Month: February 2025

Budget 2025 corrects misguided tax regime of Nehruvian socialism. Changes India’s destiny

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PM Modi takes problems head-on with a multi-year plan and clear outcomes. It requires patience and is often met with opposition from people who prefer shortcuts.

There will be obstacles. There will be doubters. There will be mistakes. But with hard work, there are no limits.” – Michael Phelps

This quote sums up PM Narendra Modi’s single-minded efforts over the last 10 years. He faced opposition and scorn but persevered. It’s what has brought us to this milestone in India’s economic journey.

Budget 2025 wasn’t any ordinary budget. Typical of PM Modi, it didn’t have the bells and whistles that the UPA/Congress decade always had, but it certainly heralds a new phase in economic growth.

For almost all the 75 years, wealth and salaries earned by Indians were highly taxed by the government. The tax regime from the early misguided Nehruvian Socialism was built on high tax rates. This is why, till 2014, India’s tax-to-GDP ratio was among the lowest in the world. Arguments against tax reforms were almost always that the government depended on squeezing hard-working Indians for its functioning and expenses. It felt that it was India’s destiny and indeed honest Indians’ destiny to be heavily taxed

But for the last 10 years PM Modi worked relentlessly on his vision to make sure India’s economy could grow and expand quantitatively and qualitatively. Digitialising, better design and monitoring of schemes, GST reforms and good economic policies that focussed on permanent long-term growth paid dividends—India has leapt from a ‘Fragile Five’ economy to one that is in the top five and fastest growing in the world.

This transformation expanded the economy, which led to sustainable growth of government resources. That in turn enabled the next step— increasing public spending on infrastructure that had been neglected for decades and was becoming a big bottleneck for investments and economic growth. Record public spending on infrastructure and the PM Gati Shakti is making India a competitive economy vis a vis other manufacturing nations.

Steady steps

I said earlier this was a milestone budget. The last decade of infrastructure development, social security, and skills have created indirect benefits. But this budget delivers a direct benefit that increases the disposal income for the majority of taxpayers in the country. It moves the Income Tax exemption to Rs 12 lakh, i.e. Indians earning up to Rs 12.75 lakh per annum pay zero income tax. It had incrementally inched up from Rs 1 lakh in 2014 to Rs 7 lakh in a decade. And in one fell swoop PM Modi has delivered the fruits of 11 years of hard work in expanding the economy and the government’s fiscal capacity.

Some years ago, I had the opportunity to visit Ahmedabad and the Sabarmati riverfront. That visit was an epiphany because it taught me PM Modi’s approach to solving deep, seemingly intractable problems— he takes them head-on with a multi-year plan and clear outcomes. It requires patience and is often met with opposition from people who don’t understand or prefer shortcuts and instant gratification. The transformation of the Sabarmati riverfront is testimony to that approach. Indian economy in 2014 was such an intractable problem. He has taken the same long-term approach to this. Steady and systematic steps have led to this Budget.

Looking back it’s difficult to gauge which was Modi’s “big” budget—but the sum total of 10 years of economic policy has brought us to a point where India is not just the world’s fastest-growing economy, but it is a resilient economy that continues its growth despite the obvious global headwinds. This is why the government can give the honest taxpayers of India a windfall tax break that is more than Rs 1 lakh crore or 3.5 per cent of the budget. That too with no cutbacks in spending or the projected glide slope to fiscal consolidation. The impact of this is akin to a stimulus of 3.4 to 3.5 per cent of the Budget. But unlike the UPA stimulus in 2008, which shattered the Indian economy and banking system, this one is factored into the growth momentum.

A diversified economy

There are a lot of other moves that PM Modi has rolled out in this Budget, whose real contribution to growth will show up down the road. The focus on agriculture makes it clear that the narrative around it will be rewritten by farmers as they transition to a value-adding, profitable activity for the economy. MSMEs getting their MSME credit card and more credit, and continuing focus on startups and entrepreneurship shows the PM’s commitment to continue to diversify and expand the economic activity and job creators. It’s a far cry from the pre-2014 days when everything in the economy depended on credit and capital concentrated on a few industrial groups—when they caught a cold, our economy caught a cold.

Today, our economy has diversified and expanded in unprecedented ways. A similar investment for the long term is the focus on Nuclear Small Modular Reactors (SMRs), with a Rs 20,000 crore outlay that will play a big part in India’s NetZero goals.

For businesses, there is the additional promise of a simpler tax code to be introduced next week in Parliament and the promise of a government that will continue its record of simplifying regulations and laws.

Amidst the usual noise of Budget coverage, something that Monika Halan, a respected financial analyst and commentator, said caught my attention. She said the tax reforms in this Budget mark a major rerating of our economy and our ambitions. We are no longer a low-income country—we are credibly marching upward. That is absolutely true. If you ignore the usual clamour of naysayers from the Opposition and look at what this Budget represents, you can’t help saying thank you to PM Modi for bringing us to a place where we are reimagining our ambitions as an economy.

