Image used for representational purpose only.
| Photo Credit: Getty Images/iStockphoto

Satheesh Vellinezhi
| Photo Credit: Satheesh Vellinezhi

Too many letters. Oh, and I’m not talking about the Russian alphabet, although it also has way too many letters. I’m talking about modern correspondence in this digital age. (The writer apologises for the loose use of the word letters. Sadly, this writer is forever apologising). In fact, this is with reference to emails, text messages, phone calls, and even the odd fax, (those under the age of 43, please Google fax. This writer is allowed only a certain number of words per column, by the editorial team).

All these messages ask only two things. The first is if I’m responsible for the Kala Ghoda Arts Festival? And depending on my mood, I normally answer “Sometimes”. The second question is more devastating. It goes on these lines, “Hello, uncle, since you are so old, can you decode the 2025 budget for us?”

Frankly, I’d much rather answer the question about Kala Ghoda Arts Festival. However, since millions are asking, and many of them being foreigners, I thought it only fair that I take a stab at it. After all economics was my ancillary subject in junior college. That I dropped it and opted for physical education is a separate matter.

First up, I would like to present terms that you should avoid trying to understand. Terms like the Nifty 50. Also, all other members of the Nifty family, such as Nifty Realty, Nifty Media, Nifty Auto, Nifty Uncle, Nifty Aunty… I think you get the picture.

These terms are just kept there so television survives.

Let me explain. Television news is the budget makers’ very own NGO. The budget makers help television with content, that they desperately need. The Nifty family plays a very important role. News panels can exhaust hours discussing these terms, without making any headway, and yet keeping the viewer entertained, by the dearth of any conclusive conversations on the subject.

It’s a bit like discussing Hindi film lyrics from the 90s. I mean who can decode the song ‘Ilu Ilu… Ilu Ilu…’? Another term to absolutely avoid is Sensex. Once you start getting involved with this Sensex, you run the risk of falling deep into a rabbit hole of unanswered questions. Then there are terms like short-term volatility, sectoral indices, debt markets, fiscal deficit and increased capex. Even while writing these terms, I feel sleepy. Suffice to say, (look the writer is no Nani Palkhivala, but he needs to, for the purpose of this column, at least sound like a leading global economist), the only thing that should really concern you, oh citizen, is the bit on income tax.

Since, upto ₹12 lakh per annum is tax free, it’s clear that your motivation should be to earn exactly that and nothing more. Once you earn ₹13 lakh, you automatically pay 15% tax. So, you’ve actually earned only ₹13 lakh – ₹1,95,000. This equals to ₹11,05,000. So, by earning more, you’ll be earning to exactly ₹12 lakh. I hope this settles all arguments. Now, let’s not mention any of this till the ‘26-27’ budget please. 

The writer has dedicated his life to communism. Though only on weekends.

The previous Budget, presented in July 2024 after the Lok Sabha election, had accorded priority to employment and skill development, given the nature of the election mandate. The Finance Minister had announced a Prime Minister’s Package of five schemes and initiatives to facilitate job and internship opportunities for 4.1 crore youth over a five-year period with a central outlay of ₹2 lakh crore. However, the Budget speech delivered in Parliament on February 1, 2025, did not refer to the Prime Minister’s Package even once. The document on implementation of Budget 2024-25 announcements states that a “draft Cabinet note on Employment Linked Incentive scheme is under finalisation” and “several meetings have been held with the Ministry of Labour and CII to discuss the relationship between capital expenditure and employment generation”. In other words, the future of the scheme looks bleak.

Deflationary budget

The September 2024 report of the Periodic Labour Force Survey (PLFS) revealed that in 2023-24, the youth unemployment rate (for those aged 15-29 years) had increased to 10.2% and the unemployment rate among graduates was 13%. Time series data from the PLFS show that the share of the workforce engaged in regular or salaried employment in the post-pandemic period has shrunk, while the share engaged in agriculture and informal self-employment has risen.

