Budget 2025 Expectations: Budget Session indicates middle class, poor may get more attention in budget - PM Modi

United Nations declared 2025 the International Year of Cooperatives and unveiled a theme that “cooperatives build a better world.” So, this aims to boost India’s cooperative sector too by deepening cooperatives’ footprints in activities like procurement to production and distribution to credit services to name a few.

The Ministry of Cooperation, since 2021, has tried to revamp cooperatives with several initiatives, namely model bye-laws for making Primary Agricultural Credit Societies (PACS) multi-purpose and multiple-service entities, promoting multi-purpose PACS, fisheries, dairy cooperatives in uncovered territories, the world’s largest integrated grain storage plan, among others.

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The latest forecast falls short of both the previous Economic Survey’s 6.5-7 per cent projection and the RBI’s 6.6 per cent estimate for 2024-25.

According to Chief Economic Advisor V. Anantha Nageswaran, India has to “raise its game” of domestic growth as the global context and contours for growth have changed. “The era of globalisation, faster and larger movement of trade and goods and services is behind us,” he said. He identified three levers of growth for India to realise its aspiration of ‘Viksit Bharat’ by 2047 -- the most important being deregulation for growth, the private sector’s role in nation-building and energy transition aligned with India’s priorities.

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Indian gold demand remained subdued this week as prices surged to record levels and potential buyers were awaiting the federal budget, while trading activity in most other Asian hubs was muted due to the Lunar New Year holiday. 

Indian dealers this week offered a discount <XAU-IN-PREM> of up to $35 an ounce over official domestic prices, compared with last week’s $38 discount. 

“Retail demand is negligible because prices surged too quickly. Jewellers are on the sidelines, as they do not want to buy before the budget,” said Chanda Venkatesh, managing director of Hyderabad-based bullion merchant CapsGold.- Reuters 

The global economy grew by 3.3 per cent in 2023. The IMF projects global growth to average around 3.2 per cent over the next five years, which is modest by historical standards. While the overall global outlook remains steady, growth varies across different regions : Economic Survey

The government’s third term is seeing work being done at thrice the speed of previous administrations with a determination to end “policy paralysis”, President Droupadi Murmu said on Friday, citing decisions on issues such as Waqf boards and One Nation, One Election. (ANI)

The Union Budget for Fiscal Year 2025-26 is expected to give boost to middle class and poor, Prime Minister Narendra Modi indicated on Friday. He also said that FY26 Budget will give fresh impetus to the aim of achieving ‘Developed Nation’ status by 2047

Invoking the goddess Laxmi, the goddess of wealth, before formal beginning of the Budget Session of the Parliament, Modi said, “I pray to Goddess Lakshmi to shower the poor, middle class with blessings.” Further he said, “I can say with confidence this Budget session will infuse new confidence, energy in attaining our goal of ‘Viksit Bharat’.”

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Please click here to get all the updates related to the Economic Survey report.

Ahead of Parliament’s Budget session, Prime Minister Narendra Modi said that it is the first time since 2014 when no attempt from abroad was made to stoke trouble in India before the start of a session. 

“This is probably the first Parliament session since 2014 when attempts to stoke fire from abroad have not been made. I have been seeing it since 2014 that people would be ready to create mischief ahead of every session. And there is no dearth of people here to fuel such troubles,” he said, in a swipe at opposition parties. (ANI)

Utkal Chamber of Commerce and Industry (UCCI) President, Dr Prabodh Mohanty, expressed his hope that the upcoming Union Budget 2025-26 will be progressive and target micro, Small and medium enterprises (MSMEs) sector, emphasising the role of the sector to make India become a $ 5 trillion economy.

Congress MP Pramod Tiwari expressed concerns over declining production, recession, and inflation ahead of Union Budget, urging the government to take meaningful steps for economic stability.

Innovation, inclusion, investment basis of our roadmap for economic activities: PM Modi ahead of Budget session.

The Government is expected to introduce key bills, including the Finance Bill, the Foreigners & Immigration Bill, the Banking Laws (Amendment) Bill, the Protection of interest in Aircraft Objects Bill, 2025 among others during the Budget Session of Parliament starting January 31.

The Waqf Bill has also been listed for consideration and passage.

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The Government is expected to introduce key bills, including the Finance Bill, the Foreigners & Immigration Bill, the Banking Laws (Amendment) Bill, the Protection of interest in Aircraft Objects Bill, 2025 among others during the Budget Session of Parliament starting January 31.

The budget session of the Parliament will commence today with President Droupadi Murmu addressing the Houses at around 11 am.

The second Budget of BJP-led NDA 3.0 government will be presented to Parliament on February 1. Since 2003-04, the fiscal policy management of India has been rule- based with two amendments (2012 and 2018) in the Fiscal Responsibility and Budget Management Act, 2003.

