This is the first Budget in my memory of Budgets over the last half a century which has embraced upfront, enthusiastically and emphatically, technology, modernity and fiscal sobriety, notes Shreekant Sambrani.
Key Points
- The Budget identified areas with great relevance to India such as biopharmaceuticals, exploration and utilisation of our own quite sizeable rare earth resources, sustaining the semiconductor initiatives which have attracted international investment attention, and regaining the advantage India once enjoyed in the fibre economy.
- Public investment, substantially in infrastructure, was slated to be Rs 12.2 trillion, an increase of nearly 10 per cent over the previous year.
- Continuing reform, a robust financial structure and cutting-edge technology would be the essential parts of the armoury as India seeks to establish itself as a modern, vibrant economy.
Technically, central Budgets are annual statements of government revenues and expenditures that the Constitution mandates to be placed before Parliament.
Obviously, they would include sources of revenues and details of expenditure according to various heads and proposals for additional revenue generation or expenses to be undertaken in the year to follow.
In India, however, more than most countries, Budgets have also been statements of government objectives, commitments and priorities in development both social and economic. These necessarily have a medium-term horizon.
Analyses and commentaries of Budgets sometimes proceed on parallel tracks of accounting and priorities statements, but more often than not, mix up the two depending on the biases of the person conducting the analysis.
That is counterproductive. While fiscal tools can sometimes be usefully applied to achieve objectives as egalitarian redistribution of the national pie, their primary purpose is to deal with issues such as inflation control, export promotion and other housekeeping concerns.
Investment programmes, on the other hand, are more focussed on developmental objectives and need a different framework of analysis.
Like Budgets in the past, the current one presented by Finance Minister Nirmala Sitharaman in Lok Sabha on February 1, 2026 will be parsed threadbare to understand who has to pay what, as well as who gets what and how these have changed over time.
That is extremely useful not just for the taxpayers and beneficiaries but also the general public.
This writer, however, has always looked at the developmental objectives of the government as stated or revealed in the Budget as a matter of personal preference and in view of what little competence he possesses in these areas.
Historically, Budgets have made rather ambitious claims and set themselves lofty targets on developmental issues.
In the Five-Year Plan era, these were followed by specific schemes, with fixed budgets and one-size-fits-all strategic designs dictated by the erstwhile Planning Commission.
As is to be expected, the actual performance of the schemes so devised was spotty at best.
Some of these schemes were grand in conception, such as massive irrigation projects or power projects, or those addressing some hot button issues, such as farmer suicides.
Our great successes in rural India, the Green Revolution and co-operative dairy development were never really parts of the Budgetary exercises, while the equally impactful Golden Quadrilateral highways programme was.
But there were few such programmes as time went by. What happened later was worse, with every new Budget proposing a few new schemes, with arbitrary allocation of resources.
In Pranab Mukherjee's Budgets, numerous schemes used to be provided Rs 100 crore to Rs 300 crore each.
Subsequent Budgets seldom bothered to report on actions taken regarding and results of past schemes, despite paying lip service to ideas as performance budgeting and other management techniques then in vogue.
The result often was that the supposedly new schemes were new avatars of the tried, trusted and failed old schemes.
This approach continued even into the Sitharaman era. The 2025 Budget contained a compendium of schemes aimed at pulse farmers, micro, medium and small enterprises (MSME), and even a makhana board for Bihar.
Planning for Growth in an Uncertain World
What made me sit up and take note was that the finance minister struck a completely new note at the very start of her speech.
She listed her three duties (with an excusable play on words, she called them her kartavyas as she was now working from kartavya bhavan).
They were to enhance and sustain growth, with focus on public investment; the second was to fulfil aspirations and the third was to be inclusive.
What followed was clearly shaped by the current global economic environment, tossed into great uncertainty by the whimsical trade policies and unfathomable use of tariffs in international trade to achieve absolutely unrelated objectives by the world's largest economic power, the United States, and the exercise of monopolistic muscle by the second largest one, China, in areas such as rare-earth magnets and numerous high-tech investments and intermediate products.
The Budget identified areas with great relevance to India such as biopharmaceuticals (she proposed, quite realistically, that India could become the global hub of this enterprise), exploration and utilisation of our own quite sizeable rare earth resources, sustaining the semiconductor initiatives which have attracted international investment attention, and regaining the advantage India once enjoyed in the fibre economy.
