Union Budget 2025 comes at a critical juncture as India grapples with a sharp slowdown in GDP growth. Finance Minister Nirmala Sitharaman is set to present the budget on February 1, with the economy projected to expand by just 6.4% in FY25, the slowest pace in four years. This stark contrast to the 8.2% growth recorded in FY24 has heightened expectations from key sectors seeking relief and stimulus.
Economic Outlook And Challenges
The advance estimates of GDP growth for FY25 have underscored the challenges facing the Indian economy. Global uncertainties, inflationary pressures, and weak domestic demand have contributed to the slowdown. The manufacturing and export sectors, in particular, have been hit hard, reflecting the need for targeted interventions.
While India remains one of the fastest-growing economies globally, the downward revision in growth projections has cast a shadow over its economic prospects. Policymakers face the dual challenge of reviving growth while maintaining fiscal discipline.
What Key Sectors Are Expecting From The Budget?
Agriculture And Rural Development
With agriculture remaining the backbone of the Indian economy, the sector is hoping for enhanced allocations under schemes like PM-KISAN and initiatives to boost rural infrastructure. Farmers are also seeking increased subsidies for fertilizers and seeds, as well as support for adopting sustainable farming practices.
The rural economy, which has shown signs of stress, needs robust measures to improve income levels and employment opportunities. Greater focus on rural development programs could drive demand and support overall economic growth.
Manufacturing And Exports
The manufacturing sector, crucial for India’s “Make in India” ambitions, is seeking incentives to drive investments and improve competitiveness. Industry players have called for lower corporate tax rates for small and medium enterprises (SMEs) and simplification of compliance processes.
Exporters, grappling with global headwinds, are hoping for enhanced export incentives and initiatives to diversify markets. The introduction of production-linked incentive (PLI) schemes for more sectors is also on the wishlist.
Healthcare
The healthcare sector, especially in the wake of the Covid-19 pandemic, expects increased budgetary support. Industry leaders are calling for higher public spending on healthcare infrastructure and schemes to improve accessibility and affordability.
Greater focus on medical research, manufacturing of medical devices, and digitization of healthcare services are among the sector’s key demands.
Education And Skill Development
To address rising unemployment, the education sector is looking for reforms in skill development programs that align with industry needs. Increased funding for digital education and infrastructure in rural areas is critical to bridge the urban-rural divide in learning outcomes.
Higher allocations for research and development in educational institutions could also bolster innovation and long-term growth prospects.
Real Estate And Infrastructure
The real estate sector is optimistic about measures to stimulate housing demand, such as increasing the tax deduction limit on home loans. Developers are seeking single-window clearance for projects and incentives for affordable housing to boost supply.
Infrastructure development, a key driver of economic growth, is expected to receive significant attention in the budget. Enhanced allocations for roads, railways, and renewable energy projects are anticipated to sustain momentum in this critical sector.
Banking And Financial Services
The banking sector, which plays a pivotal role in economic recovery, is expecting measures to address non-performing assets (NPAs) and enhance credit flow to industries. The fintech industry is hoping for policies that promote innovation and financial inclusion, such as easing regulatory hurdles and providing tax incentives for startups.
Balancing Growth And Fiscal Discipline
One of the biggest challenges for the government is striking a balance between reviving growth and maintaining fiscal discipline. With the fiscal deficit already under pressure, the scope for large-scale spending is limited.
However, targeted measures that prioritize critical sectors and stimulate demand could help address the slowdown without derailing fiscal consolidation efforts.
Global Factors And Their Impact
The global economic landscape, marked by geopolitical tensions and recessionary trends in major economies, has also affected India’s growth prospects. Exports have declined due to weak global demand, while volatility in energy prices has added to inflationary pressures.
The Union Budget 2025 will need to address these challenges by fostering resilience in domestic industries and strengthening India’s position in global supply chains.
Hopes From The Union Budget 2025
As the budget approaches, stakeholders from various sectors are pinning their hopes on bold and innovative measures to navigate the economic slowdown. Addressing key concerns, such as job creation, infrastructure development, and investment promotion, will be crucial for restoring confidence in the economy.
The Union Budget 2025 is not just an opportunity to tackle immediate challenges but also a chance to lay the foundation for sustainable and inclusive growth in the coming years.