The FRBM Act currently has prioritised the deficit rule (fiscal deficit – 3 per cent of GDP) and debt rule (40 per cent of GDP). In India, we have not so far introduced any expenditure rule.

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In 2024, we breached the 1.5-degree Celsius warming limit for the very first time. About 8 per cent of the world’s farmland is expected to become unsuitable for agriculture due to climate change. Agrarian economies are likely to be hit the hardest. A dip in crop production and decreased nutritional quality of rice and wheat are expected. 

Additionally, Indian agriculture supports the livelihoods of 42 per cent of the population and contributes 18.2 per cent of the GDP, as of 2023-24. However, with around 50 per cent of cultivated land relying on rainfall, the sector is acutely vulnerable to climate variability. 

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Ankur Aggarwal, Managing Director, Crystal Crop Protection Limited, and Chairman Crop Life India 

As we approach the Union Budget 2025, we are optimistic about its potential to catalyze growth and transformation in India’s agriculture sector. Contributing over 15% to the GDP and employing more than 45% of the population, agriculture has grown at an average annual rate of 4.18% over the past five years. We anticipate focused allocations toward driving technology adoption, enhancing productivity, and strengthening storage and supply chain infrastructure. These measures would not only empower farmers, the true ‘annadatas,’ but also benefit agricultural machinery owners and OEMs.

At Crystal Crop, we continue to push the boundaries in crop protection, seeds, and Agri-equipment through innovative R&D across various segments like pesticides, insecticides, herbicides, natural crop solutions, seeds, and agri-equipment. We look forward to initiatives that further improve productivity per hectare while creating employment opportunities for India’s talented youth. 

Moreover, we fully align with the government’s vision for Aatmanirbhar Bharat in agriculture, embracing technology-driven solutions and championing policies that encourage gender diversity and inclusivity in the sector.

Arun Poojari, CEO & Co-Founder of Cashinvoice: 

Despite government initiatives and customized financing solutions, MSMEs in India continue to face persistent challenges. From delayed payments, limited access to credit, financial illiteracy, and navigating complex regulatory frameworks, these barriers hinder their growth and limit the participation of underserved populations in the expanding economy. To address these issues, we need to look at a multipronged approach. Critical steps include enhancing credit guarantee schemes and fostering innovative financing models, such as revenue-based financing and supply chain finance.Introducing a Unified Lending Interface (ULI)—a transformative platform modeled after UPI—can potentially revolutionize the lending land

Rajat Deshpande, CEO & Co-Founder of FinBox:

A comprehensive economic strategy pertaining to strengthening Digital Public Infrastructure (DPI) will be key to this budget to financial inclusion and accelerate economic growth. We anticipate resource allocation dedicated towards expanding its applications beyond current applications to vital sectors like agriculture, healthcare and education. Additionally, to further enhance financial inclusion, targeted fiscal measures, such as subsidies or tax incentives, to stimulate innovation within the fintech and digital payment ecosystems is significant. This will enable all access to credit and other essential financial services, reaching even the country’s most remote corners.

Amar Deo Singh- Senior Vice President, Research, Angel One.

“Markets are eagerly awaiting the outcomes of the Budget 2025, the 8th in line by the Finance Minister. Focus is likely to be boosting consumption, thrust in infrastructure spending & job creation. Also, the middle class & the income tax payees are hopeful of some form of tax rebate which could ease their financial situation. Agriculture is also likely to be a key focus area as this sector accounts less than 20% of GDP, but still accounts for almost 55%-60% livelihood. Given the current domestic Economic slowdown, record FII outflow, Rupee hitting record lows along with global macros & the Trump factor, makes it all the more an interesting budget to watch out for.”

The FY26 Budget may project a 20 per cent increase in capex spending to drive economic activity, leave more disposable income in the hands of people and target a fiscal deficit of 4.4 per cent of GDP for the fiscal ending March 2026, a EY report said on Thursday.

EY India Chief Policy Advisor DK Srivastava said amid continuing global uncertainties, India may have to rely largely on domestic demand drivers to support the growth momentum.

“The FY26 budget should therefore restore the momentum of growth in GoI’s capital expenditure. This may be supplemented by some rate rationalisation and income tax deductions aimed at increasing personal disposable incomes, particularly in the hands of lower income and lower middle-income groups,” he said.

The upcoming budget must balance fiscal prudence with growth-oriented measures.

Increasing capital expenditure and putting more disposable income in the hands of consumers, particularly urban consumers, will be pivotal to uplifting growth in domestic demand,” Srivastava said.

