment without tangible impact.
To draw an analogy, imagine a government promising to provide ₹100 every year but only disbursing ₹30 while continuing to claim credit for the full amount.
This systematic underutilization of funds exposes a deep flaw in India’s fiscal governance. If funds remain unused, where do they go?
And why are they not reaching the ground where they are needed most?
The Paradox of ‘New India’
Finally, the budget raises an intriguing contradiction in India’s economic and social priorities.
While the government provides free ration to more than 50% of the population, it simultaneously allows foreign companies to import and sell premium pet food and luxury breeds of dogs and cats.
This stark contrast reflects a deeper misalignment in India’s economic behavior.
These contradictions highlight the need for a more balanced economic approach. What does it say about societal cohesion when half the country relies on government-subsidized food while a growing segment indulges in imported luxury products?
More importantly, what role should the government play in shaping economic behavior that aligns with India’s humanitarian values?
Conclusion: A Budget That Misses the Mark
At its core, a national budget should serve as a guiding force for sustainable economic growth, equitable wealth distribution, and strategic national development.
Unfortunately, India’s Budget 2025 appears to fall short on all these fronts.
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...this budget was an opportunity to position the country as a stable, business-friendly, and forward-looking economy
From the erosion of investor confidence to the lack of data transparency, from the misdirected middle-class relief to the persistent underutilization of funds, the budget reveals systemic weaknesses that cannot be ignored.
As India stands at a crucial juncture in global economics, this budget was an opportunity to position the country as a stable, business-friendly, and forward-looking economy.
Instead, it risks becoming a cautionary tale of misaligned priorities and lost potential.
For India to truly emerge as an economic powerhouse, its fiscal policies must be grounded in data-driven decision-making, efficient resource allocation, and a commitment to long-term structural reforms.
Until then, the vision of a “New India” will remain just that—a vision, rather than a reality.
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