The Union Budget 2025-26 sets out to address a range of economic challenges, from reviving growth to bolstering social welfare. However, beneath the ambitious rhetoric lies a stark reality: allocations for crucial sectors do not align with the pressing needs of the economy. While the government has taken steps to provide relief to the middle class through income tax cuts, the broader macroeconomic approach remains tilted towards supply side interventions, Economic slowdown, rising unemployment, and persistent inflation are interlinked problems that demand targeted interventions. The budget speech emphasised inclusive growth, investment in key sectors, and support for agriculture and MSMEs, yet the actual allocations tell a different story.

Sectors like rural employment, education, health, and urban development, which directly impact demand generation, have seen either negligible increases or real-term cuts. This raises concerns about whether the budget will truly spur economic revival. One of the key takeaways is the government’s continued reliance on supply-side measures. Concessions to big businesses and corporate tax incentives in the past few years have neither spurred private investment nor addressed weak domestic consumption. The government expects that boosting the private sector will lead to job creation and growth. However, if purchasing power among the majority of the population remains stagnant, demand will not rise sufficiently to justify large-scale private investment.

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This is where the budget appears to falter ~ it lacks substantial measures to put more money directly into the hands of lower-income groups, especially those whose incomes are too low to be in the tax net. The budget also reflects a shift in fiscal priorities. While the finance minister announced a commitment to “Viksit Bharat” and transformative reforms, some of the biggest schemes for employment generation and welfare have seen declining allocations. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which serves as a safety net for rural workers, has not received the boost it requires. Similarly, major urban development programmes like the PM Awas Yojana and the Jal Jeevan Mission have witnessed cuts in real terms. This pattern raises the question of whether the government is prioritising fiscal discipline at the expense of welfare spending.

On the external front, the budget does little to insulate India from global economic uncertainties. With increasing geopolitical tensions, trade disruptions, and inflationary pressures from abroad, a stronger domestic demand base is necessary to cushion the economy. However, the current budgetary allocations suggest that dem-and-side concerns have taken a backseat. The finance minister’s strategy appears to be one of balancing political messaging with fiscal constraints. Grand announcements for various sections of society help shape public perception, but the lack of adequate financial backing weakens their impact. While the middle class has received tax relief, the overall budgetary framework suggests that the government continues to place its bets on corporate-driven growth rather than broad-based public expenditure. As India navigates a complex economic landscape, the real test of this budget will be in its implementation. If expenditure does not match the commitments made, the challenges of unemployment, inflation, and sluggish growth may persist