Finance Minister Nirmala Sitharaman is all set to present the Union Budget 2025-26 on February 1, 2025. This will be a crucial budget as India faces an economic slowdown, inflation concerns, and global trade uncertainties. With Lok Sabha elections 2024 behind us, this budget is expected to focus on growth, fiscal discipline, and tax reforms.
Economic Outlook: Slowing Growth and Fiscal Challenges
- India’s GDP growth rate in 2024-25 is projected at 6.4%, the slowest in four years.
- Factors like weak manufacturing sector performance, lower corporate investments, and global trade disruptions have impacted growth.
- Retail inflation in India (December 2024) eased to 5.2%, but food inflation remains high, affecting household budgets.
- The unemployment rate in India 2025 is estimated at 8.05%, indicating a need for more job-creation measures.
Key Expectations from Budget 2025
1. Income Tax Reforms
One of the biggest expectations is changes in income tax slabs for salaried employees in India 2025. There is speculation that:
- The government may increase the basic exemption limit from ₹2.5 lakh to ₹3 lakh.
- The tax rebate under Section 87A may be extended beyond ₹7 lakh.
- Relief for taxpayers in the ₹10-20 lakh income bracket is expected.
2. Boost to Domestic Manufacturing and MSMEs
With the government’s focus on “Make in India” and “Atmanirbhar Bharat”, we might see:
- Lower import duties on raw materials to support domestic manufacturing industries.
- Special incentives for MSMEs and startups in India to promote growth.
3. Investment in Infrastructure and Agriculture
- The capital expenditure budget for 2025-26 may see a 10% increase, focusing on highways, railways, and urban development.
- Higher allocation for PM Kisan Yojana and rural development to boost farm incomes.
4. Fiscal Deficit Target and Government Borrowing
- The government is likely to target a fiscal deficit of 4.9% of GDP, down from 5.9% in 2023-24.
- There could be a push for disinvestment in public sector companies to raise funds.
Stock Market Reaction to Budget 2025
Investors in the Indian stock market (NSE, BSE) will closely watch:
- Any changes in capital gains tax on stocks and mutual funds in India 2025.
- Budget allocations for sectors like banking, IT, pharma, and infrastructure stocks.
The Union Budget 2025 expectations include tax relief for the middle class, infrastructure growth, MSME support, and fiscal discipline. As India navigates economic challenges, this budget will play a key role in shaping the country’s future growth.
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