The EY Economy Watch January 2025 report anticipates that the government may continue on its fiscal deficit glide path, reducing the fiscal deficit for FY26 to 4.4 per cent of GDP. The government had budgeted a 4.9 per cent deficit for the current fiscal and EY expects this number to come in at 4.8 per cent in revised estimates in the 2025-26 Budget to be presented on February 1.

This can be enabled by accelerating domestic demand and private consumption, as well as by increasing the government’s capital spending by at least 20 per cent. This shall pave the way for sustained economic growth while ensuring fiscal discipline, EY said.

For the current fiscal, the government had budgeted a capex of Rs 11.11 lakh crore. However, Lok Sabha elections in 2024 had slowed capex momentum in April-July, leading to a shortfall in targeted capex spend.

Srivastava, who is a member of the advisory council to the 16th Finance Commission, also said that the key to India’s medium-term growth lies in undertaking strategic reforms and their timely execution, ensuring a resilient path toward achieving long-term economic goals.

“While there may be challenges, such as global economic headwinds and pressure on the INR, these measures can help India sustain its growth trajectory. With the right fiscal policy initiatives and reforms, India can continue progressing toward its long-term targets,” he said.

With an average annual nominal GDP growth of 10.5 per cent, and even assuming a relatively higher annual depreciation rate of the INR/USD at close to 3.5 per cent, India would still achieve the USD 5 trillion economy milestone by FY30, Srivastava added.

On the inflation front, CPI inflation showed moderation in December 2024 at 5.2 per cent. With core CPI inflation also remaining steady at a relatively lower level of 3.7 per cent, there is a possibility of a downward revision in policy rates in FY26 by 50 basis points, which could boost private investment, EY said. - PTI

Ahead of the Union Budget, the Congress on Thursday slammed the government’s handling of the economy, asserting that there is a slowdown with “no jobs, raging inflation, stagnating wages and huge income inequality”.

Senior Congress leader and former finance minister P Chidambaram said the economic growth could even fall by up to 2 per cent as compared with the previous year.

He made the remarks at the Congress’ 24, Akbar Road office after releasing the ‘Real State of the Economy 2025’ report prepared by former party MP Rajeev Gowda and his team.

“The economy is in a slowdown... that cannot be denied at all, however, much the government may try to do that the economy is in a slowdown and it may fall up to two per cent of the previous year’s growth,” he said at the press conference.

“There are no jobs. Youth unemployment is close to 40 per cent. There are no jobs despite the PM handing out letters to people from time to time. That is just filling of vacant posts and does not involve creation of new jobs,” he said.

Chidambaram said wages have stagnated for the last four-five years.

The upcoming union budget should increase the capital expenditure (Capex) by at least 20 per cent to revive domestic demand, private consumption and ensure sustainable GDP growth says the EY Economy Watch January 2025 report.It says the government is expected to continue on its fiscal deficit reduction path, bringing it down to 4.4 per cent of GDP in FY26. A strategic focus on investment and spending reforms will help balance fiscal prudence with economic expansion.DK Srivastava, Chief Policy Advisor at EY India, said, “As we navigate a challenging economic landscape, the upcoming budget must balance fiscal prudence with growth-oriented measures. Increasing capital expenditure and putting more disposable income in the hands of consumers, particularly urban consumers, will be pivotal to uplifting growth in domestic demand.”Despite global economic uncertainties and currency depreciation pressures, Srivastava noted, “With the right fiscal policy initiatives and reforms, India can continue progressing toward its long-term targets. With an average annual nominal GDP growth of 10.5 per cent, and even assuming a relatively higher annual depreciation rate of the INR/USD at close to 3.5 per cent, India would still achieve the USD 5 trillion economy milestone by FY30.”The EY report outlines four key areas that should be prioritized in Budget 2025-26 to stimulate economic growth. First, infrastructure investment should be increased by at least 20 per cent to drive economic activity and long-term development.Second, reforms in personal income tax should be introduced to boost private consumption, particularly for lower middle-income groups, increasing their disposable income.Third, rationalizing import tariffs is essential to strengthen domestic manufacturing and reduce import dependency. Finally, maintaining a stable inflationary environment will create room for interest rate cuts, encouraging private investment.On the fiscal front, EY India estimates the fiscal deficit for FY25 at 4.8 per cent of GDP, slightly lower than budget expectations due to reduced capital expenditure. - ANI

Amit Chadha, CEO & Managing Director, L&T Technology Services and NASSCOM Executive Council member

“India’s growth trajectory is at an exciting juncture, and we anticipate that the upcoming budget will play a crucial role in fostering technological advancements. The Government of India’s efforts to drive economic growth and promote innovation has been noteworthy. The Production Linked Incentive (PLI) Scheme has been a significant step in boosting manufacturing capabilities and encouraging investment.