The latest Economic Survey also shows that average real earnings of self-employed male workers in India fell from ₹9,454 in 2017-18 to ₹8,591 in 2023-24. The monthly real wages of regular/salaried male workers also fell from an average of ₹12,665 in 2017-18 to ₹11,858 in 2023-24. Surplus labour inundating the job market, combined with high food inflation, have severely squeezed the real incomes and livelihoods of an overwhelming majority of India’s workforce. For a Finance Minister to overlook this is disingenuous.

The advanced estimates of GDP have already projected a decline of the real GDP growth rate to 6.4% in 2024-25 from 8.2% last year. In keeping with this, there is a slowdown in the Centre’s net tax revenues in 2024-25. With the Finance Minister keen on adhering to the fiscal consolidation path, the axe has fallen on government expenditure. Total expenditure is now likely to be over ₹1 lakh crore short of Budget Estimates (BE), with capital expenditure falling short of the target by over ₹92,000 crore.

Public expenditure on rural and urban development, agriculture, education, food subsidy, energy, transport, and health are all being axed. Among centrally sponsored schemes, the Revised Estimates (RE) for the Jal Jeevan Mission and Pradhan Mantri Awas Yojana (both rural and urban) show declines of ₹47,469 crore and ₹38,575 crore, respectively, from their BE. The expenditure on MGNREGA was cut in the BE itself by ₹3,654 crore from the previous year. Such deep cuts in budgeted capital and welfare expenditures would have a dampening effect on investment and consumption, especially in rural areas.

The Finance Minister has sought to counterbalance the deflationary impact of these expenditure cuts by enhancing the annual rebate for income tax payers from ₹7 lakh to ₹12 lakh from 2025-26. Data from the Income Tax Department show that only around 2.8 crore individuals had paid positive taxes in the assessment year 2023-24, out of the 7.54 crore filing income tax returns. The income tax relief for next year would therefore go to 2.8 crore individuals, who form only around 22% of India’s salaried workforce. For the rest who are faced with dwindling real incomes, there is nothing on offer.

The Finance Minister has estimated the revenue foregone on account of the income tax rebate to be ₹1 lakh crore. Instead, a cut of a similar magnitude in indirect taxes, such as the exorbitant excise duties on fuel or the central GST rates on mass consumption goods, could have provided relief to the entire class of working people. It is well known that the consumption propensity of wage earners is higher than that of the profit earners.

The average daily wage rate actually received by a MGNREGA worker (as per data provided by Ministry of Rural Development dashboard) has increased from ₹200.71 in 2019-20 to ₹252.31 in 2024-25. The national floor level minimum wage for unskilled workers in agriculture, in contrast, has been set at ₹452 in 2024-25. A well deserved, substantial hike in the MGNREGA wages in the Union Budget alongside an increase in rural development outlays would have led to increased consumption demand in the rural areas. The consumption effect of income tax breaks, in contrast, would be far more limited and concentrated in urban areas.

Running out of ideas

The latest Economic Survey cites a private sector research report to show how the after tax profit-to-GDP ratio of Nifty 500 companies surged from 2.1% in 2020-21 to 4.8% in 2023-24. While the deep corporate tax cut of September 2019 played a vital role in this profit surge, it has neither translated into higher levels of private corporate investment, nor employment generation.

Yet, the Union Budget has relied upon another tax break, this time for income tax payers, to inject demand into the economy, even while cutting capital and welfare expenditures to compress the fiscal deficit. This is unlikely to generate higher levels of economic growth and employment and raise the living standards of the vast majority of the working people. It is evident that the government has run out of ideas on the economic front.

Prasenjit Bose is an economist and activist

Representative image
| Photo Credit: PTI

 

Falling short of the 100 days of work guaranteed under the Mahatma Gandhi National Rural Employment Guarantee Act, average workdays per household under the scheme had come down to just 44.62 days in 2024-25 from 52.08 days in 2023-24, a consortium of non-profit organisations said on Sunday (February 2, 2025). 

A fall in person days from 312.37 crore in financial year 2023-24 to 239.67 crore in 2024-25 was also recorded. The term “person days” refers to the total number of workdays by a person registered under MGNREGA in a financial year. 

In a statement on Sunday, NREGA Sangharsh Morcha, the consortium of MGNREGA workers and NGOs working in social sector, said that low budgetary allocation for the programme which remained stagnant at ₹86,000 crore, same as that of last year, reflected the government’s deliberate neglect of the rural workforce. As of February 1, the deficit stood at ₹9,860 crore with pending wages of ₹6,948.55 crore as of January 25.

