Published 15:36 IST, February 5th 2025
Indian Budget 2025: Consolidating The Foundation For Viksit Bharat 2047
Indian Budget 2025: A thoughtful, long-term budget for inclusive growth and competitive, co-operative federalism.

The Union Budget 2025 is beyond a financial plan for the upcoming fiscal year. It is a strategic roadmap to accelerate India’s transformation into a developed nation by 2047 (Viksit Bharat 2047). With a strong emphasis on inclusive growth, innovation, manufacturing, startups and fiscal prudence, this budget is designed to position India as a $10 trillion economy within the next two decades.
The budget goes beyond short-term economic recovery and sets the stage for sustainable, long-term growth by prioritizing infrastructure, deep technology, tax rationalization, and fiscal discipline amongst others. It reinforces the concept of competitive and cooperative federalism, ensuring that states are empowered with financial resources and policy flexibility to implement developmental programs. The government has also lowered the fiscal deficit to 4.4% of GDP , with a target of 4.5% going forward, which is expected to boost investor confidence, reduce borrowing costs, and enhance India’s sovereign credit rating.
In this article, I will delve into the key highlights and policy measures announced in the Indian Budget 2025 and analyse how they contribute to the Viksit Bharat 2047 vision.
1. A Thoughtful, Long-Term Budget for Inclusive Growth with Competitive, Co-operative Federalism
In keeping with “ sabka saath, sabka vikas, sabka biswas , sabka prayas” the budget introduced long-term economic strategy that focuses on inclusive growth ensuring all sections of society including rural population, small businesses and women entrepreneurs benefit from economic progress. To facilitate this, the budget has significantly increased capital expenditure, enhanced social sector spending, and provided financial autonomy to states including announcement of special measures for states in East and Northeast.
Key initiatives for inclusive growth include allocation of a record ₹12 lakh crore for capital expenditure for further infrastructure development to benefit all citizens with focus on highways, railways, ports, and urban infrastructure to benefit all citizens as well as the creation of a new ‘State Infrastructure Development Fund’ (SIDF) allowing states to access additional financing for infrastructure projects creating competition between states to access capital.
Rural Development and MSMEs have been bolstered with an announced 50% increase in credit guarantees for micro, small, and medium enterprises (MSMEs) to promote job creation in rural and semi-urban areas. Furthermore PM-Dhan Yojana, a newly introduced scheme provides direct subsidies to small businesses in agriculture, food processing, and cottage industries and several Social Welfare and Women Empowerment schemes have been announced. Women entrepreneurship programs receive 30% increase in funding, encouraging more female-led startups and MSMEs while new schemes for term loans have been announced for first time SC/ST and women entrepreneurs. A ₹1.2 lakh crore allocation for healthcare and education, focusing on expanding digital healthcare facilities, AI-driven diagnostics, and skill-based education programs are some of the other measures announced amongst many.
Agriculture remains the focus of the government and a number of measures have been announced to build rural prosperity and resilience and move towards self-reliance. ‘Atmanirbharta’ in pulses and several measures announced for higher productivity of fruits and vegetables , high-yielding seeds, cotton production, and fishery shows that the government recognises that higher affluence and increased awareness is making citizens more aware of nutritional needs and consumption of fruits , vegetables , pulses etc are increasing. Crafting targeted and deft policy, the government wants to make the nation food secure for all.
While coalition politics may have played a role in some measures being announced for the state of Bihar, it is also true that India is a vast country and some parts of the East/ North East require a stepping board to come up to par. India will only succeed when all of India develops and therefore measures announced for Assam, Bihar should have also been supplemented with other measures including North East, Odisha, West Bengal.
By fostering inclusive growth and empowering states, the budget strengthens the federal structure of India, ensuring economic development reaches every corner of the country.
2. Startup ecosystem viewed as an integral part of the Vikshit Bharat 2047 growth engine
India is now the world’s third largest Startup eco system and one of the fastest growing with 117 unicorns already established. PM Modi’s clarion call for “Startup India” and for the country to be a nation of job creators rather than job seekers is now in its eleventh year. Employment generation is particularly important given India’s young demographic profile. Recognizing the crucial role of Startup India in job creation, technological advancement, and economic dynamism, the budget has introduced several measures to support startups.
Key initiatives introduced for the startup ecosystem demonstrate that the government views Start Up India as integral for Vikshit Bharat 2047. In addition to the existing fund of funds, a further ₹10,000 crore fund-of-funds has been set up to invest in VC/ PE Funds which would provide capital to early-stage registered startups. The earlier similar-sized fund has been leveraged 8 times with private capital and industry feels the new measure will provide huge fillip to Startup growth.