At LTTS, we strongly believe that the government’s sustained emphasis on incentivising investments in R&D and creating a conducive ecosystem for technology-led advancements can unlock immense potential for engineering services firms. Such initiatives will not only strengthen India’s standing as a preferred destination for global ER&D but also catalyse economic growth by delivering value across sectors like manufacturing, energy, and mobility. We expect the budget to further accelerate India’s growth momentum by introducing policies that promote investments in research and development, digital transformation and advanced skill development. 

We are optimistic that the budget will introduce policies supporting innovation, sustainability, and growth, aligning with initiatives like the National Green Hydrogen Mission. This will likely foster a business-friendly environment, boosting investments in research and development, digital transformation, and skill development, ultimately driving India’s growth momentum forward.” 

Venkatraman Narayanan, Managing Director & CFO, Happiest Minds:

“As we approach the Union Budget 2025, we hope for policy measures that accelerate India’s journey towards becoming a global digital innovation hub. All action taken to strengthen our domestic economy, more money into Capex, reduction of taxes on the individual taxpayer thus putting money into his hands and eventually driving consumption, simplification of tax procedures, both direct and indirect, and reduction in the compliance burden would really put us back on the path of continued growth. 

Additionally, incentives and steps to strengthen our digital infrastructure, reskilling programs will not only prepare the workforce for the future but also ensure equitable growth. A budget that fosters an environment of mindful growth and global competitiveness will significantly contribute to India’s leadership in the digital economy.”

Following the presentation of the Economic Survey on January 31 and the Union Budget on February 1, the Budget Session 2025 is poised to address a range of significant legislative matters.This year’s session will not only include the introduction and passage of key bills but also crucial financial discussions that will shape India’s fiscal landscape.A series of important bills are likely to be taken up during the session. These include the Banking Laws (Amendment) Bill, 2024, aimed at strengthening banking regulations and oversight, and the Railways (Amendment) Bill, 2024, which focuses on enhancing the operational efficiency of the Indian Railways.Another notable proposal is the Disaster Management (Amendment) Bill, 2024, which seeks to improve disaster response mechanisms across the country.Additionally, the Oilfields (Regulation and Development) Amendment Bill, 2024 will propose updates to the laws surrounding oil exploration and extraction, while the Boilers Bill, 2024 is set to introduce new safety and operational standards for boilers in industrial applications.Among other bills likely to be introduced is the Readjustment of Representation of Scheduled Tribes in Assembly Constituencies of the State of Goa Bill, 2024, which will address the reallocation of assembly constituencies to better represent scheduled tribes in the state.The Waqf (Amendment) Bill, 2024 and the Mussalman Wakf (Repeal) Bill, 2024 are also expected to bring reforms to the management of religious endowments.Maritime laws will see several updates, with the Bills of Lading Bill, 2024, Carriage of Goods by Sea Bill, 2024, Coastal Shipping Bill, 2024, and the Merchant Shipping Bill, 2024 all set to modernize shipping regulations.Above all, the Finance Bill, 2025 will be central to implementing the budgetary proposals and tax reforms which will be announced by the finance minister on February 1.Other key bills include the Protection of Interests in Aircraft Objects Bill, 2025, which will safeguard financial interests related to aviation, and the Immigration and Foreigners Bill, 2025, which will bring changes to immigration and foreigner regulations in India.In terms of financial business, the session will see the discussion and voting on Demands for Grants for 2025-26, followed by the introduction, consideration, and passage of the related Appropriation Bill.The Discussion and Voting on Demands for Grants for 2025-26 is an essential aspect of parliamentary procedures, allowing for the approval of government spending for the upcoming fiscal year while promoting accountability and transparency.Demands for Grants are essentially requests made by the government to Parliament, specifying the amount of money it needs to meet its expenses for a given year.These expenses cover a wide range of areas, such as infrastructure, healthcare, defence, education, welfare programs, and more. Each ministry or department submits its own Demands for Grants, detailing the specific amounts needed to fund its activities and programs.Additionally, the Second and Final Batch of Supplementary Demands for Grants for 2024-25 will be reviewed, along with the introduction and passage of the relevant Appropriation Bill.The Second and Final Batch of Supplementary Demands for Grants for 2024-25 refers to additional funds that the government seeks to allocate after the presentation of the annual budget for the fiscal year. These supplementary demands arise when there are changes in the government’s spending needs, which were not anticipated during the initial budget preparation.The session will also address the Demands for Excess Grants for 2021-22, which will require discussion, voting, and the introduction of a related Appropriation Bill.Demands for Excess Grants for 2021-22 refer to additional funds that the government seeks to appropriate for the financial year 2021-22 when the expenditure incurred by various ministries or departments exceeded the amount originally approved by Parliament in the budget for that fiscal year. (ANI)

Finance Minister Nirmala Sitharaman, set to make history with her eighth consecutive Union Budget, has worked tirelessly with key officials, including Finance Secretary Tuhin Kanta Pandey, to prepare a budget of over Rs 50 lakh crore for FY26.

