Desperately Seeking Growth Budget

Once again it is time for me to react to the Indian Union Budget, and given all the pre-budget media hype around it on television news of a possible tax relief for the middle-class, I should have expected what we finally got to hear on February 1, 2025. I knew it would once again be policy hijack by unprofessional PR agency idiot bosses and so am not surprised at all by the budget this time.

The Indian Economic Survey 2024-2025 mentions the previous one shared six months ago, as being more focused on states. Well, I have to say that this time, the little that I have read speaks more of the international economic scenario and is not so focused on the Indian economy, even though this is what it is mean to cover in detail. This business of states vs centre vs international is itself unprofessional PR agency idiot bosses’ mischief and meddling.

Anyway, the main focus of the Economic Survey is on the need for India’s private sector to generate more employment and to pay better wages and salaries to their people, as well as deregulation for MSMEs in India. On the first one, since it was the government that handed out generous tax breaks to companies in 2019 in the hope of boosting investment, it can hardly afford to chide them now for making record profits. The fact that they need to invest more and generate better paying jobs is pertinent but the 2025 budget has no policies to encourage this. In fact, according to the government, unemployment in India is now only 3.2% and is one of the lowest in the world. This is laughable as this means India is at near-full employment, which is patently untrue and puts the veracity and validity of Indian statistics in huge doubt. Irrespective of the need for employment generation, more tax breaks are certainly not what the Indian economy requires.

On the second issue of deregulation, it all depends on what you mean by deregulation and of what kind. However, I am glad that MSMEs are finally being given some attention – not that I work in one, and anyway I continue to be unemployed – after the ruination that demonetization wreaked on them followed by the Covid-19 pandemic. However, I hope the government doesn’t only mean internet-based start-ups, when they speak of MSMEs; there are plenty of MSMEs operating across industries and many in the informal economy, and encouraging their growth actually needs a proper industrial policy, as I have been writing on my blog.

Now, to the Union Budget 2025 itself. After generous tax breaks for corporates in 2019, when too the economy was going through a slowdown, we now have generous tax breaks for the “middle-class”. It suggests to me that the government fears a sharper slowdown and is compelled to consider such huge tax breaks under the new tax regime. I have already shared my views on what I think of the new tax regime and the new corporate tax as well for new manufacturing companies announced in previous years; both are the mischievous ideas of the same unprofessional PR agency idiot bosses who meddle in policy besides meddling in my life and my work when they have no business doing so. The justification for the middle-class tax breaks is that it will boost consumption, giving credence to the false narrative – in my opinion – created by the same troublemakers that there is a sharp slowdown in consumption, especially in urban India. They seem to be influencing retail audit companies like Nielsen and Kantar WorldPanel and even FMCG companies to toe this line and present research findings/corporate earnings that confirm this narrative.

I question the need for this tax break to the middle-class under the new tax regime and the constant tinkering with the income tax slabs in both the old as well as the new tax regimes. The fact that an annual income of Rs 15 lakhs in the old tax regime is now in the highest tax slab of 30% reeks of unprofessional nonsense once again. This mischief with 15 is all from guessing a phone conversation between me and my former junior colleague at Ogilvy, Delhi, Sarada, a decade or more ago, who said she earned Rs 15 lakhs as fees in production design for the very first feature film that she was involved with, in Bombay. Similarly, this budget has a capex of around Rs 11 lakh crore, to which grants-in-aid to the states have been added, in order that the total capex reaches the magic figure of Rs 15 lakh crores! This business of reading stupid meanings in numbers – and colours – has reached ridiculous levels.

Other than pandering to a set of unprofessional company bosses, I see no reason for these tax breaks and for foregoing tax revenue of an estimated Rs 1 trillion in FY26. I think the final tax foregone will be much higher. This money could have been spent on more essential areas of the economy such as education and healthcare, as I have been saying ad nauseum on my blog. The other problem I have with the direct taxes in India is that now the government earns more from personal income tax with such few taxpayers in the country, than from corporate tax. On principle, it strikes me as unfair and ought to be remedied.

If more money in the hands of consumers is what the government desired, it ought to have raised the minimum wage. This is also applicable at the state level, and would have put upward pressure on wages to rise more generally throughout the system. It was one of the suggestions made by P Chidambaram, former finance minister, while speaking to India Today’s Rajdeep Sardesai on Budget Day and I agree with this view. Done effectively, it would have forced companies to raise wages and salaries as well; whereas now, with the generous tax breaks for the so-called middle-class, companies have even less of a reason to increase wages.

