Budget 2025 Expectations: What Are The Priorities For Capex Push, Tax Relief & Fiscal Deficit?

We expect the Govt. should put more focus on reviving the economy, especially after the slowdown in GDP growth in the second quarter of the current financial year. The focus should be on increasing Govt's capital expenditure, infrastructure development, spurring private investments, fiscal stability, tax reform, & refining taxes to inject money into the economy and increase disposable income thereby increasing consumption.

Economic Growth and Investment:

Increased Capex and Infrastructure push: The government is expected to continue focusing on infrastructure development to boost the economy, with potential increases in spending on infrastructure including Railways, highway projects, defense, power, renewable energy, data centres, & other civic projects like housing sector & water management to infuse the money in the economy & drive the growth in FY26 and beyond.

The manufacturing sector would be the key catalyst to drive the growth:

Growth in the manufacturing sector is the catalyst for the economy. We expect the budget should support the "Make in India" initiative, such as extending the 15% concessional tax rate for new manufacturing units beyond March 2024. There is a growing demand for incentives for domestic manufacturing such as subsidies on raw materials and machinery. The PLI scheme is anticipated to be extended to the furniture industry.

Green & Renewable Energy:

We are hoping for increased financial support for the renewable energy sector. In the 2024-25 budget, the renewable energy allocation witnessed a sharp increase to Rs. 19,100 crores. This trend is expected to continue with more allocations to emerging sectors such as offshore wind, green hydrogen, solar panels and electric vehicles.

Textile Industry:

The recent political crisis in Bangladesh has significantly disrupted its textile industry, creating a strategic opportunity for India's textile sector to enhance its global market share. To capitalize on this situation, it is necessary for the Indian government to implement supportive measures, including tax exemptions on production and substantial infrastructure development within the textile industry.

Income Tax Relief for the middle class:

We expect that the Govt should raise the basic exemption limit under the new tax regime from ₹3 lakh to ₹5 lakh. This adjustment aims to reduce the tax burden on lower-income groups and enhance disposable income, thereby boosting consumption. Taxpayers are also hoping for increased deductions under Section 80D for health insurance, Section 24(b) for home loan interest, and Section 80C for investments.

Reduce Fiscal Deficit:

Govt should take necessary steps to reduce the fiscal deficit to 4.5% of GDP & reduce the debt-to-GDP ratio that is currently at 54.4%, which is above the target of 40%.