The Budget will have to address several challenges, including decelerating economic growth, falling value of Rupee against the US dollar and moderation in consumption demand.

The economic growth is estimated to slow to a 4-year low of 6.4 per cent in FY25. This is the lowest growth since the outbreak of the COVID pandemic which hit the world in 2019.

Sithraman, who had steered the Indian economy through many difficult phases, including once-in-a-century pandemic, is again confronted with economic deceleration, moderation in consumption, stagnant private investment, and an uncertain geo-political situation.

On account of various factors, the rupee has plunged to an all-time low of over 86.7 per cent earlier this month.

The team, assisting the Finance Minister to frame Budget proposals for 2025-26, include Revenue Secretary Tuhin Kanta Pandey, Economic Affairs Secretary Ajay Seth, Expenditure Secretary Manoj Govil, Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla, Financial Services Secretary M Nagaraju, and Chief Economic Advisor V Anantha Nageswaran. - PTI

Finance Minister Nirmala Sitharaman will present her eighth straight Budget and all eyes will be on the much-expected tax relief for the middle class.

Sitharaman had in her first Budget in 2019 replaced the leather briefcase -- which had been in use for decades for carrying Budget documents -- with a traditional ‘bahi-khata’ wrapped in red cloth. This year’s Budget would be in paperless form, as done in the last three years.

Here are the key numbers to watch out for in the Union Budget for 2025-26: * Fiscal Deficit: The budgeted fiscal deficit, which is the difference between the government expenditure and income, for the current fiscal (April 2024 to March 2025 or FY’25) is estimated at 4.9 per cent of GDP. As per the fiscal consolidation roadmap, the deficit is to be brought down to 4.5 per cent of GDP in FY26. Markets will keenly watch for the deficit number in FY ‘26 Budget.

* Capital Expenditure: The government’s planned capital expenditure for this fiscal year is budgeted at Rs 11.1 lakh crore. However, slower government spending in the first four months due to Lok Sabha elections delayed the capex cycle and the final numbers for current fiscal are expected to be lower than Budgeted. The capex momentum is expected to continue in FY ‘26 Budget as well.

* Debt Roadmap: The finance minister, in her 2024-25 budget speech, had stated that from 2026-27 onwards the endeavour of fiscal policy would be to maintain the fiscal deficit in a way that the central government debt is on a declining path as a percentage of GDP. Markets would closely look for the debt consolidation roadmap from FY ‘27 onwards to see when the finance minister sees general government debt-to-GDP fall to the 60 per cent target. The general government debt-to-GDP ratio was 85 per cent in 2024, which included central government debt of 57 per cent.

* Borrowing: The government’s gross borrowing Budget was Rs 14.01 lakh crore in FY’25. The government borrows from the market to fund its fiscal deficit. The borrowing number will be watched by the market, especially on the back of lower dividend from the RBI in FY’26 compared to Rs 2.11 lakh crore in FY’25.

* Tax Revenue: The 2024-25 Budget had pegged gross tax revenue at Rs 38.40 lakh crore, an 11.72 per cent growth over FY’24. This includes Rs 22.07 lakh crore estimated to come from direct taxes (personal income tax + corporate tax), and Rs 16.33 lakh crore from indirect taxes (customs + excise duty + GST).

* GST: Goods and Services Tax (GST) collection in 2024-25 is estimated to rise 11 per cent to Rs 10.62 lakh crore. FY ‘26 GST revenue projections will be watched as the revenue growth has slowed over the last three month in the current fiscal.

* Nominal GDP: India’s nominal GDP growth (real GDP plus inflation) in FY’25 is estimated to be 10.5 per cent, while the Real GDP growth estimated by NSO is 6.4 per cent. FY’26 nominal GDP growth projections in the Budget will give an idea about the inflation trajectory in the next fiscal.

* Dividend: The Government estimated Rs 2.33 lakh crore from RBI and financial institutions and Rs 56,260 crore from CPSEs as dividend in FY ‘25. These two key non-tax revenue numbers will be looked for in FY’26 Budget projections.

* Disinvestment & Asset Monetisation: ‘Miscellaneous Capital Receipts’ -- which include proceeds from disinvestment and asset monetisation,-- was pegged at Rs 50,000 crore in FY ‘25 Budget. The FY’26 Budget will give a number for next year and a broader asset monetisation roadmap.

