Editorial 1: A Budget that is mostly good but with one wrong move

Context

Some of the measures indicated in the Budget could have been implemented even earlier; moving away from ‘fiscal deficit’ as an indicator is an incorrect step.

Introduction

The Union Budget has got many things right. Its projection of nominal GDP growth for 2025-26, at 10.1%, is reasonable and acceptable. The Economic Survey 2024-25 had indicated a real GDP growth in the range of 6.3%-6.8% for 2025-26. This provides some buffer if growth picks up more. The increase in the capital expenditure of the government in 2025-26 over the revised estimates of 2024-25 is estimated at ₹1.03 lakh crore. But the capital expenditures in 2025-26, at ₹11.2 lakh crore, are nearly the same as was indicated in the Budget of 2024-25 at ₹11.1 lakh crore.

Accelerating Growth and Strengthening the Economy

• Budget’s overarching aim: The overarching aim of the Budget was to accelerate growth and push India towards a developed country status.
• Required growth rate: The required rate of real growth to achieve this is estimated differently, including a rate of 8% in the Economic Survey for 2024-25.
• Need for a growth pickup: In any case, the country needs a definite pickup in growth rate.
• Welcoming budget measures: The various measures indicated in the Budget are welcome. Some of these could have been implemented earlier.
• Income-tax concession for the middle class: The concession given to the middle class in terms of income tax is welcome as a relief.
• Impact on demand: Its impact on demand depends on the marginal propensity to consume of the households who are expected to largely benefit from these concessions and their consumption basket.

Gross tax revenues

• Declining gross tax revenue (GTR) growth: Growth in the Government of India’s GTR has trended downwards in recent years.
• Falling tax buoyancy: The buoyancy of GTR has fallen for three successive years from 1.4 in 2023-24 to 1.15 in 2024-25 (RE) and 1.07 in 2025-26 (BE).
• Decline in GTR growth rate: Growth in GTR has kept falling from 13.5% in 2023-24 to 11.2% in 2024-25 (RE)and 10.8% in 2025-26 (BE).
• Slowing GST growth: Growth rate of GST has also declined from 12.7% in 2023-24 to 10.9% in 2025-26 (BE).
• Shift from indirect to direct taxes: The share of direct taxes in GTR has increased from 52% in 2021-22 to 59% in 2025-26 (BE), which is a welcome development.
• Personal income-tax outperforming corporate income-tax: Within direct taxes, personal income-tax has performed better than corporate income-tax in terms of growth and buoyancy.
• Decline in personal income-tax growth: Growth in personal income-tax has fallen from 25.4% in 2023-24 to 20.3% in 2024-25 (RE) and 14.4% in 2025-26 (BE), partly due to income-tax concessions.
• Corporate income-tax performance: Growth in corporate income-tax was low at 7.6% in 2024-25 (RE) but has been raised to 10.4% in 2025-26 (BE).
• Realistic tax revenue assumptions: Overall, the government’s tax revenue growth assumptions for 2025-26 (BE) appear to be realistic.
• Increase in non-tax revenues: Non-tax revenues mainly come from dividends from the Reserve Bank of Indiaand public sector companies, contributing ₹3.25 lakh crore in 2025-26, an increase of ₹35,715 crore over the revised estimates.
• Rise in total non-tax revenue: Non-tax revenues have increased from ₹5.3 lakh crore (RE) to ₹5.8 lakh crore in 2025-26 (BE).

Level of government expenditure

• Determinants of government expenditure: Tax and non-tax revenues, non-debt capital receipts, and fiscal deficit collectively determine the size of government expenditure.
• Realistic tax revenue growth: Gross tax revenue growth of 10.8% appears to be realistic.
• Reduction in government expenditure as a percentage of GDP: Due to fiscal consolidation, government expenditure as a percentage of GDP has been reduced from 14.6% in 2024-25 (RE) to 14.2% in 2025-26 (BE).
• Lower growth in total expenditure: Growth in total expenditure is 7.6% in 2025-26 (BE), which is lower than the budgeted nominal GDP growth of 10.1%.
• Similar trend in 2024-25 (RE): In 2024-25 (RE), total expenditure growth was 6.1%, whereas nominal GDP growth was 9.7%.
• Improved quality of government expenditure: The share of capital expenditure in total expenditure has improved by 10 percentage points from 2020-21 to 2025-26 (BE).
• Need for AI infrastructure: The Government of India must build large-scale Artificial Intelligence (AI) infrastructure to support emerging technologies.
• China’s lead in AI: China has already taken a clear lead in AI infrastructure.
• U.S. investment in AI: The United States has announced an investment of $500 billion for AI infrastructure.
• India’s technology sector lagging in AI: Indian technology companies failed to anticipate AI developments.
• Possible government intervention: India should push technology companies to invest in AI research and development, possibly by offering tax concessions.

