The headlines proclaimed a feel-good budget. Taxpayers would now be exempted their first Rs 12 lakh of income, putting a lot more money in their pockets. The government, the quick-take claimed, had come up with a winner: a “budget for the middle-class”.
But was that the whole story? With rising unemployment, a growing budget deficit, and urgent demands for better social welfare, the Finance Minister's Union Budget 2025 had a lot of issues it needed to address. Seen in that light, this Budget is a glaring missed opportunity—cautious where boldness was needed, indifferent where urgency was demanded. The stock-market's reaction says it all: the Budget has failed to inspire confidence or address the pressing realities of the moment.
The Never-Ending Jobs Crisis
The unemployment crisis simply has not been addressed. While the tax break offers some relief to the employed, it is striking that the Budget extends no support to those who do not qualify for it—not because they earn too much, but because they earn nothing at all. This paradox becomes even starker when one considers that the Employment Linked Incentive, which was announced last year as the core pillar of the government's employment policy, saw its budget slashed from Rs.10,000 crore to Rs.6,799 crore.
India's employment challenge is as much about the scarcity of jobs as it is about the mismatch between skills and industry needs. It is uncertain if the government's skill development programmes are effective in the absence of corresponding private sector participation. And where are the jobs being generated? Employment creation cannot solely rely on government schemes; a thriving manufacturing sector and resilient MSME ecosystems are fundamental to long term job creation—yet, in a masterclass of misplaced priorities, the Budget has nothing for them but words.
Millions in rural India rely on MGNREGA, yet the scheme finds itself sidelined. The Finance Ministry has overlooked the ₹4,315 crore shortfall in wages flagged by the Rural Development Ministry, while the 2024 allocation remains stagnant at ₹86,000 crore—5% lower than 2022–23, despite surging demand. With over 82.4 million seeking work under MGNREGA, this apathy is incomprehensible.
The Need To Focus On MSMEs
The Budget speaks of making India a major global centre for the production of toys and bolstering the leather and footwear sectors. Nevertheless, there are no significant financial commitments to support these ambitious claims. These sectors receive the lowest allocation of any industry under the Production Linked Incentive (PLI) plan, a pitiful ₹0.01 crore for 2024–2025. Such statements remain empty rhetoric in the absence of real investments. Every Indian parent is swamped by “Made in China” toys.
India's 64 million MSMEs, outnumbering those in China and the US, are the backbone of employment and entrepreneurship—yet remain largely neglected. With only 14% having access to credit—far below global peers—burdensome lending and minimal support stifle their growth. Credit guarantees alone won't bridge this gap; bold fiscal intervention is needed to unlock their full potential.
Fiscal Deficit Concerns
Those who remember the late Arun Jaitley announcing plans to bring the fiscal deficit down to 3% will be underwhelmed by the present finance minister's intention to lower the budget deficit from the revised 4.8% in FY25 to 4.4% in FY26. Concerns regarding fiscal planning are raised by the government's planned foregoing of ₹2,600 crore in indirect taxes and ₹1 lakh crore in direct tax revenue. However, this might lead to less expenditure by the government, which could have an effect on economic expansion. The government must make sure that vital welfare programmes are not sacrificed in the quest for a short-term feel-good headline.
India's FDI inflows have collapsed to just $0.48 billion in the first eight months of FY25, down from $8.5 billion in FY24—exposing deeper structural issues beyond external pressures. Investor confidence is eroding under the persistence of regulatory bottlenecks, policy unpredictability, and bureaucratic inertia. Without urgent reforms to cut red tape and restore stability, India risks deterring much-needed capital and long-term investment.
Rising Medical Costs
The "missing middle"—40 crore Indians—remain without financial protection against medical costs, a glaring gap highlighted by NITI Aayog in 2021. While last year's expansion of PM-JAY to seniors was a step forward, this budget failed to build on that momentum. Millions remain uninsured, leaving them vulnerable to financial ruin from medical crises. Universal healthcare cannot be achieved through piecemeal efforts. The government must prioritise expanding coverage, combining direct aid for vulnerable groups with a public-private model that ensures affordable insurance for all.
UDAN's Slow Flight
Another significant announcement was the extension of the UDAN project, which aims to improve regional connectivity. It is admirable that UDAN will be expanded to 120 more locations, including small airports and helipads. A closer examination of the budgetary allocation, however, reveals a different picture. The Regional Connectivity Scheme has seen a steady decrease in funding, going from ₹1,063.81 crore in 2022–2023 to ₹502 crore in 2024–2025. Without sufficient funding, UDAN's long-term viability is still in doubt.
Furthermore, the scheme's focus fails to address the pressing need to overcome under-served routes as opposed to merely aiding under-served airports. In important sectors like Trivandrum-Coimbatore and Trivandrum-Kochi-Kozhikode-Kannur, where flights are non-existent despite high demand, connectivity gaps still exist for which UDAN should be extended to resolve.
The budget's political cynicism was on full display with its multiple provisions for Bihar. Bihar is one of the states that legitimately needs investment in its development, but the disproportionate
outpouring of money has little to do with financial priorities and everything to do with the imminence of an election.
Elections And Budgets
Election strategy should not determine federal budgets; economic priorities should. Rather than favouring some states over others for political reasons, fiscal policy should be based on equitable growth and real development needs. Long-term vision, not short-term political calculations, must guide budgetary decisions if India is to maintain the integrity of its economic planning.
As a political representative, I have to express my disappointment that Kerala's requests—ranging from funds for climate resilience, Wayanad's reconstruction, to an AIIMS-level facility—were given the go-by. The Union Budget's lack of proviso for Kerala, whose Vizhinjam Port, despite its strategic importance, received no support—further adds to the impression of systemic indifference to the state in fiscal planning.
Despite mounting hardships, the fishing community finds little relief in the budget—mentioned in passing but offered no real support. With depleting fish stocks, falling prices, and the removal of paraffin subsidies essential for boat fuel, thousands of fishermen face growing uncertainty. Yet, there is no financial aid, no relief package, no regulatory intervention—only indifference towards a community in crisis. Addressing these escalating issues requires an all-encompassing fisheries policy that includes sustainable resource management, financial assistance, and transformative development.
While Budget 2025 introduces some commendable measures, its approach to Viksit Bharat feels more like a cautious shuffle than a confident stride. A truly developed India requires bold, forward-thinking investments in employment, MSMEs, healthcare, and infrastructure. For Viksit Bharat to be realised, the government must bridge the gap between aspiration and execution, ensuring that economic growth translates into real opportunities and inclusive progress for all. Did someone say “Sab ka saath sab ka vikas”?
(Shashi Tharoor has been a Member of Parliament from Thiruvananthapuram, Kerala, since 2009. He is a published author and a former diplomat. He thanks Urjaswi Ahlawat for her support in preparing this analysis. Inputs from my MP staff were invaluable.)
Disclaimer: These are the personal opinions of the author and do not represent NDTV's views
