Budget 2025: What to expect from Union Budget as Indian markets await key reforms?

2025 Budget Expectations: As February 1 approaches, all eyes are on Finance Minister Nirmala Sitharaman, who will unveil the Union Budget 2025. The upcoming budget comes at a critical juncture, where balancing fiscal discipline with growth-oriented policies is paramount. Indian markets are keenly observing for measures that address key economic challenges while fostering a business-friendly environment

As the countdown to Budget 2025 continues, expectations are running high across industries and market participants. With the potential to set the tone for India’s economic trajectory in the coming years, the Union Budget will likely focus on a blend of fiscal prudence and growth-driven policies.

From infrastructure spending to tax reforms and incentives for strategic sectors, stakeholders hope for measures that address both immediate challenges and long-term aspirations. Finance Minister Sitharaman’s announcements on February 1 will be pivotal in shaping market sentiment and fueling confidence in India’s growth story.

What Indian Markets Expect from the Upcoming Budget

Akshat Garg, AVP, Choice Wealth

The government is expected to prioritise policies that stimulate economic growth, particularly as recent GDP numbers have moderated. Garg anticipates initiatives to boost infrastructure spending, job creation, and ease of doing business. These measures will be essential to reinvigorate the economy and sustain long-term momentum. Tax reforms and incentives aimed at increasing consumption and private investment are likely to be in focus, as they remain critical drivers of economic growth. Market participants will closely monitor announcements that could directly impact corporate profitability and investor sentiment.

Feroze Azeez, Deputy CEO, Anand Rathi Wealth Limited

According to Azeez, the budget is likely to focus on increased capital expenditure, incentives under Production-Linked Incentive (PLI) schemes, and substantial support for infrastructure, manufacturing, and renewable energy. Small businesses, particularly in rural areas, are hopeful for measures aimed at reviving rural consumption. This could include higher agricultural subsidies or increased rural development spending, which are vital for bolstering demand in these regions.

For the middle-class segment, rationalisation of personal income tax slabs is a widely anticipated move. The introduction of new tax slabs or enhanced deductions could provide relief to taxpayers and stimulate consumption, ultimately boosting demand.

Azeez also highlighted potential benefits for the mutual fund industry, which could see increased inflows if the government introduces measures to promote long-term investments. For instance, raising the Section 80C deduction limit or reinstating indexation benefits for debt mutual funds could make these investment avenues more attractive. Simplifying the capital gains tax structure could further encourage retail participation in financial markets, providing a significant boost to mutual fund growth.

Atul Parakh, CEO, Bigul

Parakh highlighted that Indian markets are anticipating a balanced approach between fiscal consolidation and growth-oriented initiatives. Investors expect reforms that enhance India’s position in global supply chains, particularly through incentives for manufacturing sectors like semiconductors. Such measures could strengthen India’s competitiveness and attract foreign direct investment (FDI), a key factor for sustained economic growth. Additionally, emphasis on green energy and sustainable development is expected, aligning with global trends and India’s commitment to environmental goals.

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