In a boost to Deep-Tech Startups, Artificial intelligence (AI), Robotics, Biotech and Semiconductor startups will receive special incentives under the Production-Linked Incentive (PLI) scheme. Startups registered until March 2026 will now be eligible for tax exemptions for up to 7 years. Simplified compliance and reduction in bureaucratic red tape will free up valuable time and allow Startups to focus on scaling their businesses.
With a view to ensuring that India plays a leading role in futuristic emerging technology, the budget has announced a focused fund of funds for Deeptech. The three newer sectors which find mention in the budget are all futuristic ie. nuclear, geo-spatial and and gene-technology.
These measures are designed to position India as a global hub for innovation and ensure that Startups play a leading role in achieving the Viksit Bharat 2047 vision.
3. Intelligent, Innovative Thinking and Leveraging Existing Resources for Growth
The government has adopted an intelligent, resource-efficient approach that maximizes the utilization of existing assets and investments to fuel growth. The strategic use of India Post announced including its transformation into a large, public logistics organisation will have a transformative impact on rural economy and way of life if executed well.
India Post with 1.5 lakh rural post offices, complemented by the India Post Payment Bank and a network of 2.4 lakh Dak Sevaks will be a catalyst for change in the rural economy meeting the needs of one and all including Vishwakarmas, new entrepreneurs, women, self-help groups, MSMEs and large organisations.
Revision in classification criteria for MSMEs is a significant step and will further consolidate India as a global manufacturing hub. Currently, MSMEs are responsible for 45% of India’s exports and the smart reclassification announced goes a long way in making MSMEs more competitive internationally.
Encouragement of PPP (Public Private Partnership) models in infrastructure, defence and healthcare to attract private investment while ensuring government oversight will help these sectors grow rapidly. India aims to achieve 100 GW of nuclear power by 2047 and increased private sector participation in nuclear energy production is a welcome step. Introduction of the National Smart Cities Mission 2.0, focusing on AI-driven traffic management, green buildings, and sustainable urban planning, Urban Infrastructure Optimization are other welcome measures.
Startups have created a new class of employees ie. gig workers. The government’s recognition of gig workers ( uber / Ola drivers, delivery personnel of e-commerce companies, tradespeople etc) as a profession and providing them with cards and insurance cover is recognition of a new pool of workers helping institutionalise them and thereby creating opportunity for advancement.
By leveraging existing assets intelligently, the budget ensures that economic growth is both cost-effective and sustainable.
4. Generous Tax Rationalization and Boost for Consumption-Led Growth
The widely anticipated tax rationalisation in Budget 2025 has exceeded expectations. The measures announced showcase confidence and are tantamount to the government recognising India’s move from a low-middle-income economy to a middle-middle-income economy.
The Income tax exemption limit has been increased from ₹7 lakh to ₹12 lakh, putting more disposable income in the hands of consumers. This means given rebates, there will be no tax payable till ₹12.75 lakhs. This is seminal change with potential for significant consumption led growth as a result of more disposable income.
According to early estimate by the former Chief Economic Advisor CEA, Mr Krishnamurthy Subramanium, the loss of approx. ₹1 lakh crore of direct tax will yield around ₹3 lakh crore of consumer spend giving a fillip to domestic travel , Indigenous consumer goods consumption et all.
It is interesting to see tax rationalisation measures announced in respect to other nations. While there is often criticism of the overall tax burden in India (income tax, GST, Capital gains and so on), it is worth pointing out that the UK imposes 20% value-added tax (VAT) on goods and services while the highest income tax slab is steep 45% imposed on annual income above £125000. Furthermore one only has to earn £50000 per annum to fall into the 40% tax bracket.
Tax rationalisation in the budget leaving the Indian consumer with greater disposable income will positively impact the growth of additional sectors including Tourism and ‘Make in India’ consumer brands.
The Budget has announced several measures to boost Tourism for employment-led growth and more spending power will boost domestic tourism. One can see the green shoots of excellent domestic brand creation in many categories including food, fashion, household goods et al and the Indian consumer with more disposable income will provide the perfect home market for the brands to be tested before going global.
The Finance Minister has assured that GST rate simplification will happen imminently possibly within a month. While the business world awaits the new measure, it is widely felt that this would help reduce the compliance burden for small businesses.
These tax measures in total are expected to increase consumption, drive demand across sectors, strengthen India’s economic momentum and create an environment where wealth creation is respected. This is a far cry from the ethos of the Nehruvian socialism era.
