Sitharaman’s entire budget is not contingent on the outcome of the 2024 elections.

Both converge to one question: how to rebalance policies so that the economy is balanced and people’s livelihoods are not fragmented, and the majority of the socio-economic pyramid does not fall further behind the wealthy. To be sure, solving this puzzle is not easy, nor does it converge entirely within the confines of India’s fiscal plan for 2024-25.

But the basics have been clear for a long time: rapid GDP growth with steady inflation. Austerity usually works for both, but our recovery from the pandemic has been led by government spending, with the failure of private spending to compensate slowing the decline.

The fiscal deficit target for this year is set at 4.9 percent of GDP and Finance Minister Nirmala Sitharaman has indicated no intention to change course, although improved revenue projections have allowed her to cut the interim budget figure of 5.1 percent.

Governments will continue to be big spenders until the private sector steps up. Infrastructure spending has remained flat. ₹11.1 trillion yuan, the same as the interim estimate.

This is a slightly smaller percentage of the total budget spending. ₹48.2 trillion, but that’s still big.

What about the electoral impact? A bias in distribution in favour of Bihar and Andhra Pradesh, where the support of leaders is crucial to the government, was widely expected. But it is largely cosmetic and will not have a financial impact.

Elsewhere, there is a clear commitment to job creation, this time through an employment-related incentive scheme inspired by the government’s support for factory production, apart from support for internships.

However, spending on welfare programs was not significantly changed from interim levels. As for tax cuts for taxpayers under the new income tax regime, it is unclear how effective they will be in stimulating consumption in an environment of weak aggregate demand.

But in countries where taxpayers are a minority, tax policies alone cannot be expected to stimulate consumer markets and the “animal spirits” of domestic investment. Capital gains taxes have been simplified but strengthened, to the dismay of asset markets.

The “angel tax”, a bane of start-ups, is thankfully being scrapped. Import tariffs have been rebalanced to ease the burden on some sectors and correct overtaxed raw materials, but these are selective adjustments. A broader measure against the web of tariffs that make it difficult for local factories to fit into global supply chains is awaited.

Neither announcement signals an overhaul of economic policy. The budget, like past infrastructure-focused budgets, has a clear supply-side orientation with emphasis on productive capacity. A bright spot in the finance minister’s speech was the promise of factor market reforms as part of a revised policy framework aimed at improving efficiency.

From the perspective of short-term GDP growth, this is all fine and even welcome. Why fix what isn’t broken? No one expected change anyway. But spending on health and education is still too low to justify lofty development aspirations, and India’s welfare system, based on free food, is likely to remain immature.

Still, if the Budget helps spread the benefits of growth a little, it will serve the larger purpose of the country.To stay on track for Viksit Bharat, our economy will have to become more unbalanced.