The Indian government is gearing up for its 2025 Union Budget, which is poised to introduce consequential reforms addressing both economic and social issues, aiming to pave the way for sustained growth and stability.
With Finance Minister Nirmala Sitharaman at the forefront, the budget is anticipated to herald reforms particularly focused on taxation and labor laws, reflecting the government’s commitment to not only strengthen the economy but also to safeguard the rights of workers.
A focal point of the upcoming budget discussions revolves around the newly established Labour Codes. According to reports by Deepika Mathur and Priyanka Bhutada from Deloitte India, these codes are set to reform labor regulations significantly, enhancing the ease of doing business and streamlining worker protection. The implementation of these codes is expected to coincide with budgetary decisions, particularly concerning the inclusion of social security coverage for various workforce categories.
The Labour Codes aim to address the needs of gig and platform workers, who have emerged as a significant segment of India’s labor force. The shift away from traditional employer-employee relationships calls for unique solutions, and it is reported the budget may introduce policies to extend social security benefits to these workers, ensuring their protection and rights are upheld.
"These workers, along with those engaged in informal sectors, must be included in the social security frameworks, as their work is characterized by the absence of traditional employer relationships,” the report indicates, emphasizing the importance of modernizing labor laws to fit contemporary business models. This will help businesses operate more efficiently and is expected to boost employment generation throughout FY2025-26.
On the taxation front, the 2025 Union Budget is expected to announce various modifications reflecting the government's focus on the middle class. Current anticipations include maintaining the nil tax slab for income up to ₹12 lakh, aimed at instilling confidence among taxpayers. Reports suggest Sitharaman is expected to introduce changes to tax slabs, potentially easing financial burdens on individuals and families.
Other updates anticipated from the budget include the revision of TDS on rent, which is projected to increase its annual limit from ₹2.40 lakh to ₹6 lakh. The focus on improving taxpayer experience will also lead to the introduction of the new Central Know Your Customer (CKYC) framework, which seeks to streamline identity verification and data security by substituting visible Aadhaar and PAN details with CKYC Reference IDs.
Noteworthy initiatives outlined for this year’s budget also include the establishment of SWAMIH Fund 2.0 aimed at completing 1 lakh housing projects, as well as the complete removal of TCS on family remittances for educational purposes, reflecting the government's aim to remove impediments for students seeking education abroad.
Strategic provisions are expected to encourage foreign direct investments (FDI) as well. The introduction of 100% FDI for the insurance sector is indicative of the government's strategy to attract significant capital inflows, needed to bolster India's economic standing globally.
The government's commitment to the healthcare sector through the removal of duty on 36 life-saving drugs signifies its focus on enhancing access to quality healthcare. The online budget document suggests significant reforms across various sectors including tourism, where it aims to spearhead employment-led growth through skills development initiatives for the youth.
Other proposals, as highlighted by various news updates, include enhancements aimed at invigoratiing the domestic electronics industry, the introduction of the National Geo-Spatial Mission, and reforms to catalyze the mining sector.
Among initiatives targeting agricultural productivity under the PM Dhan Dhanya Krishi Yojana, this budget reflects the government's holistic approach to improving India's agrarian economy, especially considering the carbon footprint challenges projected by climate change.
Finally, the budget also proposes improvements for women entrepreneurs, promising enhanced access to term loans up to ₹2 crore for women from SC and ST communities to stimulate entrepreneurship and economic inclusion.
Overall, the expectations for the 2025 Union Budget encapsulate not only reforms aimed at economic development but also strategic interventions directed toward improving social equity. With these comprehensive initiatives, the budget is poised to address the holistic needs of the Indian economy and its people, and the resultant policy outcomes will be instrumental as India skews toward becoming a developed economy.