5. Strong Focus on Manufacturing and Deep Tech – Making India Deep Tech future ready
The government recognises that Manufacturing and Deep Technology sectors are crucial for India’s long term economic self-reliance and export competitiveness. Following PM Modi’s clarion ‘Make in India’ call, the country has come a long way in manufacturing and the budget reflects the government’s inalienable confidence. Today exceptional Deep Tech innovation and manufacturing are grabbing headlines with venture funds vying with one another to fund innovative Deep Tech Startups.
To bolster industrial production, the government has introduced a series of strategic incentives which seek to address the full spectre including making India a global hub for toy manufacturing, leather goods as well as a crucible for Deep Tech innovation.
The announcement of a Deeptech fund of funds will give further boost to a sector that is on a remarkable trajectory. Other key measures for manufacturing and deep tech include additional ₹2 lakh crore allocation for sectors like semiconductors, EVs, space technology, and defence manufacturing. The ₹250 billion Maritime Development Fund will boost shipbuilding, port infrastructure, and logistics efficiency. AI and Deep Tech Research will benefit with the establishment of five new AI and robotics research centres, with a focus on AI-driven automation and Industry 4.0.
The announcement of the setting up of 50 000 Atal tinkering labs in government schools in the next 5 years, broadband connectivity in government schools and Primary Health Centres, additional ten thousand PM technology research fellowships in IITs and IISc and several other measures announced showcase the government’s will to lay a strong foundation for innovation and manufacturing. The emphasis on Cleantech manufacturing is also noteworthy.
With these initiatives, India aims to become a global hub for advanced manufacturing and technological innovation.
6. Fiscal Prudence: A Lowered Budget Deficit to Strengthen Investor Confidence
Mentioned towards the end of the budget statement and somewhat lost in fine print, the government’s continued commitment to fiscal prudence deserves unequivocal praise. Impact of fiscal prudence is manifold. It will enhance investor confidence leading to higher foreign direct investment (FDI) inflow. It will lower borrowing costs for businesses and consumers. It will potentially lead to sovereign credit rating upgrade, further attracting global capital inflows.
By further lowering the fiscal deficit to 4.4% of GDP, the government has exceeded its own target. Following 2024 General Election, the Modi led government is part of a ruling coalition and greater dependence on allies for a stable government could have led to ‘populist measures’ resulting in increased budget deficit. The fact this has not happened speaks to a bold government with the will to stay the course, deft handling of the economy and mature alliance partners that recognise the importance of continuity of the India growth story.
In summary the disciplined budget reinforces India's economic stability and attractiveness to investors.
Missed Opportunity :
The march towards Vikshit Bharat 2047 would have benefited from increased focus on the following :
More Structural Reforms: Analysts have expressed disappointment over the absence of significant reforms in critical areas such as agricultural markets, labour laws, and business regulation. These reforms are deemed essential to achieve the government's target of 8% GDP growth and beyond.
More focus and investment in Skilling to create a work-ready workforce : While the last budget had prioritised skill development and allocated funds, there has been no report card update and budget 2025 does not do enough to clearly state the future road map in this area. This is an area that could benefit much from identifying partners from the private / non-government sector and working in tandem in PPP model.
Quality of life: I reiterate the point made after Budget 2024. The government’s focus on building state-of-the-art highways, railways, bridges, airports et al is laudable and some infrastructure built is beyond world-class. Yet basic quality of life in towns and cities must improve including air quality, road water logging during monsoons, public transport and so on. Budget 2024 sought to address this as Priority 5 called “Urban Development” and Budget 2025 talks again of Urban sector reforms and Urban challenge fund, but more clarity and will is required to address the disconnect felt when one travels Pune - Mumbai distance in two hours on a six-lane expressway only to spend equivalent time to reach one’s destination in Mumbai after entering the city.
In Conclusion :
Discussion of Budget 2025 above is by no means exhaustive and seeks only to highlight particular factors that caught attention and those that address Vikshit Bharat.
Overall Budget 2025 could be termed a growth-oriented, inclusive, nation-building blueprint that aligns with the vision of Viksit Bharat 2047. By focusing on infrastructure, startups, tax relief, manufacturing, and fiscal discipline, the government has created a well-balanced approach to economic growth.
This budget represents a crucial step toward transforming India into a high-growth, self-reliant economy, solidifying its position as a global economic leader. With long-term vision and strategic execution, India is well on its way to achieving the Viksit Bharat 2047 dream.
Updated 15:37 IST, February 5th 2025