* Spotlight would also be on spending on key schemes like NREGA as well as key sectors like health and education. --- PTI

The next 10 days will be pivotal for India’s economic trajectory as the upcoming Union Budget announcement on February 1 and the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting on February 7 will lay down the policy road map to boost the slowing economy, according to the Union Bank of India (UBI) latest report.According to the report, both the government and the RBI are expected to announce crucial steps aimed at stimulating growth in the face of a slowing economy.The economy is facing a slowdown after growing at the rate of over 8 per cent in the fiscal year 2024, recording a slowed growth of 5.4 per cent in the July-September quarter of the current fiscal.The report adds that as the country grapples with moderating GDP growth, the government is expected to continue its focus on fiscal consolidation.The government could consolidate the fiscal deficit target to 4.5 per cent of GDP in FY26 from 4.8 per cent in FY25. -- ANI

As more research is done on biological products, including cutting-edge cell and gene therapies, the clinical research industry hopes that Budget 2025 will extend more financial incentives to it.

“A strong investment from a budget perspective is absolutely needed to focus on developing more such new molecules and CAR-T therapies here in India,” Sanjay Vyas, President and Managing Director, Parexel India, told businessline, adding that the sops should be extended to private clinical research organisations (CROs) as well, and not just academic institutions. (Parexel is among the world’s largest CROs.)

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First, many informal micro enterprises rely on frequent, often daily or weekly, access to credit but don’t have the time to visit banks for transactions. To address this, mobile banking or street-corner banks could be introduced, bringing banking services directly to market centres, making it easier for MSMEs to manage their finances.

Second, while MSMEs can access collateral-free loans, the process of getting approval is often unclear and complicated. To make the process more transparent and accessible, banks should be advised by the RBI to regularly report the number and value of collateral-free loans they’ve approved. This would go a long way in supporting the growth of MSMEs. The Budget could convey an overall intent in this direction.

Third, many MSMEs struggle with the complexities of GST. Reducing the GST slabs or a single GST registration that covers all States would reduce compliance challenges. Simplifying the process for inter-State transactions within the same business group would also cut down on paperwork and improve efficiency. Additionally, MSMEs are often heavily fined for delays in GST payments or filings, even when the reasons for the delay are valid. Introducing a tiered penalty system that takes into account the severity and justification of delays would help lessen the financial burden on these small businesses. Though the decision lies with the GST Council, the Budget could give comfort to MSMEs in this direction.

Fourth, lowering corporate taxes from 25 per cent to 15 per cent would free up resources for MSMEs to invest in R&D, innovation, meet ESG standards, and fuel overall growth. Alternatively, offering accelerated depreciation in the first five years could ease the financial strain.

Fifth, setting up integrated infrastructure townships specifically for MSMEs could be a booster.

Sixth, skill development is critical for the growth of the MSME sector. One practical idea is to create dedicated MSME ‘universities’ offering specialised training, internships and final placements. Budgetary allocations for such ‘universities’ would help the cause of MSME’s in a big way.

These steps would ensure MSME workers are able to thrive in a rapidly changing market scenario.

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As more research is done on biological products, including cutting-edge cell and gene therapies, the clinical research industry hopes that Budget 2025 will extend more financial incentives to it.

“A strong investment from a budget perspective is absolutely needed to focus on developing more such new molecules and CAR-T therapies here in India,” Sanjay Vyas, President and Managing Director, Parexel India, told businessline, adding that the sops should be extended to private clinical research organisations (CROs) as well, and not just academic institutions. (Parexel is among the world’s largest CROs.)

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In India, the micro, small, and medium enterprise (MSME) segment is not only a powerful engine of economic growth but also an employment generator. It contributes nearly 30 per cent to the country’s GDP, and provides livelihoods to approximately 240 million people. The Prime Minister’s vision of a Viksit Bharat by 2047 will need MSMEs to play a vital role. Hence, there is a need to nurture them more.

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As India anticipates the Union Budget 2025-26, several expectations have emerged that could significantly impact wealth management strategies. There is an expectation that the government may raise the basic exemption limit for personal income tax, with EY India suggesting an increase from ₹3 lakh to ₹5 lakh. This move could enhance disposable income and stimulate economic growth. Investors are also hopeful for a more streamlined capital gains tax structure across various asset classes, which could reduce complexity and improve compliance. Deloitte anticipates that the government may introduce measures to simplify the tax structure, potentially facilitating smoother merger and acquisition deals.

