Page 59 - EW March 2025

Union finance minister Nirmala Sitharaman & team: hard and soft infrastructure dichotomy

is a mere $4 trillion. Or that in 1950, their GDP was less come tax payable structure, individuals with annual income
than ours right until 1978, after which they have left India of a substantial Rs.12.75 lakh per year are henceforward
lagging way behind in the global development race. exempt from paying income tax (after availing Rs.75,000
The BJP/NDA government also needs to be commended standard deduction) and out of the direct taxes net. But
for its determined effort to continuously reduce the nation’s for this higher exemption threshold, they would have been
fiscal deficit which has fallen continuously year after year obliged to pay Rs.65,000 to the Central government.
from the high point of 9.2 percent of GDP in 2020-21 (the By Indian yardsticks this is a substantial concession am-
Covid high noon) to 5.6 percent in 2023-24 to 4.8 percent plified by lesser percentage of income payable on higher
last year and is budgeted to decline to 4.4 percent of GDP slabs. India’s middle class whose number is estimated at
in 2025-26. This, despite pressure from industry to ease 430 million is indeed stoking the engines — even if sub-
credit to boost GDP which is expected to grow to Rs.356.97 optimally — of national growth and is most vocal in ex-
lakh crore ($4 trillion) in nominal terms (unadjusted for pressing dissatisfaction with inadequate urban infrastruc-
inflation) in 2025-26. ture and rising inflation. Therefore this year’s budget has
Balancing the budget by reducing the fiscal deficit is substantially smoothed the feathers of this flock which is
important because the fiscal deficit amount (budgeted at increasingly voting with its feet to exit the country, given
Rs.15.68 lakh crore in 2025-26) necessitates printing addi- opportunity. Belatedly there is rising awareness within the
tional money pumped into the economy without commen- somnolent establishment of the need to stem this continu-
surate output, resulting in too much money chasing too few ous brain drain. Hence the infrastructure development,
goods driving up prices, i.e, inflation. Therefore, the Fiscal inflation management and direct tax reduction thrust of
Responsibility & Budget Management Act, 2003 mandates this essentially middle class budget.
the Central and state governments to “endeavour to ensure” Yet while the strategy of Budget 2025-26 to invest in
that the fiscal deficit does not exceed 3 percent of GDP. modern infrastructure for its downstream multiplier im-
The third highlight of Budget 2025-26 is a substantial in- pact, inflation management to ameliorate the burden of
come tax concession that Finance Minister Sitharaman has the poor and rewarding the middle class is intelligent, one
conferred upon India’s expanding middle class which “pro- wonders why successive governments at the Centre and in
vides the strength for India’s growth”. Under the revised in- the states advised and enabled by a pantheon of eminent

MARCH 2025 EDUCATIONWORLD 59