With two months remaining in the financial year, this recurring trend, where an average of 20% of the Budget is used to clear past dues, means that the effective allocation for FY 2025-26 will be no more than ₹70,000 crore.

This, when adjusted against inflation, is approximately ₹4,000 crore less than the previous year, it pointed out. “As a percentage of GDP, the allocation has further declined to a mere 0.24%, compared to 0.26% in the last financial year. The scheme is also awaiting routine wage indexation, and even this adjustment has not been accounted for,” the statement said. 

The NREGA Morcha said inadequate budget will result in “massive delays in wage payments exacerbating”, “financial distress for rural workers”, “suppression of work demand” and “denying people their right to employment”, “decline in quality asset creation”, and “weakening of rural infrastructure”.  

Congress general secretary Jairam Ramesh said that the government’s neglect of this “crucial safety net” exposes its “indifference to rural livelihoods”. It reduces MGNREGA’s reach leaving drought-hit and poor rural workers stranded, Mr. Ramesh said.

“It also precludes any increase in the wages paid to workers. Even in this ongoing Financial Year, the minimum average notified wage rate was increased by only 7%. This is at a time when Consumer Price Index (CPI) inflation is estimated to be ~5%. MGNREGA is therefore ground zero for the national crisis of wage stagnation,” he added.

New Delhi:

Amid the Opposition’s charge that Budget 2025 had ignored Kerala, Union Minister George Kurian has said the southern state must declare that it is backward if it wants more funds from the Centre. The remark has intensified the row and the ruling Left has said the minister’s statement reflects the Centre’s “anti-Kerala” stand.

Shortly after Finance Minister Nirmala Sitharaman delivered the Budget speech in Lok Sabha, Kerala Chief Minister Pinarayi Vijayan said it was a disappointing budget for the state. He said the Centre had ignored their request for funds to rebuild Wayanad, where landslides in July claimed more than 400 lives. The Budget also ignored the Vizhinjam Port in Kerala.

“We had requested a special package for Rs 24,000 crore besides a special Wayanad landslide package. Considering the national importance of the Vizhinjam Port, we had requested support for it too. But none of these have been considered,” he said.

“Kerala is being penalised for its gains in the education and other sectors. It is said that our state does not need more as we are already ahead in many sectors. But there are some areas where Kerala is lagging. But we get no support from the Union government to uplift these sectors,” he said. “Kerala has been sidelined badly in this Budget and this is unacceptable to us,” the Chief Minister said.

Amid the criticism from Kerala, Union Minister Kurian said the Centre allocates financial packages to states that have fallen behind on development indices. In a sharp remark aimed at the Left government, he said, “You announce that Kerala is backward, that it does not have roads, good education, etc. If you say Kerala is behind other states in terms of education, infrastructure, and social welfare, then the (Finance) Commission will examine it and give a report to the central government. The central government will make a decision based on the report. It does not decide on its own.” 

Mr Kurian, who is from Kerala’s Kottayam district, is a Minister of State for Fisheries, Animal Husbandry and Dairying and for Minority Affairs in the third Narendra Modi government. He is a Rajya Sabha MP since September last year.

Mr Kurian’s remark drew sharp responses from Left leaders. CPM state secretary M V Govindan said the Centre wants Kerala to be backward, “but that will not happen”. He alleged that the BJP has an “anti-Kerala stand” and its leaders from the state share that outlook.

“The objective of the BJP is to make Kerala poor and backward. They made several attempts to tighten their grip on the state. As all such attempts have failed, they are now trying to push Kerala backward by denying deserved allocations,” he alleged.

Veteran CPM leader EP Jayarajan said the people of Kerala should come forward and protest against the Union minister’s statement.

New Delhi:

As campaigning for the February 5 election in Delhi enters its last leg, Prime Minister Narendra Modi today pointed to Budget 2025 and played up the proposals for Bihar and the income tax relief to the middle class.