Besides, the finance minister seems to have forgotten the 8th Pay Commission whose recommendations are meant to take effect at the start of 2026. This will provide a huge boost to consumption, going by past Pay Commission revisions, and could even pose a danger on the inflation front. RBI will have to be extra careful with inflation next year, while staying watchful this year too.

Looking at the budget allocations this year, it is more of the same. The largest chunk – leaving out subsidies – goes to NHAI (read, roads and highways) at Rs 1.7 trillion. And education and healthcare spending are still woefully inadequate, as percentage of GDP, when decades ago it was said that India needed to spend at least 4%-5% of GDP on each of these heads. Even more critical now, if we wish to achieve developed nation status by 2047. Besides, even what is allocated in the budget is not always spent. Incidentally, the reason the fiscal deficit for FY25 is an improvement on what was budgeted is because the government spent less. While the finance minister made a special mention of providing potable water to villages in rural India, the Jal Jeevan Mission underspent its allocation by more than 2/3rds in FY25. The allocated amount was Rs 70, 163 crores for FY25, and only Rs. 22,694 crores were spent. Even more surprising is the underspending on the government’s much touted affordable housing scheme. PM Awas Yojana spent Rs 16,000 crores less in urban India and Rs 22,000 crores less in rural India in FY25. What’s more, the allocation for the urban part of this scheme for FY26 is less than half of what was allocated last year, while rural housing has been maintained at the same level as FY25. Wonder what the reason for this could be. All of this also reeks of unprofessional PR agency idiot bosses meddling. Thankfully, the sums allocated to MNREGA and to PM-KISAN in FY 26 have been maintained at the same levels as in the previous year, at Rs 86,000 crores and Rs 63,500 crores respectively, all of which was indeed spent.

Separately, I have been writing on elections in India and how political parties promise all kinds of freebies and sops to voters, especially at the state level. Delhi assembly elections have just concluded and we will know the results tomorrow. But I must mention that the INC advertising on TV for Delhi elections actually promoted the freebies (money in the bank) as something they are doing in various other states. The point that I made in those previous articles of mine is that the doling out of freebies at election time is becoming policy, and all political parties are increasingly resorting to it. Which makes me wonder if the central government thinks it can justify cutting back on certain spends in the budget, because states are doling out sops anyway, shifting more of the burden to the states. In this context, it is worth mentioning that the combined fiscal deficit (states+centre) for FY25 is 8%, going by the states gross fiscal deficit target (BE) for FY25 according to the RBI.

The other problem I have with this year’s budget is that there is no particular area of focus, besides the middle-class tax breaks. One would have thought that with Trump tariffs coming, it would have been prudent to seriously consider a China+1 strategy and make it work this time. It would need specific tariff and tax structures for certain industries with a view to attracting foreign investment and for boosting domestic manufacturing investment as well. In fact, the customs and import duty section of the budget was sorely lacking in details, when this is what the private sector in India and foreign companies might have been waiting to hear more about.

The Economic Times mentions that the customs duty framework is now going to focus on eight slabs of tariffs and a single surcharge, but it doesn’t say what the eight slabs are and what the seven tariffs that have been removed are, and on which products/industries. The finance minister herself only mentioned that seven tariffs have been removed in addition to the seven that were removed earlier and this leaves only eight tariffs! It would have been better if there was some proper context for this reform and which industries are likely to benefit, as well as some detail on the tariff structure itself. The ET article mentions that 35 capital goods for EV battery manufacturing have been exempted from the duty as well as 28 capital goods for mobile phone battery manufacturing. But other than EV and mobile battery manufacturing, what else are we lowering import duties on?

I have to say that this is the most disappointing budget and possibly the worst from Nirmala Sitharaman, finance minister. I shudder to think what more surprises, or rude shocks, are coming up in the new Income Tax Bill that is to be tabled soon, with this kind of meddling and interference in policymaking by unprofessional and desperate bosses in Perfect Relations and their cronies in RK Swamy/BBDO who ought not to be in the corporate world.

I said at the start of this piece that I am not surprised by their meddling. But I find the level and amount of collusion between these unprofessional elements and the government shocking. People who ought to be punished and weeded out of the system for all the unprofessional nonsense they have indulged in, to do with my career in advertising and brand communications in India which they have wrecked, are instead being protected and shielded with meaningless policy.

This is not about the budget alone, but about the weakening of democratic institutions in India, with this kind of policy and media hijack and capture by unprofessional circuses. As a woman advertising professional who has always had responsibilities toward my aged parents and grandmums, I can only say that my last hope is that the rule of law at least prevails in our country.

This article originally appeared on my blog on February 7, 2025