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'But this Budget alone will not fix what ails the Indian economy.'
"Borrowing from former chief economic advisor Arvind Subramanian's recent writings and speeches, the biggest impediments plaguing the Indian economy cannot be fixed by a 'good' Budget," Milan Vaishnav, director, South Asia Programme at Carnegie Endowment for Peace tells Rediff.com's Archana Masih.
"They involve reining in overzealous tax authorities, committing to the rule of law, ensuring greater regulatory certainty, and reversing the perception that India is -- above all -- committed to its national champions at the expense of foreign or smaller players."
On the key takeaways from the Budget:
The first takeaway is that the government has belatedly admitted that demand is a constraint and has sought to use a generous middle class tax cut as a way of stoking consumption.
Previous Budgets in recent years have prioritised the supply side, namely capital expenditure. The government could not hide from the laws of economic gravity any longer.
The second takeaway is how constrained the government is given the prevailing realities.
It's shown an admirable dedication to macro-economic responsibility but this, combined with precarious global conditions, limits what it can do with traditional fiscal and monetary policy.
The third takeaway for me is that, borrowing from former chief economic advisor Arvind Subramanian's recent writings and speeches, the biggest impediments plaguing the Indian economy cannot be fixed by a 'good' Budget.
They involve reining in overzealous tax authorities, committing to the rule of law, ensuring greater regulatory certainty, and reversing the perception that India is -- above all -- committed to its national champions at the expense of foreign or smaller players.
On the impact of the Budget on the Delhi election:
On the Delhi election, clearly the tax cut is meant to send a 'feel good' signal for middle class voters, especially those residing in the national capital.
Given Delhi's relatively higher share of salaried, formal sector workers, this move could have bigger bang for the buck than in other parts of the country.
Whether it will be enough to overcome the party's under-performance in regional elections is harder to divine.
On the big ticket announcements for poll-bound Bihar:
When it comes to politics, Bihar is clearly the biggest story of Budget 2025.
The Budget showered largesse on the electorally pivotal Hindi belt states with schemes ranging from new airports to new educational institutions and a fillip for the Buddhist tourism sector.
This not only sends a message to Bihari voters about the importance the BJP places on the state, but it also gives them a readymade campaign material for this year's assembly elections.
A brief sum-up of Budget 2025:
In sum, this was a responsible Budget.
It gives the middle class some additional breathing room. It does not contain anything objectionable that would roil markets.
But this Budget alone will not fix what ails the Indian economy. The answer to that conundrum lies in reforms -- of regulation, tax, policy, rule or law, factor markets.
Many of these are the humdrum tools of policy wielded in between Budgets.
Feature Presentation: Aslam Hunani/Rediff.com