New Delhi, Feb. 1 -- The Union budget presented by finance minister Nirmala Sitharaman on Saturday can be framed against two major shifts in the Indian economy.

First, the splendid economic recovery after the pandemic shock has begun to lose steam. Consumer spending in cities has been especially weak as a result of anaemic growth in labour incomes other than at the very top of the income pyramid. Meanwhile, corporate profits have soared. Companies sitting on piles of cash are not keen to invest in new capacity unless they see robust demand from fatigued consumers.

The income tax cuts that have been announced will leave more money with households, around Rs.1 trillion according to the finance minister. That is around 0.3% of India's gros...