A less transparent fiscal health indicator

• Change in fiscal prudence measure: The Budget introduces a wrong measure by moving away from fiscal deficit as an indicator of fiscal prudence.
• Loss of transparency: Contrary to the Budget document’s claim, the shift is from a transparent to a less transparent indicator.
• Previous fiscal deficit target: As per the 2024-25 Budget’s glide path, the fiscal deficit was to be brought down to below 4.5% by 2025-26.
• Discontinuation of fiscal deficit glide path: The 2025-26 Budget has discontinued the practice of giving a fiscal deficit glide path.
• New focus on debt-GDP ratio: Instead of focusing on fiscal deficit reduction, the emphasis is now on reducing the debt-GDP ratio annually.
• Alternative debt-GDP projections: The annexure statement in the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 provides alternative debt-GDP ratio paths based on nominal GDP growth assumptions of 10.0%, 10.5%, and 11.0%.

Conclusion

The glide paths are indicated in terms of alternative growth assumptions and alternative assumptions regarding mild, moderate, and high degrees of fiscal consolidation. This makes the whole exercise vague and non-transparent. It is better for fiscal discipline to indicate specific fiscal deficit target for different years and the corresponding debt-GDP ratios for those years. It should clearly be shown by what year the FRBM Act targets are to be achieved. A larger claim on the available investible resources by the government will make it difficult for private investment to pick up.

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Editorial 2: A green signal for India to assert its health leadership

Context

The Budget has recognised the role of health care as a pillar of national growth and development.

Introduction

The Union Budget 2025-26 lays a robust foundation for India to assert its leadership in global health care and innovation, with strategic announcements that bolster medical infrastructure, expand educational opportunities, and promote global collaboration. With a ₹90,958 crore health-care allocation, the addition of 75,000 medical seats over the next five years, and investments in daycare cancer centres, India is poised to enhance both accessibility and quality of care. The country will add 10,000 medical seats in FY26 alone, underscoring its commitment to health-care excellence.

India’s health-care transformation

• India’s health-care progress: The Budget highlights India’s transformation from limited medical infrastructure in the 1980s to a global health-care leader today.
• Key recommendations to PM: The writer proposed two ideas to Prime Minister Narendra Modi:
  • Positioning India as a global health-care destination.
  • Addressing the global shortfall of health-care professionals.
• ‘Heal in India’ initiative: Focuses on streamlined visa processes,
  • enhanced hospital infrastructure, and 
  • public-private partnerships
  • to make India a top medical destination for international patients.
• ‘Heal by India’ initiative: Aims to train and deployIndian doctors, nurses, and paramedics abroad,
  • helping to address the global health-care workforce shortage.
• Global impact: These initiatives will strengthen international health-care systems while creating opportunities for skilled Indian professionals.

Customs duty exemptions, tech outlook

• Growing burden of non-communicable diseases: It is commendable that the growing burden of non-communicable diseases such as cancer has been acknowledged in this Budget.
• 200 day-care cancer centres: The establishment of 200 day-care cancer centres in district hospitals
  • will bring specialised treatment closer to people,
  • improving early diagnosis and better patient outcomes.
• Customs duty exemption on 36 life-saving drugs: The customs duty exemption on 36 life-saving drugs, including those for cancer, rare diseases, and chronic conditions will lower the cost of treatments, benefiting thousands of patients across the country.
• Addition of 13 new patient assistance programmes: The addition of 13 new patient assistance programmes would also improve access to critical medications for patients, particularly those with chronic conditions.
• Emphasis on AI and digital health: The emphasis on Artificial Intelligence and digital health marks a pivotal moment for the future of India’s health care.
• National Centres of Excellence: The new National Centres of Excellence will spearhead innovation in diagnostics, treatment, and research, enabling India to develop cutting-edge solutions that enhance patient care.
• Strengthened global health-care position: The writer believes that the introduction of cutting-edge technologies to
  • deliver quality health care has strengthened India’s position as a global health-care player.
• Private and public hospital contributions: Both private and public hospitals have played an integral role in this progress.
• Apollo’s role:Apollo was the first hospital to launch Proton therapy for advanced cancer care in this part of the world
  • and continues to attract patients from countries such as Australia and the United Kingdom, to name a few.

Build on the momentum

• Government’s vision for health care: This Budget clearly recognises the government’s vision for — and demonstration of bold leadership in recognising — health care as a pillar of national growth and development.
• Evolution in medical care: From a country that once struggled to provide basic medical care, we have evolved into a nation offering world-class treatment to millions.
• Synergy of initiatives: Through the synergy of Heal in India, Heal by India, and innovation-driven care, we are shaping a future where India’s health-care system sets new global benchmarks.

Conclusion

It is our collective responsibility now to build on this momentum — by embracing technology, strengthening medical education, and ensuring that health care reaches every individual in need. India is not just healing its own people; it is healing the world.