Union Budget 2025-2026: A Review from the Needonomics Perspective

GG News Bureau
New Delhi, 2nd Feb. By Professor Madan Mohan Goel

The Union Budget for 2025-2026, presented by Finance Minister (FM) Nirmala Sitharaman, amounts to ₹5,065,345 crore, which includes ₹3,394,425 crore for revenue expenditure and ₹1,121,090 crore for capital expenditure. This budget represents a significant step towards realizing India’s vision of becoming a “Viksit Bharat” (Developed India) by 2047. In her 60-page speech, structured into 161 headings, the Finance Minister outlined an ambitious roadmap, highlighting the goal of a nation characterized by zero poverty, universal access to quality education and healthcare, a skilled workforce with meaningful employment, increased female participation in the economy, and enhanced agricultural productivity aimed at transforming India into the “food basket of the world.”

FM has identified ten key focus areas, including: Spurring agricultural growth and productivity, Building rural prosperity and resilience, Ensuring inclusive growth, Boosting manufacturing and the “Make in India” initiative, Supporting MSMEs and employment-led development, investing in people, the economy, and innovation, Securing energy supplies, Promoting exports and Nurturing innovation

FM further highlighted four primary drivers of growth—agriculture, MSMEs, investment, and exports—empowered by reforms and guided by inclusivity. The aim is to achieve a “Viksit Bharat.”

However, from the perspective of the Needonomics School of Thought, our primary concern lies with the fiscal deficit, which remains above the 3% target prescribed by the Fiscal Responsibility and Budget Management (FRBM) Act. The projected fiscal deficit for 2025-26 stands at 4.4% (₹1,568,936 crore), raising concerns about the sustainability of this trajectory. Furthermore, the government’s expenditure composition is worrisome, with 20% of every rupee spent allocated to interest payments, a non-productive expenditure that has yet to be adequately addressed. Additionally, borrowings and other liabilities contribute 24% of revenue, further escalating the fiscal burden.

Despite Haryana being represented by three ministers in the NDA government, the Finance Minister did not announce any specific provisions for the state. However, Haryana may indirectly benefit from national schemes targeting farmers, women, the poor, and youth.

For the broader vision of “Needo-happiness” and “Needo-health” for the masses—rather than just the classes—of a Viksit Bharat, it is essential that the Finance Minister adopts a Gita-based Needonomics approach which could serve as a form of economic yog more than so called Yoga.

While the tax slabs and rates aim to reduce the tax burden for middle-class earners, thereby leaving more disposable income for consumption, savings, and investment, the reality is that only 2.2% of the population currently pays taxes. This minority of taxpayers deserves recognition and equitable treatment in terms of public services and benefits, if not direct financial concessions.

The government’s focus on revenue mobilization extends beyond taxes, with an emphasis on optimizing unutilized government assets, such as stadiums and land held by PSUs, for better utilization. Additionally, the government is exploring new revenue streams to offset the revenue forgone due to tax concessions. According to Union Budget documents, 24% of government receipts will come from borrowings and other liabilities, followed by income tax (22%), corporate tax (17%), and non-tax revenue sources like disinvestment (9%).

On the expenditure side, the budget allocates 20% of every rupee to interest payments, 22% to states’ share of taxes and duties, 8% for defense expenditure, 16% for central sector schemes, and 8% for centrally sponsored schemes. Expenditures on subsidies and pensions account for 6% and 4%, respectively, with the remaining 8% allocated to other expenditures.

The announcement of five National Centers of Excellence for skilling is commendable. These centers, focusing on curriculum design, trainer training, skill certification, and periodic reviews, align well with the “Make for India, Make for the World” initiative and aim to equip youth with global manufacturing expertise.

The budget’s allocation for school education at ₹78,572 crore is the highest-ever allocation for the department. Similarly, the Higher Education Department receives ₹50,077.95 crore, with a substantial increase in student financial aid to ₹2,160 crore. These provisions deserve recognition, as does the emphasis on utilizing the education cess collected from taxpayers to help states implement the National Education Policy.

However, a more concrete action plan is needed to transform citizens from being careless and cared-less to careful, and from useless and used-less to useful, making them active stakeholders in India’s growth. A healthy economy with a growth rate of 6.8% requires a mindset shift among all stakeholders, including consumers, who must adopt a philosophy of mindful consumption (needo-consumption).

To compete effectively with China, India must enhance its domestic savings rate, which consistently lags by about 10%. A cultural shift towards needo-saving is essential. Additionally, to support farmers, both the central and state governments must implement a “rainbow revolution” in agriculture, focused on boosting productivity, agro-processing, and agro-product exports.

Reducing the compliance burden requires adherence to Dr. B.R. Ambedkar’s principles of public expenditure—namely faithfulness, wisdom, and economy in execution. Unfortunately, the provisions for tourism development in Kurukshetra were overlooked.

The path to India becoming a “Viksit Bharat” hinges on resolving critical economic challenges, one of the most pressing being the Consumption-Investment Paradox. This paradox revolves around the relationship between consumption, savings, and investment, and how these factors interact to drive economic growth. From the Needonomics perspective, this paradox highlights that growth cannot solely be driven by supply-side policies (such as investment in infrastructure and industry) without stimulating demand-side factors (such as enhancing consumption through increased purchasing power). The Needonomics approach advocates that demand should align with societal needs, thereby creating a more inclusive economic environment.

In conclusion, while the Union Budget addresses several critical areas, it falls short of presenting a comprehensive and sustainable economic strategy. Greater emphasis is needed on reducing fiscal deficits, enhancing domestic savings, and ensuring equitable resource distribution. Additionally, integrating mindful economic practices and robust agricultural reforms will be crucial to realizing the vision of a prosperous and resilient Viksit Bharat by 2047. To achieve this, the Consumption-Investment Paradox must be addressed, and India must adopt a holistic approach to development—one that aligns consumption with human needs and ensures investments contributes to building an inclusive, sustainable economy. The Needonomics perspective offers a framework for overcoming this paradox, emphasizing that growth should prioritize the well-being of all citizens.