The Hindu Editorial Analysis- 6th February 2025 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

A Budget that is mostly good but with one wrong move

 Why in News?

 The Union Budget for 2025-26 aims to boost economic growth while keeping fiscal discipline in mind. It emphasizes capital spending, tax revenue trends, and shifts in fiscal policy, including adjustments to deficit targets. 

 GDP Growth and Capital Expenditure 

•  The government anticipates a nominal GDP growth of 10.1% for 2025-26, which is seen as achievable. 
•  The Economic Survey for 2024-25 suggests a real GDP growth rate between 6.3% and 6.8% for 2025-26, allowing some flexibility for potential growth increases. 
•  Capital expenditure for 2025-26 is projected at ₹11.2 lakh crore, reflecting an increase of ₹1.03 lakh crore compared to the revised estimates for 2024-25. However, this figure is similar to the ₹11.1 lakh crore estimated in the previous budget. 

 Need for Higher Economic Growth 

•  The budget aims to accelerate growth and move India closer to developed country status, with a target of 8% real GDP growth. 
•  While several measures introduced in the budget are positive, some could have been implemented earlier. 
•  Income tax relief for the middle class is expected to stimulate demand, but its impact will depend on household consumption patterns. 

 Trends in the Indian Economy 

•  Declining Revenue Growth: Overall revenue growth has been slowing down over the past three years. 
•  Tax Buoyancy Reduction: The efficiency of tax collection in relation to economic growth has decreased. 
•  Slower GST Growth: The growth rate of GST revenue has declined compared to previous years. 
•  Shift Towards Direct Taxes: Direct taxes now constitute a larger share of total revenue compared to earlier years. 
•  Personal Income Tax vs Corporate Tax: Personal income tax has performed better than corporate tax but has slowed due to tax concessions. 
•  Corporate Tax Recovery: Corporate income tax is expected to grow at a better rate in the coming year. 

 Non-Tax Revenues 

•  Non-tax revenues, primarily from the Reserve Bank of India (RBI) and public sector dividends, are projected to increase to ₹3.25 lakh crore in 2025-26, up by ₹35,715 crore from the revised estimates for 2024-25. 
•  Overall, non-tax revenue is expected to rise from ₹5.3 lakh crore (revised estimates) to ₹5.8 lakh crore in 2025-26 (budget estimates). 

 Government Expenditure and Fiscal Consolidation 

•  Declining Government Expenditure: The government’s spending as a share of GDP is set to decrease as part of efforts to manage the fiscal deficit. 
•  Slower Expenditure Growth: Government spending is growing at a slower pace compared to the overall economy. 
•  Improved Spending Quality: A larger portion of government funds is being directed toward long-term investments in infrastructure. 
•  Importance of AI Investment: Strengthening AI infrastructure is crucial as global leaders like the U.S. and China are advancing rapidly in this sector. 
•  Need for AI Incentives: The government should consider tax benefits to encourage AI research and development in India. 

 Concerns Over Fiscal Transparency 

•  Shift in Fiscal Focus: The budget moves away from using the fiscal deficit as the primary measure of financial discipline. 
•  Previous Target: There was an earlier goal to reduce the fiscal deficit below 4.5% by 2025-26. 
•  New Approach: The focus has shifted to lowering the debt-to-GDP ratio instead of setting a specific fiscal deficit target. 
•  Lack of Clarity: The new strategy lacks clarity as it depends on various economic growth scenarios. 
•  Need for a Clear Target: Having a defined fiscal deficit goal would help maintain financial discipline and prevent excessive government borrowing, which could impact private investment. 

 Conclusion 

•  The Budget for 2025-26 aims to sustain economic growth while ensuring fiscal discipline. 
•  While capital expenditure remains a priority, there is a need for increased focus on investing in AI infrastructure. 

A green signal for India to assert its health leadership

Why is it News?

• The Union Budget 2025-26 places a strong emphasis on expanding health care, enhancing medical education, and fostering global collaborations in the health sector.
• The budget aims to position India as a leader in providing affordable and innovative health services, both domestically and internationally.

India’s Vision for Health Care and Innovation

• The Union Budget 2025-26 is focused on strengthening India’s health-care sector through improved medical infrastructure, expanded educational opportunities, and enhanced global collaboration.
• With a substantial allocation of ₹90,958 crore for health care, the government is prioritizing accessibility, affordability, and quality in medical services.
• The introduction of 75,000 new medical seats over the next five years, including 10,000 seats in FY26, underscores India’s commitment to addressing the shortage of health-care professionals.

India’s Transformation in Health Care

• India has undergone significant transformation in health care over the past few decades, evolving from limited infrastructure in the 1980s to becoming a global leader in medical services.
• The ‘Heal in India’ initiative aims to enhance India’s appeal as a preferred medical destination for international patients by improving hospital infrastructure and streamlining visa procedures.
• Simultaneously, the ‘Heal by India’ initiative focuses on training and deploying Indian health-care professionals abroad to address global shortages while creating new employment opportunities for Indian professionals.

Strengthening Cancer Care and Affordable Medicines

• To address the rising burden of non-communicable diseases, the Budget allocates resources for the establishment of 200 day-care cancer centres in district hospitals.
• These centres aim to facilitate early diagnosis and treatment, thereby improving survival rates and reducing the overall cost of cancer care.
• Customs duty exemptions on 36 life-saving drugs, including those for cancer, rare diseases, and chronic conditions, are expected to make critical treatments more affordable for patients.
• Additionally, the introduction of 13 new patient assistance programs will further support patients, particularly those with chronic illnesses, in accessing essential medications.

Technology and Innovation in Health Care

• The Budget highlights the importance of Artificial Intelligence (AI) and digital health in advancing medical research, diagnostics, and treatment methodologies.
• National Centres of Excellence are set to be established to foster innovation, enabling India to develop cutting-edge medical solutions and technologies.
• Private hospitals, in collaboration with government initiatives, have played a pivotal role in bringing advanced health-care technologies to India.
• For instance, Apollo Hospitals has introduced Proton Therapy for advanced cancer care, attracting patients from countries such as Australia and the UK.

India’s Leadership in Global Health Care

• India’s health-care sector has become a crucial pillar of national growth and development, contributing significantly to the economy.
• By integrating the strengths of initiatives like Heal in India, Heal by India, and technology-driven innovation, the country is setting new standards in global health care.
• Continued investment in medical education, infrastructure, and technological advancements is essential for India to further solidify its position as a global health care leader.
• The focus remains on ensuring that high-quality medical services are accessible to every individual, both within India and internationally.

Conclusion

• India is not only enhancing health care for its citizens but also playing a vital role in addressing global health challenges.
• The Budget provides a robust foundation for future advancements by integrating technology, expanding educational opportunities, and improving medical infrastructure.
• It is now a shared responsibility to build on this progress and ensure that world-class health care is accessible to all individuals, regardless of their location.