With fiscal prudence at the core, a budget bonanza for the middle class reinforces Amritkaal.
The reforms are aimed at fostering inclusive growth and economic resilience across various sectors, with particular emphasis on the middle class, farmers and women entrepreneurs.
The focus is on consumption versus capex — overhaul in income tax brackets, no income tax below ₹12 lakh and TDS and TCS tweaks; bringing the fiscal deficit down from 4.8 per cent (FY25) to 4.4 per cent (FY26) by cutting ₹1 lakh crore from direct tax receipts, albeit adding ₹2.6 lakh crore from RBI and PSU dividends, resulting in increasing the capex by 10 per cent. This leads to expectations from the private sector to invest in infrastructure.
Shifting focus
The Budget announcement of a potentially massive income tax break is an acceptance by the government that, more than anything else, private sector investments require robust consumer demand. The government has finally bit the bullet for an income tax cut as a way to spur consumer spending. With the rejig in the income tax slab rates, the Centre has put more money in the hands of people. The hope now is that consumers will spend the additional money in hand, which will provide the corporates with the essential reason to invest in new capacities, create jobs, and further spur economic growth.
A landmark decision is to raise the FDI limit to 100 per cent in the insurance sector, if ‘mission 2047 insurance for all’ is to be met. Long-term capital sourced from the deep pocket class of investors is a must. With this move, the flagship initiatives for crop insurance and Ayushman Bharat can be taken to the next level. The futuristic initiatives will see investments in Robotic Process Automation. This move encourages global companies to enter the Indian market with complete ownership, leading to higher capital inflows, and helping the insurers to expand their reach. Even reinsurance companies are likely to set up full-fledged operations in India as against the current branch structure.
To strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business’, especially regarding inspections and compliances, a high-level committee is to be set up to review, all non-financial sector regulations, certifications, licenses, and permissions. Recommendations are expected to be made within a year.
It’s a comprehensive and transformative roadmap for India’s development, with a clear focus on inclusive growth, economic empowerment, and regional development. By addressing the diverse needs of India’s population, this Budget promises to foster prosperity and resilience across all sectors, ensuring that every citizen becomes a partner in the nation’s development journey.
(The writer is Chairman, Hinduja Group)