Budget 2025 Expectations: Finance Minister Nirmala Sitharaman will present a budget of FY 2025-26 on the first date of February. This budget will be introduced between many economic challenges and possibilities. There is a complex situation in front of policy makers, where they have to promote public capital experience, improve consumer demand and proceed to the prescribed goals to control fiscal deficit. However, this will not be easy, because the growth rate of the economy is slow, the growth of tax revenue is also dull, and there is an atmosphere of uncertainty globally. What can be expected from the budget. Let’s understand in detail…
1. Emphasis on employment and skill development
The previous budget emphasized employment generation and skill development, with initiatives like Employment Linked Incentive and Internship Program. According to the Periodic Labor Survey, the quarter results of June 2024 show an increase in labor force participation rate (LFPR) for both men and women, which has increased from 73.5 percent in June 2023 and from 23.2 percent to 74.7 percent and 25.2 percent respectively. In addition, the unemployment rate is steadily declining.
Dr. Rumki Majumdar, an economist of Deloitte, says that we hope that the government will continue to prioritize and increase efforts towards skill development and employment generation while maintaining positive pace. With this, India will be able to take advantage of its population. Both sides will help in promoting economic growth and promoting consumption through high income from both sides.
2. Make the tax system simplify and improvement in dividend taxation
Brokerage firm Motilal Oswal hopes that the government will try to simplify the tax system and try to improve dividend taxation.
Simple GST slabs: Reducing indirect taxes with about 60% stake in tax receipts and simplifying GST slabs will increase people’s disposable income.
Solve the problem of double taxation on dividend income: Make dividend income tax-deductable (tax deductable) for companies or return to earlier arrangements. These steps will provide relief to investors and improve tax compliance.
3. To curb inflation
Inflation has been a big challenge for the economy for a long time, due to which it will have to pay special attention in the upcoming budget. The Economic Survey 2024 recommends that food prices should not be included in the framework related to India’s inflation target, as food inflation is mainly based on supply rather than demanding. It suggested that the government should solve food inflation through measures related to supply-side instead of being dependent on RBI to manage it with demand-party means.
Majumdar says that we expect to focus on long-term solutions aimed at strengthening the agricultural value chain, encouraging production and solving the structural issues of supply. Actually, the distribution cost increases due to these issues. In the short term, we hope that the government will move towards direct profit transfer (DBT) and food coupon to support rural consumption, as rural inflation is high and it affects rural demand.
4. Indian exports promoted
After the US elections, the risk of global trade fluctuations has increased due to possible measures such as an increase in import duty and tax cuts to promote manufacturing in the US. All these will affect the global supply chain, which will affect Indian exports. With India setting ambitious targets of economic development, the country will have to strengthen its position in global markets to reach a 2 trillion export target by 2030, especially by 2030.
To achieve this goal, we hope that the government will implement several measures to increase the competitiveness of Indian products on the global platform. These may include fixing tariffs, fees relaxation and discounts related schemes, which will help reduce the cost of Indian exports. Additionally, the government may focus on simplifying export compliance processes to reduce obstacles and increase the efficiency of exporters.
5. Big investment in infrastructure
In recent years, the government has laid great emphasis on the development of infrastructure, with increasing capital expenditure in FY 2019 to 3.4 percent in FY 2025 in FY 2019. With the efforts towards India to achieve the vision of India by 2047, Deloitte is that the government will recognize it as a major driver of comprehensive economic development while maintaining its strong commitment to invest in infrastructure. .
The government is expected to improve the entire logistics infrastructure to expand road networks, develop multi-model logistic parks and support efficient economic activities. Also, the government will focus on health and education with special emphasis on skills. New digital innovation and transparency steps will also be given priority.
In view of the success in the digital sector in recent years, new digital projects can also be started. It is clear from the budget 2025 that the government is not only paying equal attention to economic development, but also on social development.