NewIndia will become ViksitBharat. Budget 2025 tells us, in the words of Barack Obama, Yes, we can.

Let the Double Engine Sarkar begin in Delhi. Voters have invested in a Viksit future

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Arvind Kejriwal stormed into India’s political discourse in 2009 amid a well-crafted and well-spun narrative of being the outsider and the reformer. Some 10 years in government later, he departs as yet another discredited politician – who mistook the mandate he received from the people of Delhi as a license to break promises. He embarked on a political route very similar to the one that he claimed to overthrow and clean-up – the Congress way.

Voters of Delhi snatched away both the government and his MLA seat from him. They have swept away all the corruption-accused in the AAP government including top two leaders Kejriwal and Manish Sisodia. Congress under its intellectual powerhouse, Rahul Gandhi, has been whitewashed from the national capital.
The u-turns and contradictions between the original Kejriwal and the current one are legion – the list is endless. From claiming to wanting to throw Sonia Gandhi, Lalu Yadav and the corrupt politicians in jail to becoming its B team. From claiming he will give corruption-free governance to running a government that had half its ministers jailed for corruption and scams. From claiming he will live the life of an austere politician, shunning the perks of government, to building and living in the infamous Sheesh Mahal. From talking about development to becoming a poster boy for freebies sans development politics. It’s what his alter ego Rahul Gandhi has embraced with fervour and passion, even Kejriwal like a beginner. From talking about nationalism to cosying up to the dangerous terror-appeasing Khalistani elements. He rose on his promises and he fell on his broken promises, and reality.

But through this rise and fall, Kejriwal became a figure of abject disappointment. I knew him well throughout the India Against Corruption (IAC) movement and even attended meetings there as an independent MP. After raising the 2G scam in Parliament, I shared the papers with him and he visited my North Avenue Office with Manish Sisodia. He put on a real act of being a man on a mission, I was even one of the first ones to donate money to his movement as did so many others. But as soon as he morphed into a politician in early 2015, he also morphed into a new version of the Congress party.

Politics of fake promises

The people of Delhi gave Kejriwal two turns to govern the city. He blew both. And so in the 2025 Delhi Assembly election, the comparison between AAP and BJP was a very easy one for the wise voters of the capital. On one hand, they had given (all seven MP seats) for 10 years to Prime Minister Narendra Modi. He had worked hard and transformed India – taking it from a desperate Fragile 5 economy to Top 5 Economy. The BJP government established a relentless pace for India’s development. PM Modi’s corruption-free maximum governance has clearly transformed the country’s landscape and the lives of people far and near, across the country. His 10 years of work represented a real payback to the mandate and trust given to him by the people of Delhi.

On the other hand, Kejriwal’s 10 years were a shamble. Corruption, scams, no perceptible development, a disastrous government in Punjab—there was simply nothing to show for the last decade except a few schools and clinics, a slew of unkept promises and scams, and, most disturbingly for an anti-corruption crusader turned politician, an alliance with Congress that represents everything wrong in governance in the past and even today. Voters saw through it.

The comparison with the PM and the BJP’s development record failed and his politics represented a betrayal of the values that drew people to him in the first place.

BJP under PM Modi, Amit Shah and JP Nadda ran a very effective campaign where the comparison was reached to each and every voter. This truth – cut through effectively all the giveaways and rhetoric that Kejriwal and his AAP had become infamous for.

Double-engine sarkar begins

This is also an important election in a very fundamental way – that shows the shifting sands of the minds and expectations of the Indian voter. Opportunistic political leaders like Rahul Gandhi and Arvind Kejriwal keep sowing and attempting to reap the old-style politics of fake promises, caste, region, appeasement, and temporary freebies. It was the message of PM Modi’s politics of performance and social welfare that voters chose. The public’s expectations from their political parties and leaders are changing despite every effort by lazy, dynast, entitled politicians trying to keep the old status quo going.

PM Modi, with his Viksit Bharat vision, has reset people’s aspirations. Election results like Delhi and Maharashtra reinforce the sense that people have signed up to be stakeholders in this Viksit Bharat goal and ambition. One idea that really resonated with voters is that as the capital of the emerging powerhouse, Delhi deserved better. A Viksit Delhi for a Viskit Bharat.

The politics of yesterday is the politics of Kejriwal, Rahul, Akhilesh, and Lalu Yadav. The politics of today is about the future of people and their lives. Voters of Delhi (as have voters of Haryana and Maharashtra) told us what they want. The national capital has chosen a Viskit Delhi as its future. Let the double-engine sarkar start.

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