Daring to upset markets and letting rupee fall to keep India on growth path

The charming thing about budget is its single figure — the annual income and expenditure number.

Arriving at the estimate, however, isn’t as simple, and every year, governments have to squeeze in the requests of several stakeholders, and perhaps even give in to some of their not-so-desirable demands.
But how does India’s budget look like, when it’s free from the pulls and pushes of trade, industry and investor lobbies?

The New Indian Express brings you a first-hand account.

The second edition of the Shadow Budget 2025 takes a long-term perspective to both resource allocation and resource mobilisation, but with an achingly specific details on how to rebuild growth. The state of the Indian economy isn’t sound, with pockets of stress seen everywhere.

Household stress is real and here. They are not earning enough as real incomes have been stagnant for years, and so the growth in saving and spending is even lesser every year. MSMEs are yet to come out of the triple-shocks of demonetisation, GST rollout and Covid pandemic fallouts. Large companies are back on their feet but are in no mood to invest citing poor domestic demand. Lastly, our goods and services exports too need an energetic uplift.

In other words, now is the time for the government to be bold. As Oscar Wilde said, anyone who lives within their means suffers from a lack of imagination and this can’t be truer in the context of Indian economy. All talk about fiscal consolidation can wait, In fact, it’s the worst choice to make at this point in time. In any case, India isn’t going with a cap in hand to foreign lenders and so there’s no need to finger our worry beads about a potential ratings downgrade.

What sets the Shadow Budget apart is that it not only stays away from immediate fiscal consolidation, but restructures capital gains taxation, doesn’t increase contribution from GST, links corporation tax rate to employment, productivity and value-creation through innovation, and raises the revenue share of states to pre-pandemic levels. The latter is crucial as states play a critical role to cater to education, health, housing and sanitation programmes.