Addressing a rally in south Delhi’s RK Puram, the Prime Minister said this Budget was the people’s Budget and represents the hopes and aspirations of the middle class. “The country is growing economically. In earlier times, corruption would have eaten up the people and your hard-earned money would have been taken away. BJP’s honest governance has worked for the welfare of every section – be it the poor, the middle class, people in rural areas, or urban voters.”

“The entire middle class is saying this budget is a middle-class-friendly Budget. Every family is happy and hopeful. During Nehru’s time, if you were earning Rs 12 lakh, you would have to pay 1/4th of your salary as tax. If this were Indira Gandhi’s time, you would have to pay Rs 10 lakh tax on Rs 12 lakh income. But under the BJP government, people will have to pay zero tax,” he said.

The Prime Minister said many residents of RK Puram have government jobs. “You have got not just tax relief but 8th Pay Commission is also being introduced, pension schemes consolidated, and budget benefits extended to senior citizens and the retired government officials too,” he said, adding that young couples, too, will save a lot on taxes.

The Prime Minister then underlined the Budget offerings to Bihar to reach out to the Purvanchali community in Delhi, which plays a key role in the election. Purvanchal spans eastern Uttar Pradesh and western Bihar and many migrants from the region have settled in the national capital.

“The Purvanchali community made me an MP and the PM. The Purvanchali community made me who I am and they have been taken care of in the Budget. They were neglected in Congress’ time, people from Bihar were not respected. But we have respected them,” the Prime Minister said, pointing to the Budget announcements for Bihar.

Targeting the ruling Aam Aadmi Party (AAP), the Prime Minister said AAP is spreading lies and fear and driving the Purvanchali community out of Delhi. “They are stopping Chhath puja celebrations. Let them indulge in negative politics, but BJP will continue to extend support to the Purvanchali community,” he said.

The Prime Minister expressed confidence that the BJP would form the government in Delhi. “In a few days, a new spring of development will arrive in Delhi. This time, the BJP government is about to form in Delhi. The ‘AAP-da party’ has wasted 11 years. My biggest request is that we should be given a chance to serve the people of Delhi. I promise to go to any length to remove every difficulty you face.”

Taking a swipe at the AAP over the exit of six MLAs days before the polls, he said, “We are seeing that even before the voting, the broomstick is disintegrating,” he said, referring to the AAP’s poll symbol. “AAP leaders are leaving because they realize how angry the people are.”

New Delhi:

Finance Minister Nirmala Sitharaman, who presented the Union Budget yesterday, clarified that the asset monetisation plan is not a substitute to disinvestment. 

Speaking to NDTV Editor-in-Chief Sanjay Pugalia on Sunday, Ms Sitharaman said, “Asset monetisation is not a substitute for disinvestment. Asset monetisation has been going on and will continue. In the 2nd edition, we said we will plough back capital of 10 lakh crore in new projects…If there is an asset that we want to monetise with a private party, that won’t be for sale. The ownership will be with the Centre, it won’t transfer. That is not disinvestment. The revenue that we will get, we will plough back.”

“The Centre has not dismissed disinvestment. There is talk of disinvestment as well,” Ms Sitharaman added.

According to Ms Sitharaman, Public Sector Undertakings (PSU) will help in building more assets.

“Every PSU is becoming professional on its own. But the market assessment processes, they do not have it. We are helping towards value addition to assets…Our budget also focuses on meeting urban challenges,” she said.

Ms Sitharaman on Saturday announced the launch of the second Asset Monetisation Plan for the period 2025-30. The plan aims to generate Rs 10 lakh crore by monetising government-owned assets and reinvesting the proceeds into new infrastructure projects. The government will also fine-tune regulatory and fiscal measures to ensure the successful implementation of the plan.

Apart from this, the government also proposed a financial outlay of Rs 1.5 lakh crore for interest-free loans to states. These loans, with a tenure of 50 years, are aimed at boosting capital expenditure and incentivising state-level infrastructure reforms.

New Delhi:

Countering the Opposition’s charge that the Centre has extended big Budget gifts to Bihar with an eye on the upcoming Assembly polls, Finance Minister Nirmala Sitharaman has questioned if a state with such a high population density and rich history does not deserve a good international airport.

