With India’s Union Budget 2025 just around the corner, the expectations from various sectors are mounting as stakeholders anticipate significant announcements from the finance ministry. Finance Minister Nirmala Sitharaman is set to present the budget on February 1, 2025, and the discussion has largely veered toward important financial strategies and reforms aimed at boosting growth and economic stability.
Gautam Chhaochharia from UBS has been vocal about his expectations, stressing the need for fiscal consolidation and the importance of government capital spending to revitalize growth. “The Indian markets’ correction reflects growth disappointment over the last few months,” says Chhaochharia, emphasizing the necessity for changes in both fiscal policies and approaches to capital expenditure if the markets are to respond positively post-budget.
There are high hopes for specific adjustments targeting the middle-class taxpayer, particularly as individuals look for relief amid rising costs. Potential adjustments to income tax thresholds could significantly increase disposable income. According to analysts, reforms could point to raising the income limit for full tax rebates to INR 10 lakhs, increasing the exemption limit for individuals at various income levels, and possibly introducing simplifications to the tax administration.
Echoing these sentiments, Manoj Purohit, Partner & Leader at BDO India, remarked on the insurance sector’s anticipation of regularized tax provisions and measures to support innovation. The adoption of IndAS 117 on insurance contracts poses challenges, which could be addressed through the upcoming budget. "A holistic tax regime aligned with new financial reporting standards is required to support continued industry growth," he stated.
Meanwhile, the renewable energy sector is also watching closely. Amit Jain, CEO of ENGIE India, highlighted the need for measures encouraging green growth, such as land acquisition reforms and long-term tax incentives. “With renewable energy standing at the forefront of both domestic energy security and international climate commitments, we expect budget allocations to reflect this priority,” Jain noted.
The logistics sector is pressing for targeted incentives aimed at modernizing warehousing infrastructures and increasing efficiency across supply chains. Ravi Goel from RapidShyp argues for bolstered funding for infrastructure development, especially for multi-modal logistics parks, which align with the PM GatiShakti initiative.
The automotive industry is also vying for policy measures to invigorate growth. With consumer demand slowing, industry leaders are pushing for incentives to accelerate the transition to electric vehicle manufacturing and supportive policies aimed at enhancing local production capabilities.
Turning to the larger economic picture, analysts foresee the budget playing a central role as India aspires to become a $7 trillion economy by 2030. Observers are cautious, predicting the need for more than just budget reforms for sustained growth, pointing to the necessity for broader reform initiatives beyond the budgetary framework.
Substantial discourse also surrounds the proposed simplification of tax structures. “With over 5,44,205 petitions waiting for resolution within the income tax department, there’s vast room for improvement. Budget 2025 could lay foundations toward simplifying these issues,” Lokesh Shah, Partner at IndusLaw stated, emphasizing the continued initiatives to address the backlog of cases.
Venturing down the direct tax route, expectations for the budget include possible extensions of tax incentives for startups as provided under Section 80-IAC, following the expiry of its sunset clause. This would signify the government’s continued support for burgeoning enterprises which play pivotal roles in the economy.
Financial analysts and industry leaders are also pushing for significant reforms to strengthen the digital finance sector. Rohit Beri from ArthAlpha highlighted the need for tax parity between capital gains on listed and unlisted securities, as well as other incentives to attract investments and encourage innovation. “It is time to focus on creating conditions supportive of financial inclusion through technology and improved industry regulations,” Beri said.
Highlighting the agricultural perspective, stakeholders urge for increased budgetary allocations toward integrating technology within the agri-food industry, fostering sustainability and operational efficiency throughout the supply chain.
From a broader economic and fiscal standpoint, discussions revolving around the Finance Bill set the stage for introducing significant tax reforms. Observers point out the alignment with growth targets and the commitment to crafting financial policies to boost structural growth.
With just days until the presentation of the budget, anticipation is rippling through various sectors as they await the finance minister’s address. Stakeholders continue to reaffirm the need for comprehensive reforms, innovative policies, and continued support for key sectors as India navigates its path toward economic resilience and growth.
Through these concerted efforts, India not only aims to address pressing economic challenges but also to reinforce its position on the global stage as it seeks to emerge stronger from the existing fiscal environment.