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A Budget for the Future: Vision Beyond Infrastructure

India’s budget is more than just a financial statement—it serves as a blueprint for the country’s economic vision. While infrastructure spending remains a key component, the real question is whether it alone can drive sustainable economic growth. The answer is clear: infrastructure cannot be the sole engine of growth. A broader approach, especially one that prioritizes human capital development, is necessary.

Skilled Workforce: Beyond Traditional Sectors

India needs high-skilled and moderately skilled workers, but the focus should not only be on traditional trades like plumbing and carpentry. While these sectors are crucial, the country must also expand opportunities in cutting-edge industries like semiconductor chip design and AI-driven technology. The government’s $25 billion chip subsidy program is an ambitious move, but is it the most efficient allocation of resources?

Consider Japan, a country that has successfully built its economy around human capital. On the other hand, states like Bihar struggle with poor education outcomes, limiting opportunities for students in the modern economy. Without strong state support, disparities between developed and underdeveloped regions will persist. The central government must take a more strategic approach to budgetary support for education and healthcare, particularly in states with weaker infrastructure.

Corporate Tax Cuts: A Missed Opportunity?

In 2019, the government introduced a corporate tax cut aimed at stimulating investment and growth. However, years later, it has not yielded the expected results. Even the Economic Survey acknowledges that the policy has yet to deliver a meaningful impact.

Why hasn’t it worked? The primary issue is that businesses require more than just tax cuts to invest. A conducive business environment, skilled labor, and predictable policies matter just as much—if not more—than low tax rates. While reversing the tax cut would appear inconsistent, a more holistic approach to economic policy is needed to ensure businesses invest and create jobs.

Trade Wars and India’s Export Dilemma

As Donald Trump prepares to take office again, the world is bracing for another round of trade conflicts. His previous presidency saw aggressive tariff policies, and indications suggest that similar strategies may return. For India, a potential global trade war raises several critical questions:

1. Will India be directly affected?

India is not the primary target—China and Mexico top the list—but with a $60 billion trade deficit with the U.S., India cannot remain complacent.

If trade restrictions tighten, India’s exports could suffer, especially in manufacturing sectors.

2. What happens if tariffs escalate?

If a full-fledged trade war erupts, nations may start slapping tariffs on each other, disrupting global supply chains.

India, already struggling with stagnant exports, will find it even harder to compete in a protectionist global economy.


Balancing Global Risks with Domestic Growth

India must diversify its export strategy to reduce dependency on markets that are increasingly protectionist. The focus should shift towards:

Expanding trade with emerging markets that have less volatile policies.

Strengthening the services sector, which is relatively insulated from manufacturing-focused trade wars.

Enhancing domestic consumption to act as a buffer against external shocks.


Where Should India Put Its Money?

Instead of pouring billions into subsidizing specific industries like chip manufacturing, the government should:

Invest in education and skill development, particularly in poorer states.

Support small and medium enterprises (SMEs), which are the backbone of employment.

Create a long-term industrial policy that fosters innovation and sustainable growth.

Final Thoughts: The Need for a Clear Vision

India needs a cohesive economic vision that extends beyond infrastructure and corporate tax cuts. The budget must address human capital development, strategic sectoral investments, and global trade uncertainties. Without a well-defined strategy, economic growth will remain unbalanced and vulnerable to external disruptions.