On the investment front, the government is expected to maintain a strong focus on infrastructure development, with previous budgets allocating a capital expenditure outlay of 11.1 trillion rupees for this purpose. Similar or increased allocations are anticipated, continuing to drive growth in sectors like construction, cement, steel, and engineering. Furthermore, with the global shift towards sustainability, there is an expectation for increased emphasis on renewable energy and green technologies. Incentives for green bonds or Environmental, Social, and Governance (ESG) investments may also be introduced, aligning with global sustainability goals.

For wealth management, these changes could necessitate adjustments in investment strategies to maintain tax efficiency, especially with potential modifications in income and capital gains taxes. The anticipated increased government spending in infrastructure and green energy sectors could also make related investment avenues more lucrative. As regulatory changes, particularly concerning mutual funds and other investment vehicles, are likely, staying informed and consulting with financial advisors will be crucial for navigating these shifts effectively. In summary, the upcoming budget is expected to introduce measures that could influence various aspects of wealth management, from tax planning to investment strategies.

“The upcoming budget holds the promise of propelling India’s economy to greater heights in FY2025. With an immense focus on “Make in India” initiatives, an increasing regulatory oversight in the financial sector and a thriving global capability hub as key themes, the budget could further address issues faced by foreign companies doing business in India, attract investments for MSME entities and address inflationary pressures. By focusing on export competitiveness, sustainable infrastructure, and inclusive growth measures, the budget has the potential to strengthen India’s economic resilience and position it as a leader in the global economic landscape”

“To empower Indian farmers and accelerate agricultural growth, we anticipate exempting essential agricultural inputs such as agrochemicals, drones, and modern implements from GST or reducing the rate to a maximum of 5%. The current 18% GST on these items discourages farmers from adopting advanced technologies vital for bridging the yield gap with developed nations. This high tax burden often forces farmers to rely on low-quality alternatives, leading to reduced productivity, lower incomes, and significant losses for the nation in terms of GDP and food security.

Additionally, lowering the import duty on pesticide technicals and formulations continues to 10% making advanced innovative crop solutions more affordable and accessible. Encouraging domestic R&D through reinstating a 200% tax deduction on research expenses and allocating a dedicated budget for agrochemical innovation will foster self-reliance and reduce dependency on imports. We appreciate the various initiatives by the Hon’ble Agriculture Minister, Shri Shivraj Singh Chouhan, giving focus to the agriculture sector under the dynamic leadership of Hon’ble Prime Minister, Shri Narendra Modi.

India’s agricultural research needs urgent attention. Only 0.06% of GDP is allocated to R&D, compared to 4.5-5% in developed nations, limiting our capacity to innovate. Reinstating the 200% tax incentive for R&D would encourage domestic innovation, reduce dependence on foreign technology, and ensure farmers benefit from cutting-edge solutions.

The agrochemical industry, contributing USD 5.5 billion annually to India’s agricultural exports, is pivotal to strengthening agriculture. Strategic measures like tax incentives, a Production Linked Incentive (PLI) scheme and a review of the Insecticides Act to streamline faster new product approvals will empower farmers, enhance productivity, and position India as a global leader in agriculture.”

“As we approach the Union Budget for 2025, we anticipate a comprehensive and broad-based fiscal plan from the Modi government, marking its first full-fledged budget in this term. The government is expected to focus on continued infrastructure investment, particularly in critical areas such as housing, electricity, and employment generation. 

The targeted fiscal deficit is projected to be around 4.5% of GDP, reflecting the government’s commitment to maintaining macroeconomic stability amidst global uncertainties. 

While there may be discussions around potential relief for taxpayers, we do not anticipate any major changes in the overall tax structure in this budget. Instead, the focus will likely remain on enhancing capital expenditure and stimulating consumption to revitalize the economy, ultimately balancing support for growth initiatives with fiscal responsibility and setting a positive direction for India’s economy in the coming fiscal year.”

“The Union Budget should focus on continuity in its policies—frequent changes can disrupt confidence and long-term planning. Therefore, it is imperative to maintain 98% of the existing framework and communicate to the world about the consistency maintained. In fact, the Budget should focus on improving internal governance—diverting resources towards more impactful initiatives and eliminating redundant schemes. Necessary changes should be made wherever required with supporting rationale.

This will also create a business-friendly environment, which is essential for India to attain its goal of Viksit Bharat. Streamlined regulations and a robust single-window clearance system can remove obstacles form industries, helping them utilise their full potential and drive economic expansion. High-tech manufacturing sectors, especially space, semiconductors, and chips, must form the core of this approach. Expanding the Production-Linked Incentive (PLI) scheme beyond its current 14 sectors would further bolster India’s industrial base and enhance resilience against global disruptions.

Agriculture is equally important and remains central to India’s economic fabric. Initiatives such as One District, One Warehouse, can minimise post-harvest losses and improve supply chain efficiency, resulting in an increase in farmer incomes.

