Outlook Business Desk
Finance Minister Nirmala Sitharaman will present India’s Union Budget on February 1, 2025, expected to be a key economic trigger. Prime Minister Narendra Modi met with economists and experts, while Sitharaman has completed consultations with key stakeholders.
Budget 2025 will be Prime Minister Modi’s third term’s first comprehensive budget, shaping India’s economic direction for the coming years. It is expected to have a significant impact on the economy in the first half of 2025.
India's GDP growth dropped to 5.4 Per cent in Q2 2024, below expectations of over 7 per cent. The RBI revised its growth forecast for 2024-25 from 7.2per cent to 6.6 per cent. Falling wages, weak profits, inflation, and high borrowing costs have slowed economic activity.
Finance Minister Sitharaman downplays the GDP slowdown, stating the Q2 dip isn't systemic. She anticipates that third-quarter public expenditure will offset the moderation.
Budget 2025 is expected to address the Q2 GDP slowdown, focusing on boosting growth and consumption. The government may also cut income tax for individuals earning up to Rs 15 lakh annually, benefiting millions, particularly in urban areas
The government aims for a 4.5 per cent fiscal deficit of GDP in FY26, prioritizing quality spending and social security. Economists advocate for income tax cuts, tariff rationalization, and export support. Experts also call for a 30 per cent rise in infrastructure spending, requesting Rs 18 lakh crore for capital expenditure.
In FY25, capital expenditure growth slowed to 10 per cent, linked to a GDP growth slowdown. Research shows every rupee spent on infrastructure generates three rupees in GDP, highlighting the need for increased investment to boost growth.