Union Finance Minister Nirmala Sitharaman began the Budget 2025 by quoting Telugu poet Gurajada Apparao: Desamante matti kadoi, desamante manushuloi (a country is made not just with soil but with people). Accordingly, the FM outlined that the objective of this year’s budget was to focus on accelerating growth via boosting household consumption, enhancing spending, increasing investment, and incentivising the private sector to benefit the middle class.
To unlock India’s growth potential, the FM focused on growth ostensibly led by the poor, youth, farmers, and women. Yet, a closer look reveals the fundamental problem—growth continues to be framed around private sector-led expansion, credit-fuelled entrepreneurship, and a trickle-down assumption that fails the poorest. The government’s persistent reliance on loans as the solution to economic woes sidelines a crucial element—an active role of public intervention and investment.
Credit is not a substitute
One of the dominant themes of Budget 2025 is the expansion of a credit-based approach, particularly for MSMEs and agriculture. The plan includes introducing or increasing credit limits through Kisan Credit Cards, loans, and financial support for enterprises. The underlying rationale is quite straightforward: easier access to credit for businesses is expected to drive expansion operations, increase employment, and foster economic growth. However, this approach places exclusive importance on credit for livelihood generation.
In practice, access to loans without direct government policy intervention in the form of support for shielding the small enterprises and informal workers leads to precarious employment, debt burdens, and a market skewed towards large corporations. The problem arises as the large corporations are better positioned to absorb credit more effectively than small-scale enterprises or informal workers.
The budget seems to suggest that individuals and businesses can create their own employment opportunities through credit access, but it lacks measures for the government’s intervention in direct job creation. Instead, increasing workers’ wages and active public intervention to create jobs can be a far more effective strategy in driving economic expansion. Higher wages create demand for goods and services, fostering sustainable growth from the ground up. However, the government’s continued insistence on promoting an active role for the private sector alongside public efforts runs counter to this strategy. Wage-led growth can instead aid in reducing inequality and sustaining long-term economic growth, yet the current budget largely overlooks this avenue.
Where are the women?
India’s female labour force participation remains among the lowest in the world and yet the budget does very little to address this. Women are disproportionately employed, largely in low-paid and informal jobs across rural and urban areas, yet no measures have been taken seriously to address their working conditions and create employment. Though there is a high presence of women in self-employment, this has largely been out of necessity rather than choice.
The budget stresses upon providing credit for women-led entrepreneurs, however, this approach indicates that women have to create jobs for themselves. This is highly problematic as borrowing loans further pushes them into the debt repayment trap with additional interest. This can be further concerning considering the uncertainties associated with the business/self-employment generated in the process. It does not address the root cause and underlying structural issues, such as restricted mobility, limited asset ownership, and high care burdens that hinder their ability to take credit and repay loans.
The budget also conveniently overlooks social sector domains such as education, which is an investment to provide employment avenues. The large focus on education is through broadband connectivity, tinkering labs encouraging science and technology education, expansion of capacities of IITs, and a centre of excellence in AI. But nothing has been said or planned for strong public intervention or support for primary, secondary, and higher education that is accessible and affordable. The budget overall fails to ensure gender-responsive investments in crucial areas like maternity benefits, childcare, education, and employment/workplaces. Without stronger commitments to gender-responsive policies, the promise of inclusive growth that our Finance Minister has spelt out remains hollow.
What about the farmer?
Budget 2025 declared agriculture its primary focus as it introduced the Pradhan Mantri Dhan Dhanya Krishi Yojana, which will integrate existing programmes and focus on 100 districts characterised by low productivity, moderate crop intensity, and below-average agricultural indicators. No major reforms or bold initiatives were announced to support farmers. The demands of the long-standing farmers’ protest have also been ignored and no delivery was made on fixing a just Minimum Support Price (MSP).
The budget offered several schemes in pulses and urea production, which are no doubt a welcome move; however, it failed to address concerns regarding loan waivers for farmers, which have become all the more necessary due to poor and delayed monsoons last year.
All in all, the budget falls short of adequately addressing the pressing needs of the agricultural sector and fails to encompass the broader challenges the farming community faces. Where the agricultural sector has been grappling with issues like declining soil fertility, inadequate access to modern technology, and adverse effects of climate change, the budget does not focus on any comprehensive strategies to tackle these systemic problems, leaving farmers vulnerable and unsupported.
The youth and the poor: But where is social welfare?
The social sector continues to suffer from chronic underfunding, with allocations for crucial welfare schemes stagnating or witnessing only marginal increases. Despite rising inflation and deepening inequalities, there is little expansion of direct social security measures like cash transfers, improved food security provisions, or enhanced rural employment schemes.
MGNREGA, the backbone of rural employment, has seen reduced funding in recent years, and this budget does little to reverse the trend. No mention of Aanganwadis was made except to marginally increase the allocation for nutrition. Further, while there was mention of housing for the middle class, no housing initiatives for the poor were announced or planned, which could be beneficial to the economically disadvantaged or low income groups. The absence of targeted interventions for economically disadvantaged groups reflects a missed opportunity to ensure inclusive and equitable growth.
As part of its push for digital finance, the budget spoke about the expansion of UPI-linked credit cards, yet it ignores the critical issue of digital literacy, which continues to be a major obstacle to financial inclusion. Although encouraging digital transactions and credit accessibility is a step toward a cashless economy, many people – especially in rural and semi-urban areas – still lack the technical skills to utilise these financial tools safely and effectively. It also comes with a risk that financial exclusion and vulnerability to fraud will rise in the absence of focused efforts to improve digital literacy, especially among economically disadvantaged groups. Rather, an initiative for investment in digital education programmes, training workshops, and awareness campaigns can enable citizens to fully participate in the evolving digital economy.
A better alternative
To create meaningful jobs and ensure sustainable economic growth, the government must shift from a credit-centric approach to prioritising direct employment, wage growth, and public investment. Strengthening employment generation through investments in healthcare, education, social services, and rural infrastructure would provide stable jobs, particularly for women and marginalised communities.
Although the budget acknowledged the growing presence of platform workers and proposed a plan for arranging identity cards and the provision of healthcare, it does not address the need for regulatory frameworks to ensure safe working conditions and fair wages, particularly amid growing resistance from gig economy workers.
Ensuring fair wages and expanding social security coverage should be the centre of employment policy for all jobs. Instead of relying on credit for the self-creation of employment, which the budget focuses on, it is ideal to move towards a wage-led revival of growth that ensures driving domestic demand and sustained economic expansion.
Without substantial state intervention in employment and social security, the promise of economic growth remains an illusion for millions of Indian workers, particularly women and the poor. The need of the hour is not more credit but more public investment, direct job creation, and policies that empower workers rather than leaving them to navigate an increasingly volatile and precarious labour market. Until then, the budget will remain an exercise in rhetoric, failing those who need economic security the most.
Boddu Srujana and Aurolipsa Das are Assistant Professors in the Department of Economics at SRM University, Andhra Pradesh.
Views expressed are the authors’ own.