Central budget lacks clear economic targets for 2030, says economist Rathin Roy at panel discussion in Hyderabad

Hyderabad: The Central Budget 2026 provided no serious estimates of what the economy would look like by 2030; instead, the policy discourse increasingly invoked 2047, a symbolic milestone, said prominent economist Rathin Roy in Hyderabad on Saturday.Roy, who was also the economic adviser to the 13th Finance Commission of India, spoke on ‘The Fiscal Situation: India's Challenge, Peninsula's Quandary' at a discussion organised by non-profit Manthan.
"There are no clear targets (in the budget) for manufacturing share, export growth, poverty reduction or employment generation. For me, the more urgent question is immediate and structural: unless youth unemployment, stagnant wages and low productivity are addressed within this decade, long-term aspirations will remain rhetorical. A nation cannot realistically aspire to greatness in 2047 if it fails to build economic strength by 2030," said Roy.Roy also criticised the 16th Finance Commission's formula for still focusing heavily on "income distance", which gave more funds to poorer states. While this approach was earlier meant to promote fairness, he pointed out that the gap between states did not reduce much, raising concerns. Additionally, he said that adding "contribution to GDP" (how much a state adds to the country's economy) as a factor gave only a small advantage to richer states.Moreover, Roy contended that India shifted from being a "developmental state" to becoming a "compensatory state". This, he added, was because instead of prioritising health, education and productivity-enhancing investments, the govt now increasingly spent on subsidies and transfers designed to offset the failure of inclusive growth. "Food subsidies, housing schemes and employment guarantees help sustain consumption but do not fundamentally raise productivity. Health and education expenditures are now a fraction of compensatory spending. Such measures may be politically effective, but they reflect economic distress rather than prosperity," said Roy.The economist also highlighted growing economic divergence between northern and southern states. "While southern states such as Tamil Nadu, Kerala, Karnataka and Telangana have per capita incomes approaching lower-tier G20 levels, comparable in some respects to countries like Indonesia, states such as Bihar lag behind even neighbours like Bangladesh and Nepal," said Roy, stressing that the situation created a structural tension: political power remained concentrated in populous northern states, while economic dynamism shifted southward.On India becoming the world's fourth-largest economy in aggregate GDP terms—behind the US, China and Germany—Roy said there was nothing wrong with saying that per se, but it did not reflect individual prosperity and high per capita income. "I come from Bombay, which has a large slum, Dharavi. Its GDP could rival that of a small country. But what does that mean? Nothing. India is similar. Multiply a huge population by income and you get a big number. Saying we are fourth in aggregate GDP sounds impressive, but it means nothing," he added.