As India advances towards its ambition of becoming a $7 trillion economy by 2030, the policy challenge is shifting—from driving growth to funding it responsibly. Expanding welfare without stretching public finances has become a delicate balancing act. Indonesia’s recent fiscal strategy offers India a timely lesson: social programmes need not be built on higher debt.
In 2025, Indonesia undertook a sweeping fiscal reallocation under President Prabowo Subianto, creating nearly $30 billion in fiscal space without raising taxes or widening the deficit. The government achieved this by cutting waste, tightening enforcement, and recovering lost revenue—proving that better governance can fund welfare while preserving macroeconomic stability.
The reforms began with spending discipline. Non-essential expenditures were sharply curtailed, procurement processes streamlined, and ceremonial and administrative costs trimmed. Indonesia reportedly cut procurement waste by up to 90 per cent and slashed printing and rental expenses without compromising essential public services.
“Most governments approach welfare by looking for more money,” said Dr Prabhakar Patil, former Chief General Manager at Sebi. “Indonesia reversed the question—where is money leaking, and how can existing budgets work harder?”
Equally important was Indonesia’s focus on enforcement as a fiscal tool. Illegal palm oil plantations and mining operations were brought under taxation, smuggling was curbed, and assets were seized in corruption cases—converting informal activity into formal revenue.
Dr Siva Reddy Kalluru of the Gokhale Institute of Politics and Economics noted that this approach is highly relevant for India. “Widening the tax base through enforcement restores fairness without raising rates or cutting welfare,” he said.
The savings were channelled into food security, healthcare, education, and rural development—while keeping debt stable and deficits within legal limits. For India, the lesson is clear: welfare expansion and fiscal discipline need not be rivals. By spending smarter and enforcing better, governments can deliver inclusive growth without passing today’s costs to future generations.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: ZEE News
