On February 1, 2025, Finance Minister Nirmala Sitharaman presented the Union Budget 2025 in Parliament, marking her eighth consecutive budget presentation amid protests from the opposition. During her speech, which commenced at 11 AM, Sitharaman focused on key economic areas amid rising inflation and economic uncertainties. This budget aims to shore up India’s economic growth, which is projected to be between 6.3% and 6.8% for the upcoming fiscal year 2025-26.
The government's economic roadmap includes significant fiscal policies, taxation reforms, and efforts to boost consumption, all aligned with maintaining fiscal discipline. Approaching her budget presentation, Sitharaman had already received Cabinet approval for the proposals, which were revealed earlier at the Rashtrapati Bhavan where she met President Droupadi Murmu.
Aiming to address pressing issues such as unemployment and inflation, Sitharaman stated her government’s vision was to accelerate growth, secure inclusive development, invigorate private sector investment, uplift household sentiment, and bolster the spending power of the rising middle class. This multifaceted approach seeks to rebound consumer confidence and strengthen economic foundations.
Among the notable proposals, Sitharaman mentioned four engines of development prioritized within the budget: agriculture, micro, small and medium enterprises (MSMEs), investments, and exports. The finance minister also emphasized transformative reforms across six domains, including taxation, urban development, and financial sector improvements, aiming for comprehensive economic revitalization.
The day before the budget, the Economic Survey for 2024-25 was tabled, projecting growth rates and forecasting the nation’s direction toward becoming Viksit Bharat (developed India) by 2047, marking the centenary of India's independence. During her address, the minister stated, "This budget continues government efforts to accelerate growth, secure inclusive development, and uplift household sentiments."
Sitharaman highlighted plans to promote self-sufficiency within the agricultural sector, outlining specific measures for pulses production, including support for the cultivation and marketing of key crops such as toor, urad, and masur. An allocation for establishing a Makhana board to boost fox nut production was also announced.
While the Economic Survey conveyed optimism about post-pandemic recovery, it also recognized the challenges of producing quality goods required for infrastructure and investment growth. The survey noted, "India faces limitations in producing these goods at the scale and quality required to serve the needs of our aspiring economy."
Corporate reactions to the budget have been particularly anticipatory, considering the emphasis on various sectors including banking, finance, and artificial intelligence. Leaders from different industries were visibly attentive during Sitharaman’s speech, signaling the interconnectedness between the budget and corporate health.
With respect to fiscal policy, experts are safeguarding expectations for some tax rationalization and increased allocations to welfare schemes coupled with continued investment stimulation efforts. Preliminary reports suggest the budget may also include expanded production-linked incentive schemes aimed at industries vulnerable to inflationary pressures.
The fiscal prudence theme was underscored as Sitharaman reiterated her commitment to adhering to the fiscal deficit roadmap, even as the budget seeks to address immediate consumer and industry needs. She asserted, "Together we will begin our ascent to unlocking India's potential for greater prosperity and global positioning under the leadership of PM Modi." This statement encapsulated the essence of her ambitious vision for India’s economic future.
Notable among the expected reforms are potential income tax adjustments. Analysts anticipate discussions on revising income tax slabs, including possible reductions or the introduction of zero income tax for those earning less than ₹10 lakh per annum. These measures aim to provide relief for the middle-class sector grappling with rising costs and stagnant income levels.
While agricultural reforms form a significant part of the budget narrative, the government is expected to prioritize infrastructure improvements and digital initiatives as part of broader economic growth strategies. Innovation support is also on the agenda, with discussions surrounding the prioritization of research and development across sectors.
Overall, the budget addresses pressing issues within India's economic apparatus, reflecting the government's balancing act between encouraging growth and maintaining fiscal discipline. While the presentation has garnered some criticism from opposition parties, the government remains focused on its larger vision for economic revitalization and inclusion.
With the budget now detailed, the discussions will continue across various sectors and among the populace, gauging reactions and expectations as stakeholders begin to digest the far-reaching proposals set forth by the Finance Minister.