Announcements on Income Tax, Capex, Employment Expected in Sitharaman's Budget

Finance Minister Nirmala Sitharaman will present her record eight consecutive budget today in the parliament at 11 am. Anticipation running high as the budget will be presented against the backdrop of a slowdown in the economy and long-standing concern over inflation. India’s real gross domestic product (GDP) is projected to grow at a four-year low of 6.4% in the FY25, primarily driven by weak industrial and investment growth.

India is on its journey to become a developed nation by 2047, a vision that requires a growth rate of around 8% at constant prices, on average, for about a decade or two as mentioned in the Economic Survey 2025.

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What to Expect from Sitharaman's Budget 2025

The Budget 2025 is expected to be growth-oriented while also being fiscally prudent. India’s economy is expected to grow in the range of 6.3% and 6.8% in FY26, according to the latest Economic Survey.

A cut or change in the income tax slabs to ease the burden on the middle class and boost demand is highly expected from this budget. The country's middle class is struggling with rising prices and stagnant wage growth for a couple of quarters now.

A major focus will be on the government's commitment to narrow its fiscal deficit to 4.9% for the current financial year. India's fiscal deficit shot to 9.2% of gross domestic product (GDP) during the pandemic and since then the government has been actively working towards lowering its deficit to 4.5% by 2026.

The upcoming budget is also likely to concentrate its focus on job creation in the labor-intensive manufacturing sector, promoting rural housing programs and additional steps to control price volatility.

Earlier, The Economic Times reported that the country to cut its disinvestment and asset monetisation targets by 40% for the current financial year. Hence, a group of the the investors will be focused on the government's divestment of stakes in state-run entities.

Railways has always been a key focus during budget announcements. This budget is expected to hike the gross budgetary support (GBS) to the Ministry of Railways (Indian Railways) by 15-18 percent to around Rs 2.9 lakh crore-Rs 3 lakh crore, according to Moneycontrol.

Very recently, Reuters also reported that the government is likely to increase its spending for the agriculture sector by about 15 percent to nearly $20bn, its biggest increase in six years.

Furthermore, the infrastructure stocks will also be under focus today followed by the Economic Survey's emphasis on increasing private sector financing in the infrastructure sector.