Budget 2025 could bring big changes to India’s economy. Finance Minister Nirmala Sitharaman will present the budget on February 1, 2025, marking her record eighth consecutive Union Budget. With inflation rising and a need for fiscal discipline, the budget has high expectations. Here are the key highlights and their potential impact:
🔹 1. Tax Reforms: What to ExpectSeveral tax changes may be introduced:
Simplified Taxation: The old tax regime may be phased out for simplicity.
Zero Tax for Incomes Below ₹10 Lakh: This reform could benefit the middle class and boost disposable income.
Higher Standard Deduction: Salaried employees might see an increase in their standard deduction limit.
Case Insight: Simplified tax structures encourage compliance, as noted in a 2024 court ruling.
🔹 2. Focus on AgricultureThe agriculture sector may get more funding:
Modernization: Investments in technology and irrigation.
Subsidy Boost: Better subsidies for fertilizers and crop insurance.
Export Policies: New measures to enhance agricultural exports and rural incomes.
Impact: These initiatives could help over 50% of India’s population engaged in farming.
🔹 3. Balancing Fiscal Discipline with GrowthWith inflation pressures, the government must balance fiscal discipline and economic growth:
Higher Capex: More spending on infrastructure projects.
Targeted Subsidies: Welfare subsidies with fiscal control.
Borrowing Limits: Strict caps on government borrowing.
Tip: Businesses should prepare for possible tax structure changes.
🔹 4. Industry IncentivesIndustries could see more growth-focused incentives:
PLI Scheme Expansion: Inclusion of semiconductors and green energy sectors.
Startup Benefits: Tax holidays and better funding opportunities.
MSME Support: Additional credit and fewer compliance requirements.
Case Study: The electronics sector’s success under PLI highlights the benefits of targeted policies.