The Finance Minister spoke to NDTV’s Editor-in-Chief Sanjay Pugalia in an exclusive interview today.

In her Budget speech yesterday, Ms Sitharaman announced big offerings to Bihar, which goes to polls later this year. Besides the election, the Budget bonanza was also seen against the backdrop of the crucial support of Nitish Kumar’s JDU to the BJP after the latter fell short of the majority mark in the general election last year. JDU and the BJP are allies in Bihar and are prepping hard for the polls.

The Finance Minister has announced the establishment of a board to support the production of Makhana in north Bihar. She also said greenfield airports will be developed in the state. The Budget also announced financial help for the Western Kosi Canal project in Mithilanchal, which aims to boost irrigation. It also announced a plan for IIT Patna’s expansion and the establishment of a National Institute of Food Technology in Bihar.

Responding to a question on the Opposition’s charge that this Budget was prepared with an eye on the Bihar and Delhi elections, Ms Sitharaman said this was a budget for the people. She then quoted the timeless phrase of former US President Abraham Lincoln and said this was a budget “of the people, by the people, for the people”. “The characteristic changes in this Budget are based on people’s voices. The Opposition parties always feel the Budget is for the election. I disagree. Are their elections in Assam too?” she asked, pointing to the announcement for a urea plant in Assam.

Ms Sitharaman said Bihar is densely populated and has cultural centres such as Nalanda and Rajgir. “Despite this, there is no good international airport. Aren’t we all responsible for this? Shouldn’t we give it to them? Someone asked, ‘can you only see Bihar?’. Isn’t Bihar a part of India? Bihar’s workers are found across the country. Shouldn’t there be work in their villages?” she asked.

Chief Minister Nitish Kumar has welcomed the Budget announcements for Bihar. “The budget is progressive and futuristic. It will help accelerate the state’s growth. I thank Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman,” he said in a statement.

“Greenfield airports would address the state’s future needs. These will improve air connectivity in the state which shall now look forward to having a greater number of international flights,” he said.

RJD, the main opposition in Bihar, was not impressed. Tejashwi Yadav, Leader of the Opposition in the Assembly, said the Budget did not mention a special package for Bihar. “I am not sure if they will even give Bihar the status of a special state. Today’s budget was unfair to Bihar. Whatever was given in the last budget has just been repeated this time. They have talked about Greenfield airport, but no details of where and when it will be built. No budget allocation was mentioned. I think all this is just ‘jumla’.”

Congress general in-charge Communications Jairam Ramesh said, the government’s neglect of this crucial safety net exposes its indifference to rural livelihoods. File
| Photo Credit: ANI

The Congress on Sunday (February 2, 2025) lashed out at the government over keeping the MGNREGS budget stagnant and said the “neglect” of this crucial safety net exposes its indifference to rural livelihoods.

The allocation for the flagship rural employment scheme Mahatma Gandhi National Rural Development Scheme (MGNREGS) was ₹86,000 crore, the same as last year.

In 2023-24, the allocation for MGNREGS was ₹60,000 crore, but additional funds were provided and the actual expenditure stood at ₹89,153.71 crore, the Budget document showed. No additional allocations for MGNREGS were made in 2024-25.

In a post on X, Congress general secretary in-charge communications Jairam Ramesh said that despite rising rural distress, the government has kept MGNREGA’s budget stagnant at ₹86,000 crore for 2024-26.

“This effectively represents a decline in the real (adjusted for price rise) allocations made to MGNREGA,” he said.

“To add insult to injury, estimates suggest that about 20% of the budget is paid towards clearing dues from previous years,” Mr. Ramesh said.

“This effectively reduces MGNREGA’s reach, leaving drought-hit and poor rural workers stranded,” he added.

It also precludes any increase in the wages paid to workers, Mr. Ramesh said.

“Even in this ongoing Financial Year, the minimum average notified wage rate was increased by only 7%. This is at a time when Consumer Price Index (CPI) inflation is estimated to be 5%. MGNREGA is therefore ground zero for the national crisis of wage stagnation,” he said.

The government’s neglect of this crucial safety net exposes its indifference to rural livelihoods, Mr. Ramesh said.

