With the union budget and monetary policy announcement on the horizon, India faces a challenging economic environment marked by slowing urban demand, uncertain private investment, and global economic headwinds. In such a scenario, the incoming budget needs to put taxpayers first and rationalise their burden while steering growth effectively and keeping inflation under check.
Rationalising revenue expenditure
Much of the government's spending goes into revenue expenditures such as subsidies and interest payments, leaving little room for productive investments. Almost 60 per cent of this year's budgeted revenue expenditure has already been spent, compared with just 46 per cent of capital expenditure. Rationalising subsidies, especially the food subsidy programme, could free up funds for infrastructure and development projects that boost economic growth.
Why focus on taxes?
The momentum of urban consumption is weakening. Taxpayers, particularly the middle class, need relief in the form of revised tax slabs or lower rates to stimulate demand. Yet, broadening the tax base is equally vital: less than 7 per cent of Indians file returns, while 60 per cent report zero taxable income. A fairer design of tax may ensure that its burden is distributed more equitably and increase revenue.
Why targeted capex is key
Public capex is the harbinger of economic activity but cannot be unrealistic or inefficient. Whether it is the roads or the defence sector, the worrying figure of 16 per cent capex contraction stares at us during this fiscal year. Removing the bottlenecks in project execution and setting attainable capex targets will ensure infrastructure development on schedule, create employment, and galvanize growth.
Experts believe that its focus must be on backing growth while controlling inflation rather than defending the rupee. As food inflation has eased and core inflation hasn't changed, easing liquidity and policy rates could help stimulate economic activity without risking instability.
For taxpayers, budget 2025 should signal fairness, efficiency, and a commitment to growth-driven fiscal responsibility.