New Delhi:
The income tax benefit announced for the middle class in the Union Budget 2025-26 on Saturday is the biggest relief provided by any government for the concerned economic strata so far, India’s G20 Sherpa and former NITI Aayog CEO Amitabh Kant has said.
The budget for the upcoming financial year focuses on growth and creation of jobs, and provides a huge fillip for demand creation, Mr Kant told NDTV. “I rate the budget very high,” he added.
Mr Kant’s remarks came as the Narendra Modi-led government exempted annual income of up to Rs 12 lakh from income tax and rejigged tax slabs as part of a reformist Budget.
Presenting her eighth straight Budget in the Lok Sabha, Union Finance Minister Nirmala Sitharaman laid out a blueprint for next-generation reforms. She announced the setting up of a National Manufacturing Mission to further promote Make in India initiative, and said support will be provided to develop domestic manufacturing capacities for the Indian economy’s integration with global supply chains.
Manufacturing and job creation
Mr Kant hailed the government’s focus on manufacturing and job creation. “You are actually ensuring that consumption drives the economy, and consumption will lead to greater demand, and demand will lead to greater production, and production will lead to greater jobs,” he said.
“So, this, to my mind, is being done but in a very fiscally responsible manner because the fiscal deficit for this year was 4.8% and next year, the finance minister is aiming for 4.4%. So, she has been fiscally very responsible and prudent. I think the key highlights of this budget is the huge focus on the labour-intensive sector,” he added.
The former NITI Aayog CEO also claimed that “never before has so much emphasis been put on tourism, footwear, leather, toys and on about a 100 aspirational districts in the agricultural sector.” “So, a vast impact on labour-intensive sectors which will happen through the creation of jobs,” he said.
Boost for labour-intensive sectors
The government has announced a focused product scheme for footwear and leather sectors to enhance its productivity, quality and competitiveness. Besides, it announced a scheme to make India a global hub for toys by focusing on cluster development.
Mr Kant said the Union Budget 2025-26 is “very progressive on some of the labour intensive sectors”. “For every job that you create in tourism, you are creating 11 indirect jobs. A massive impact on growth with jobs. We have not even scratched the surface of the tourism potential in India. We have so much heritage and so much culture that you need to tap into,” he said.
Likewise, the toy sector also has massive potential, he said. “Look at footwear, look at leather. Huge potential… objective of bringing cutting edge technology, storage, credit to 100 backward districts in the agricultural sector… All this can be path-breaking as far as creating jobs is concerned. While growth will create jobs, focus on the labour intensive sector, with growth means that you are going for growth with labour intensity, which is very very important in the case of India,” he explained.
On the Finance Minister’s announcement of setting up a National Manufacturing Mission, Mr Kant said it’s very important to drive manufacturing since a high proportion of the population are dependent on agriculture. “They are poorly paid, you need to move them to good jobs in the manufacturing sector. That, to my mind, is very important. The budget does that through the instrument of credit guarantee,” he said.
Credit guarantee for start-ups, MSMEs
Start-ups and Micro, Small and Medium Enterprises (MSMEs) can use the credit guarantee, he said. Also, it (budget) lays emphasis on a lot of cutting edge areas of growth. Artificial intelligence, clean tech, etc. Now, my view is that the private credit to the GDP ratio needs to be enhanced. The finance minister has done her bit. The Reserve Bank of India needs to ensure flow of greater credit in a systematic and orderly manner through the monetary policy,” he said.
Technology and innovation
The Union Budget 2025-26 also lays a lot of emphasis on innovation, technology and start-ups, Mr Kant said. “To put up 10,000 crores of funds for start-ups, replenish it. Also talk about another 10,000 crore of funds for deep tech, with a 20,000 crore for innovation. All this will have a multiplier impact on the economy. And then a clean tech mission, so that we can manufacture solar, fuel cells and batteries. All this in India… all this is very very important to my mind,” he said.
“Lastly, I would say that this thrust towards nuclear energy and opening up the insurance sector are also very very major initiatives,” he added.
The G20 Sherpa appreciated the government’s efforts to focus on cutting edge technology, whether through the clean tech mission or through Artificial Intelligence (AI).
“Last year, the finance minister had given three centres of excellence. This year, she has given another centre of excellence in AI for education. But more important than that is the huge focus and emphasis on start ups, which will do cutting edge work in many of these new tech areas of growth. So we need to grow AI, we need to grow in quantum computing, we need to grow in semiconductors, we need to grow in clean tech areas. All this has had a very huge emphasis in the last two years and that will enable India to technologically pole vault in the coming years,” he said.
New and emerging technologies were in focus in the Union Budget, as Ms Sitharaman announced a national framework for Global Capability Centres (GCCs), Rs 500-crore Centre of Excellence in AI for education, and said a deep tech “Fund of Funds” will be explored to catalyse the next generation startups.
“I announced three Centres of Excellence in Artificial Intelligence for agriculture, health, and sustainable cities in 2023. Now a Centre of Excellence in Artificial Intelligence for education will be set up with a total outlay of Rs 500 crore,” she said.