By rationalising GST, reforming labour laws and incentivising green technologies, India can address the burgeoning issue of climate change while fostering resilience. These interconnected efforts, backed by public-private collaboration, can transform India into a future-ready, globally competitive economy.”

Agrochemical makers are looking forward to the uniform basic customs duty, rationalisation of GST and introduction of the 200 per cent deduction on R&D expenses in the forthcoming Budget.

CropLife, a body of agrochemical makers has suggested key measures to the government such as maintaining a uniform basic customs duty of 10 per cent for both technical raw materials and formulations and reduction in GST on agrochemicals from the current 18 per cent to 12 per cent. Providing a 200 per cent weighted deduction on R&D expenses for agrochemical companies would enhance focus on innovation and R&D, which will enable farmers to access newer and greener crop protection products, it said.

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The Budget is expected to focus on boosting private capex, tax simplification and reduction in personal income tax, particularly for the lower-income groups, to stimulate demand, EY India said.

EY India, in its Budget expectation note, said with over Rs 31 lakh crore stuck in income tax disputes as of 2023-24, there is an urgent need to clear Commissioner of Income Tax (Appeals) backlog and bolster alternate dispute resolution mechanisms like advance pricing agreements and safe harbours.

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The 2024 Budget marked a significant milestone by allocating the highest-ever amount to the gender budget, accounting for 6.8 per cent of the total Budget or 1 per cent of GDP.

While this is a step forward, it remains insufficient to address the vast resource gaps affecting 50 per cent of the population. There is an urgent economic imperative for the upcoming Budget to scale up the focus on gender-related budgeting.

As the government prepares for the next Budget, there is an urgent economic imperative to prioritise gender-responsive budgeting.

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The Union Budget 2025 is expected to bring transformative reforms to India’s insurance sector, accelerating its growth and enhancing accessibility as part of the country’s ambitious “Insurance for All by 2047” vision.

Over the past several months, the Department of Financial Services in the Finance Ministry has completed an exhaustive exercise of seeking stakeholders’ comments on various likely amendments to the Insurance Act. IRDAI Chairman Debasish Panda has been promoting India’s insurance sector abroad through investment roadshows. All these amendments are likely to be introduced through the Finance Bill, 2025, said sources.

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As India’s growth engine slows, with GDP growth projected to decelerate to a four-year low of 6.4% in FY25 from 8.2% in FY24, the upcoming Union Budget will be a critical policy lever for reigniting growth momentum. NSO’s first advance estimates reveal some concerning trends-manufacturing growth slowing from 9.9% in FY24 to 5.3% in FY25; weakening investment momentum with gross fixed capital formation at a six-quarter low of 5.9% in Q2 FY25; and tepid urban and rural consumption. Meanwhile, global headwinds, including subdued trade and geopolitical uncertainties, continue to strain India’s export potential.

Concomitantly, the Finance Minister faces a complex fiscal challenge. With nominal GDP growth expected to reach only 9.7% in FY25, below the FY25 budget target of 10.5%, managing the fiscal deficit will require a careful balancing act. The FY25 deficit target of 4.9% of GDP may reach 5%, making it crucial to maintain the fiscal glide path without compromising growth-enabling expenditure.

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Companies in agriculture sector are looking forward to policy support in the forthcoming Union Budget to boost investments in agri R&D, seed ecosystem, adoption of digital agriculture, sustainable fertiliser use, empowering FPOs and industry status for micro-irrigation among others.

“Granting infrastructure status to the micro-irrigation industry will help the sector and allied industries to flourish, which is predominantly made up of MSMEs, accounting for 95 per cent of the overall agri sector. It can substantially reduce operational costs, lower equipment prices, and drive expansion. Integrating renewable energy, such as solar installations, with micro-irrigation systems can further enhance energy efficiency, cut costs, and boost profitability for farmers,” said Randhir Chauhan, Managing Director, Netafim India.

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Ahead of Union budget, the $800 billion mutual funds industry has urged the government to introduce a more favourable dispensation of taxation for debt mutual funds in India. 

This is a must if investors have to make right asset allocation and a proper retirement security is to be created for the 1.4 billion people, Navneet Munot, Chairman, Association of Mutual Funds in India (AMFI), told businessline here in an interview. 

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Insurance industry is awaiting a big push in the upcoming Union Budget 2025-26 by way of waiver of GST on premiums of health insurance and annuity plans, a separate tax deduction for term insurance and life insurance premium under the new tax regime.

There has also been expectation of removal of the current upper cap on Foreign Direct Investment (FDI) in insurance which is at 74 per cent to allow 100 per cent investment which has been proposed by the Government earlier. 

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