SWAMI DIVYAGYAN
The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, can be summarized as a mix of tax reliefs for the middle class and businesses, investments in agriculture and healthcare, and a significant challenge for fiscal balance. While this budget opens new opportunities, the critical question remains—how sustainable and practical are these economic measures?
Does the Tax Relief Provide Real Benefits?
The government has announced income tax exemption for earnings up to ₹12.75 lakh, providing a direct benefit to salaried individuals and the middle class. This tax relief will increase disposable income, boost spending, and stimulate economic activities. However, the impact on government revenue cannot be ignored, as a reduction in direct tax collections could widen the fiscal deficit.
This raises a crucial question: How will the government compensate for this revenue shortfall? If the loss in direct tax revenue is offset by higher indirect taxes (such as GST hikes) or reductions in government expenditure, the relief might be temporary. The government must ensure that this policy does not create a fiscal imbalance that leads to long-term economic instability.
Industrial Growth vs. Fiscal Constraints
The budget includes significant measures to boost the MSME sector and startups, which could accelerate industrial growth. Some key announcements include:
Increase in MSME loan guarantee limit from ₹5 crore to ₹10 crore
₹10,000 crore allocated for startups
Tax reductions and incentives for businesses
While these measures aim to strengthen entrepreneurship and create jobs, the real challenge lies in their implementation. Historically, industrial policies and loan schemes in India have often favoured large corporations, leaving small businesses and startups struggling with bureaucratic red tape. To ensure the success of these initiatives, the government must guarantee that financial aid reaches businesses at the grassroots level.
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Agriculture: Will the Announced Reforms Deliver?
The government has introduced various schemes to support farmers, including:
Increase in Kisan Credit Card (KCC) limit from ₹3 lakh to ₹5 lakh
Expansion of Pradhan Mantri Dhan-Dhanya Krishi Yojana to 100 districts
Irrigation and canal projects in the Mithilanchal region
These measures are commendable, but India’s agricultural crisis is not just about access to credit. The real challenge is fair crop pricing, lack of modern agricultural infrastructure, and inefficient water resource management.
Unless farmers receive fair market prices for their produce, increasing credit limits will only push them further into debt. The effectiveness of agricultural reforms depends on minimum support price (MSP) guarantees and access to modern farming technologies. Without these, the announced measures may fail to provide meaningful relief.
Investments in Healthcare and Education: Are They Enough?
The budget also emphasizes healthcare and education, with major investments in:
200 new cancer day-care centres
36 life-saving drugs made tax-free
Expansion of medical and IIT seats
While these initiatives appear promising, their impact depends on execution. The real issue in healthcare is not just affordability but accessibility, especially in rural areas. Without upgrading government hospitals and improving infrastructure, these measures may fail to bring real change.
Similarly, increasing medical and engineering seats alone is not sufficient. India’s higher education sector struggles with quality issues, lack of research funding, and industry-academic disconnect. Unless these concerns are addressed, merely adding more seats will not significantly enhance the quality of education.
Can the Government Maintain Fiscal Balance?
Despite multiple spending commitments, the budget lacks clarity on how these programs will be funded. If the government relies on increased borrowing to cover expenses, India’s fiscal deficit could expand, creating long-term financial risks.
Direct tax cuts reduce government income
Increased spending on welfare programs adds financial pressure
Revenue generation strategies remain unclear
If revenue shortfalls are managed through higher indirect taxes or disinvestments, the burden may ultimately fall on the common citizen. Economists warn that without careful fiscal planning, inflationary pressures could rise, negating the benefits of tax relief.
A Budget with Good Intentions, but Execution is Key
Budget 2025 presents a visionary framework that focuses on tax relief, industrial expansion, agricultural support, and social infrastructure development. However, its success will depend entirely on effective execution and fiscal management.
If implemented efficiently, this budget could boost economic growth, encourage entrepreneurship, and uplift rural livelihoods.
The increased fiscal deficit and policy inefficiencies could create economic instability if mismanaged.
To ensure long-term success, the government must:
Balance revenue loss from tax cuts with sustainable income sources
Guarantee that industrial and MSME incentives reach small businesses
Support farmers with better pricing policies along with credit expansion
Improve healthcare and education quality, not just expand capacity
While this budget lays out ambitious economic goals, its true impact will only be visible once policies are implemented on the ground. If the government fails to maintain financial discipline, these reforms could become a fiscal burden instead of a growth accelerator.