The MGNREGS provides guaranteed 100 days of wage employment in a financial year to at least one member of every household whose adult members volunteer to do unskilled manual work. It keeps at least one-third of jobs for women.

In the Covid pandemic year of 2020-21, when MGNREGS proved a lifeline in providing employment in rural areas amid huge reverse migration in the lockdown period, ₹1,11,169 crore was spent on the scheme, according per previous budget documents.

Aaditya Thackeray. File
| Photo Credit: ANI

The Opposition parties in Maharashtra slammed the Union Budget presented by Finance Minister Nirmala Sitharaman as ‘Bihar budget’. While the Nationalist Congress Party (NCP), the Congress and the Shiv Sena UBT hit out at the Budget for open favouritism, the State Bharatiya Janata Party (BJP) and its governing allies claimed that it was a ‘revolutionary Budget transforming rural India.’

Union Budget 2025 Highlights: No reduction in public spending on capital expenditure, says Finance Minister

“This Budget paves way for a developed India, is all-inclusive, and is a historic Budget for a developed nation. It will make the economy more mature and strengthen it further. It provides relief to the middle class, salaried individuals, youth, farmers, and labourers. The provisions in this Budget will support many of Maharashtra’s ambitious policies. In particular, since Maharashtra is the start-up capital, it will greatly benefit from the new policies,” said Chief Minister Devendra Fadnavis.

But the NCP(Sharad Pawar) national spokesperson Clyde Crasto criticised the government. “The only thing missing today was the presentation of the Budget in Bhojpuri,” he posted on social media platform X, with the hashtag #BiharBudget. “Maharashtra has been completely disappointed yet again. Nothing has been given to the State, while massive allocation has been done for Bihar,” said Congress leader Vijay Waddettiwar.

Editorial | ​Hope in the time of desperation: On the Union Budget 2025

Shiv Sena UBT leader Aaditya Thackeray posted on social media platform X, “The BJP that spoke of abolition of income tax, around the years 2012-14 before election, at least is now getting more liberal and negotiating with tax payers on slabs and rebates (with a lot of conditions and hidden clauses). This is the power of the citizens that brought them to 240, from a majority government that took us Bhartiyas for granted. Now that the Govt speaks about income tax rebates and exemptions, also do tell us of how to earn that much? Or at least in that bracket? When unemployment is at its highest, there’s no mention of a solution to it.”

Targeting the Union Government for failing to keep its word on the promised allocation, he further stated, “I’m indeed very happy for Bihar, for the mentions it got in the Budget speech. I’m hoping the State has already got the ₹1.25 lakh crore package as promised by the BJP in 2015 and then the big package the BJP promised in 2024. I wonder if the current announcements truly fulfill the needs of the people of Bihar and if this is not a deviation from the ideology of the need for one nation, one poll, by the party that proposed it. However, not a single mention of Maharashtra is an outright insult to the State of Maharashtra — the State that contributes the highest taxes, including one of the highest GST consistently. While the State doesn’t get its due and full GST in time, neither do we get funds for development, the BJP has consistently neglected Maharashtra in all its Budgets since 2014.”

Union Budget 2025: Tax bonanza for middle class

Maharashtra Deputy CM Eknath Shinde lauded the Budget and termed it a pathway towards wealth for the common man. “This Budget is like the footsteps of Goddess Lakshmi in a common person’s life. I congratulate PM Modi for it. The salaried class has received revolutionary and unprecedented benefits. They will be able to see a lot of saving in their income. This saved money will enter the market and will strengthen our economy,” said Deputy Chief Minister Eknath Shinde.

Hailing the change in tax slabs for the salaried class, Chief Minister Devendra Fadnavis called it a dream-like Budget for the middle class. “The Budget also includes crucial announcements for the agricultural sector. A special incentive scheme for 100 districts, support for oilseed production and a policy ensuring 100% procurement will greatly benefit farmers. Fishermen will now have access to interest-free loans of up to ₹5 lakh, encouraging business expansion. These measures are expected to increase investment in agriculture, creating new opportunities for farmers and the agricultural sector,” he said.

Deputy CM Ajit Pawar said the Budget is a strong step to make India an economic superpower. “Crores of middle class Indians have received great relief due to the Budget,” he said.