Budget 2025–26: Some Thoughts
An egalitarian society cannot thrive if wealth is concentrated in the hands of a few while many remain in poverty.
As our Honourable Finance Minister Mrs. Nirmala Sitharaman prepares to present her seventh budget, the nation is abuzz with hope, anticipation, and excitement. Everyone—from industry leaders to small farmers, from corporations to everyday citizens—wonders how the budget will shape their future.So far, successive budgets from the finance Minister have proven beneficial and prudent to the economy keeping the fiscal deficit under control and propelling the economy towards fast growth. Thanks to a disciplined fiscal stance by the Government of India and innovative monetary policies by the Reserve Bank of India, our nation has weathered global challenges, from the COVID-19 pandemic to geopolitical upheavals. While the achievements are significant and point toward the goal of becoming a top global economy by 2047, we must also acknowledge the widening gap between the rich and the poor. Ensuring that growth uplifts all sections of society remains our collective responsibility.
With this background, there is immense optimism that the upcoming budget could be a true “dream budget,” accelerating progress for everyone. Here are some thoughts which can make a meaningful difference in realising our vision of “Viksit Bharat.”
1. Stimulating Mass Consumption to Drive Growth
Mass consumption of goods and services sparks the virtuous cycle of investment, employment, production, demand, and supply. To sustain this cycle, there is an urgent need to control Production Costs, Keeping costs low and encouraging both local and foreign investment.
Manage Inflation: Stable or moderate inflation ensures that increased incomes truly benefit people.
Balance Resource Needs: While the government must mobilise funds for infrastructure and public services, it should do so without unduly burdening ordinary citizens.Achieving this balance is challenging but essential if we want to fulfil our dream of a developed India.
2. Rationalising and Strengthening Tax Policies
To finance our ambitious development agenda, the government needs robust revenue. This calls for:
Review of Tax Rates and Structures: Simplify and rationalise taxes to ensure fairness and sufficient revenue.Curbing Tax Evasion by embracing Technology, Artificial Intelligence, and better regulatory oversight to clamp down on elusive tendencies and practices.Promoting Tax Awareness by educating citizens, businesses, and other stakeholders on the importance of tax compliance , incentivising tax payers, eliciting cooperation of informed and enthusiastic public is key to broadening the tax base.A participative approach—where policymakers, professionals, academics, and industry leaders collaborate—can help craft pragmatic and inclusive policies.
3. Bridging the Gap Between Cost of Production and Cost of Living ; Keeping the cost of production low is a specialised art based on linkages of lots of variables, like, cost of land, materials, labour, interest, time and all connected logistics till the products reach the consumers. The impact of inflation on cost of production is also a factor which cannot be overlooked. Cascading effect of costs on various variables has an inflationary impact affecting the prices, the demand and supply.
When inflation, particularly in essential commodities, remains high, it disproportionately hurts the less privileged. Aligning Incomes and Inflation is crucial to ensure wage growth keeping pace with the rising cost of living so that economic gains reach every household.
4. Fostering Wealth Creation with Responsible Distribution
While the country’s GDP growth, though a bit low, is impressive, it should translate into tangible benefits for all.Encouraging Wealth creation and its Redistribution calls for all round attention and continuous monitoring. National wealth creation must go hand-in-hand with ensuring equitable distribution. Tax policies should reflect this commitment in letter and spirit. The budget should address narrowing the Rich-Poor Divide by creating an environment that fosters growth for every segment of society, not just the affluent. Special and very conscious efforts have to be taken to address all sorts of Indirect costs, misuse of public funds, corruption, black money, and losses from underperforming institutions that weigh heavily on taxpayers and drive up inflation. Tackling these effectively will free resources for vital public investments.
5. Unleashing the Power of Demand
High-sounding numbers and statistical jugglery have limited effect if people can’t afford the goods and services they need. We must promote Financial Inclusion. Banks and financial institutions should be proactive in expanding credit and supporting enterprises particularly at grassroots levels.
Boost Consumer Confidence: When consumers have the means to spend, the entire economic cycle—from producers to sellers—thrives, fuelling employment and further consumption.
Leverage Technology: Harness AI and digital solutions to streamline operations and make credit flows quicker, safer, and more inclusive.The budget can introduce targeted incentives for both financiers and borrowers to keep this virtuous cycle running smoothly.
6. Simplifying the Tax Regime
A simpler, more transparent tax system would benefit everyone:
Fewer Tax Categories: Consider consolidating taxes so that citizens face fewer rates and rules.
Transaction Tax + Comprehensive GST: A single transaction tax on all receipts and payments, supported by a holistic and definitely not hostile as at present GST, could reduce complexity, widen the tax base, and curb evasive practices. People should welcome and volunteer to pay taxes for the nation's progress.
Income Tax as a Supplement: Let income tax remain only as an additional resource, applied in a clear, justifiable manner.
7. Strengthening Governance and Accountability
Tax collection and distribution should be transparent, traceable, and accountable. This calls for:
Strong Bureaucracy and Efficient Administration: Build a mechanism that ensures fair allocation of tax revenues among states, infrastructure, security, and other national priorities.Disincentive freebies by all means to bring in meaningful and healthy fiscal prudence. Result-Oriented Governance can bring in huge benefits all around. Link revenue collection and public expenditure to tangible, measurable benefits for citizens. Robust Vigilance and Technology: Leverage advanced tools to eliminate fraud and corruption, thereby safeguarding both citizens and the national exchequer.
8. Embedding Ethical Values in Business and Public Life
High ethical standards—rooted in our cultural heritage—are key to sustainable development. We should:
Encourage Responsible Pricing and Customer Care: Service sectors, from travel to hospitality, must be fair and people-centric.
Reward Compliance and Discourage Freebies: Offer incentives for honest tax practices while disincentivizing wasteful public spending that imposes an unfair burden on taxpayers.
Integrate Social Audits: Eminent social reformers and experienced professionals should help monitor and evaluate the moral and social impact of businesses and public institutions.
When institutions and individuals alike commit to these ethics, the country’s global image and societal well-being both thrive.
Conclusion
To build a strong and equitable economy, we need a budget that inspires all citizens—across every socioeconomic level—to participate in nation-building. By combining technological innovation, simplified tax structures, ethical governance, and a genuine commitment to uplift every Indian, we can ensure that The economy performs , grows equitably and all the segments of the society benefit by minimising the ugly rich and uplifting the poorest of the poor. May the budget bring benefits and welfare measures for all.
Wish every one a very happy and wonderful new year 2025.
Loka samastha Sukhino Bhavanthu
T V Gopalakrishnan
Bengaluru.
( This article got published in Money Life dt 31/12/2024)
