Budget 2025 will hog the limelight today, February 1, 2025. Especially after the Economic Survey for 2024-25 highlighted the need for returning to the growth path via deregulation, many are asking what could be route to this end. The challenges are enormous — restoring the steepness of the curve, creation of jobs and investing in infrastructure are three of the important things that analysts are looking forward to.
One of the most prominent faces in the investment community of India, Nilesh Shah, who is the managing director of Kotak Mahindra AMC, has told the media succinctly, “The markets are expecting Budget to provide Triveni Sangam of fiscal prudence, growth orientation through higher capex allocation and boost for consumption and raising of resources through non-tax revenues like divestment, exit tax and gold monetization scheme.”
Income Tax relief
Will the FM raise income tax slabs and/or tweak income tax rates? That’s the question uppermost in the minds of the entire salaried class. Most believe that it is more probable this year than any in the past few years and there is a solid ground for this expectation. Income tax relief perhaps dominates the wishlist of every middle-class citizen in the run-up to every Union budget and Budget 2025 is no exception. However, the context is a bit different this time. Consumption, which is the primary growth driver of the Indian economy, is slackening, especially in the high-consumption urban sector. It is impacting businesses, decelerating the growth curve, slowing down corporate investment in new capacities and, thereby, affecting fresh hiring. Many analysts, including corporate captions, have lent their voice to the chorus that the FM must provide more disposable income in the hands of the common people to stoke consumption.
Spending on infrastructure
One of the highlights of the Narendra Modi government has been the expenditure on infrastructure. The allocation on infrastructure in the Budget presented on July 23, 2024 was Rs 11,11,111 crore, or 3.4% of GDP. Spending on infrastructure not only paves the way for long-term economic benefits, but also creates big employment opportunities for the huge unskilled and semi-skilled sectors.
Significance of revenue deficit
Where will revenue deficit reach this year, is a question that most analysts will watch out for. If the FM can move to a minimal revenue deficit, it will add feathers to her cap for prudent fiscal management. While many have questioned the fixation of fiscal prudence even when growth is slackening and job creation taking a hit, revenue deficit actually reflects a mismatch between the government’s income and expenditure, and moving towards a minimal RD can be a FM’s dream. In the last budget, RD was projected at 1.8% of GDP, sharply down from 2.6% deficit in 2023-24.
Budget 2025 that FM Nirmala Sitharaman will start presenting from 11 am today will be followed by millions of eager citizens who will be looking forward to a lot of expectations. From relief in Income Tax to creating of employment opportunities, from fiscal prudence to a return of the bulls in the stock markets, the expectations are virtually endless. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