The signalling out of certain seemingly small yet critical pieces of equipment -- lifts, fire-fighting gear, tunnel boring machines, to name just three -- showed that the minister had paid attention to the fact that entirely avoidable bottlenecks often hinder progress, an echo of Richard III's famous lament, 'My kingdom for a horse'.
She emphasised specifically the manufacture of high-tech high-precision investment goods, jointly with technology leaders if required.
There was also a clear recognition that all these needed improvements to infrastructure and energy and water supply.
Public investment, substantially in infrastructure, was slated to be Rs 12.2 trillion, an increase of nearly 10 per cent over the previous year.
Where Reform Meets Execution
The minister had done her homework as to which areas to target: Rare earths in Odisha, Kerala, Tamil Nadu and Andhra Pradesh; cutting edge technologies to benefit second generation chip manufacturing, institutions of research to support the new areas highlighted and located in those specific regions, new highspeed rail corridors and another dedicated freight corridor running from the east coast to the west), waterways, container manufacturing were among a plethora of specific initiatives.
Anyone who has travelled the countryside with open eyes would immediately recognise the immense relevance and necessity of these to integrate India globally (tyrant Donald Trump notwithstanding).
Even in areas of service economy such as tourism, the Budget speech showed some new insights: The growing importance of medical tourism given India's cost advantage, and religious tourism in the eastern half of the country were both highlighted.
Tourism in hill and mountain states -- Himachal Pradesh, Uttarakhand and Jammu and Kashmir, and an area very close to this writer's heart, the Arakku Valley in the Eastern Ghats, will also receive priority attention.
The Budget showed a clear shift towards use of technology even as far as rural India is concerned: Improving farm productivity (not merely production), cultivating high value crops to enhance farm incomes and improvements to the milch herd.
In fishing, the Budget recognised the role of mechanised trawling in the exclusive economic zone and if the haul landed in foreign ports, it would be treated as export, eligible for incentives.
All these mark a transition away from subsistence activities, which this writer holds as absolutely vital for transforming rural India,
And unlike in the past, Sitharaman outlined at the outset how these objectives were to be achieved.
She said that continuing reform, a robust financial structure and cutting-edge technology would be the essential parts of the armoury as India seeks to establish itself as a modern, vibrant economy.
Even in Part B of the Budget Speech, a far greater commitment to reform was evident.
Sitharaman emphatically decriminalised several minor (and some not-so minor) transgressions, omissions and exclusions.
She proposed to convert fines into fees and offered select amnesties, especially involving non-reporting of foreign assets.
She recognised that removal of the fear of the taxman from the public mindset was the key to better compliance.
Avoiding litigation where possible has been her pet idea and she extended it further in this budget.
From Bold Admission to Hard Numbers
The finance minister had handsomely earned her reformist spurs in the first post-Covid Budget of 2021, when she took the bold initiative of bringing into budgetary deficit calculation several items considered off-budget by all her predecessors.
In one fell swoop, she bit the bullet and admitted to a deficit of over 9 per cent.
She also promised to bring it down gradually to acceptable levels, a promise she has meticulously maintained, resulting in an upgrade in India's credit ratings.
She said that the last years revised target of 4.4 per cent was met and this year it would be 4.3 per cent. Given her track record, there is no reason not to take her at her word.
Sitharaman began her Budget Speech by invoking the magic word 'aatmanirbhar'. But this time it was not an exercise of mere genuflection; the way the Budget unfolded, one could well appreciate that self-reliance was indeed at the core of it.
A good friend, who knew I was listening to the Budget, called immediately thereafter to ask how I scored it. In a true pedantic fashion, I said 8.5 out of 10.
This is the first Budget in my memory of budgets over the last half a century which has embraced upfront, enthusiastically and emphatically, technology, modernity and fiscal sobriety.
We have always treated these as items to be sneaked in backdoor, unseen by the public which we think considers them anathema (remember P V Narasimha Rao?).
That candour and boldness needs to be applauded.
And why the hold-back? The devil, dear reader, is always in the detail.
Let us hope there are no monsters lurking underfoot, so Nirmala Sitharaman can score a perfect 10 when she presents her tenth Budget a year from now.
Dr Shreekant Sambrani trained as an engineer at the Indian Institute of Technology- Bombay and Northwestern University, then as an economist at Cornell University.
He served as a Professor at the Indian Institute of Management-Ahmedabad, Chief of the Research Bureau, before becoming the Founder-Director, Institute of Rural Management, Anand.
Feature Presentation: Aslam Hunani/Rediff
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