Fiscal Targets and Revenue Concerns
The Budget sets a fiscal deficit target of 4.4% of GDP for FY26, relying on ambitious tax revenue growth and asset monetization.
Optimistic revenue projections may not be realistic given the economic challenges and past underperformance of asset monetization.
The ₹11.54 lakh crore market borrowings could crowd out private capital amid weak credit demand.
Successful revenue generation will depend on better tax administration and realistic asset monetization strategies.
Tax Cuts and Economic Impact
Personal income tax revisions offer relief but result in ₹1 lakh crore in foregone revenue.
The tax cuts risk limiting government funds for critical investments in infrastructure and welfare.
Declining household savings and tax-base erosion raise concerns about the long-term sustainability of these cuts.
The cuts may negatively impact the ability to stimulate investment and maintain economic stability.
Manufacturing and Agriculture Challenges
The Budget focuses on boosting manufacturing through PLIs and credit facilities for MSMEs, but core issues like infrastructure and innovation remain unaddressed.
Despite efforts, India's manufacturing sector still lags, contributing only 17% to GDP.
Agricultural initiatives focus on productivity and climate resilience but fail to tackle market inefficiencies and price volatility.
There is insufficient support for agricultural exports, a missed opportunity for growth in the sector.
External Sector and Climate Action
Export support measures like Bharat Trade Net (BTN) and credit facilities for MSMEs lack the scale to address trade deficits effectively.
Services exports continue to grow, but there is limited effort to diversify and strengthen other sectors.
The Budget shows intent for climate action but lacks transformative investments in energy storage and industrial decarbonization.
Supply-chain resilience measures, while pragmatic, do not fully address the broader low-carbon transition challenges.
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