I on my part disagree with the policy of decentralizing the space authority of India. But on other hand Government is giving impetus on ISRO working for core technology development rather then working on launch vehicles and satellite launching. For example if we look into the cost of one PSLV launch, it comes to around 130-200 crore per launch. Now even if 4k Crore or 5k Crore is allocated as budget to ISRO and we launch 10 missions of PSLV, half of the budget goes into non-productive activity.
So, the budget cut should be seen into the prospect where Govt is pushing pvt companies to take the job of launching and making commercial satellites so that ISRO could focus more on core technology development. In 2020-21 itself, around 100+ ToT has been provided by ISRO to pvt organizations.
But whether I or you agree to this step or not is another matter.