Paromita Das
GG News Bureau
New Delhi, 26th Jan. As Bharat stands on the cusp of unveiling its Union Budget 2025, the nation faces a unique economic juncture defined by subdued urban consumption, sluggish private investment, and external uncertainties. Against this backdrop, policymakers must chart a course that reconciles the twin imperatives of spurring economic growth and maintaining fiscal prudence. This year’s budget holds the potential to shape Bharat’s economic trajectory amidst global volatility and evolving domestic priorities.
Subsidy Reforms: Realigning Priorities
Bharat’s subsidy regime, particularly in food distribution, requires a fundamental reassessment. While subsidies have been essential in alleviating poverty, changing consumption patterns and fiscal constraints necessitate a more targeted approach. Rationalising subsidies can free up resources for productive investments in high-impact sectors such as infrastructure and green energy.
The recent underutilisation of allocated capital expenditure in sectors like roads and defence highlights the need for better allocation and execution. Ambitious spending targets often fail without addressing bottlenecks such as bureaucratic inefficiencies and project delays. The government must strengthen institutional capacity to fast-track approvals, enhance project monitoring, and ensure accountability at all levels.
Boosting Urban Consumption: Tax Reforms as a Catalyst
Urban consumption, a key driver of economic growth, has shown signs of stagnation. Tax reforms, particularly targeted relief measures for the middle class, can stimulate demand. However, such measures must tread a fine line between fostering growth and maintaining fiscal discipline.
Bharat’s tax base remains narrow, with a small fraction of the population filing income tax returns. Broadening the tax base through reforms, incentivising compliance, and introducing innovative taxation mechanisms can offset potential revenue losses from middle-class relief measures. A more equitable tax system will not only boost revenues but also reduce the dependence on corporate taxes, which have shown limited growth potential.
Monetary Policy: Pivoting Towards Growth
The Reserve Bank of India(RBI) faces a pivotal moment as it navigates the monetary policy landscape. With food inflation easing and core inflation stabilising, the RBI has an opportunity to adopt a more accommodative stance. Lowering interest rates and easing liquidity can encourage private investment and consumer spending, providing the much-needed impetus to the economy.
Additionally, the flexible inflation-targeting framework allows the central bank to prioritise domestic economic conditions over defending the currency. A balanced approach that supports growth without stoking inflationary pressures will be critical in sustaining Bharat’s recovery momentum.
Infrastructure Development: From Ambition to Execution
Infrastructure development, with its high multiplier effect, remains a cornerstone of Bharat’s economic strategy. However, recent trends indicate significant underutilisation of allocated funds in critical sectors. The government must adopt a realistic approach to capital expenditure, focusing on achievable targets and robust implementation mechanisms. Streamlining bureaucratic processes, leveraging public-private partnerships, and utilising technology for real-time monitoring can transform ambitious plans into tangible outcomes.
Global Integration: Anticipating and Adapting
In an increasingly interconnected world, Bharat’s budget must anticipate global trends to remain competitive. Trade tensions, a strong dollar, and geopolitical uncertainties pose challenges but also present opportunities. Strengthening diplomatic and trade relations, investing in export-oriented industries, and enhancing competitiveness in global markets will be vital for sustained growth.
Balancing Immediate Needs with Long-Term Goals
Bharat’s economic strategy must strike a delicate balance between addressing immediate challenges and laying the foundation for long-term growth. While subsidies and tax relief measures are essential to meet short-term needs, investments in infrastructure, education, and healthcare will define India’s future. Policymakers must prioritise reforms that enhance productivity, foster innovation, and build resilience against external shocks.
Conclusion: A Roadmap for Resilient Growth
The Union Budget 2025 offers Bharat a unique opportunity to recalibrate its fiscal and monetary policies. By addressing bottlenecks in infrastructure development, boosting urban consumption through tax reforms, and adopting a growth-oriented monetary stance, the government can lay the groundwork for sustained economic progress.
The road ahead demands bold decisions and meticulous execution. Bharat’s resilience in the face of global challenges and its ability to harness domestic potential will determine its position as a global economic leader. The Union Budget 2025 must be more than a fiscal exercise—it must be a visionary blueprint for a self-reliant, inclusive, and competitive Bharat.
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