With the economy facing challenges like a 5.4 per cent growth rate in Q2 FY25, the lowest in seven quarters and high inflation, the upcoming Union Budget 2025 will play a crucial role in steering India’s fiscal policy toward sustained growth.
The government’s 10.5 per cent growth forecast for FY25 provides a high bar to aim for, but will it be enough to overcome the global headwinds and domestic challenges?
Will fiscal prudence or heavy spending take precedence? Can measures boost credit growth and empower NBFCs to support SMEs? What policies could propel exports and achieve “Viksit Bharat”?, remain to be some key questions
Here is all you need to know about the upcoming Budget 2025 and the current state:
- What is the schedule and tradition behind the Union Budget presentation?
The Union Budget 2025 will be tabled in Parliament on February 1, 2025, at 11:00 am by Finance Minister Nirmala Sitharaman in the Lok Sabha who will be presenting her eighth Budget. This tradition, established in 2017, ensures timely implementation before the new fiscal year begins in April.A unique aspect of the Budget process is the halwa ceremony, marking the start of budget printing, symbolizing confidentiality. The presentation includes the Budget Speech, typically lasting 90–120 minutes, outlining key priorities and reforms. In recent years, the traditional budget briefcase has been replaced by the Bahi Khata. - What are the major fiscal priorities for Union Budget 2025?
Industry experts suggest that the Budget will focus on fiscal consolidation, leveraging global bond indices to reduce borrowing costs and stabilize the economy. Accelerated capital expenditure in social welfare and climate change will drive productivity, while the challenge remains to balance deficit control with growth-driven spending. - What is the expected focus on taxation and fiscal reforms?
Tax simplification to boost disposable incomes is anticipated, along with targeted exemptions for NBFCs and reduced tax burdens on fuels. Measures to ease TDS under Section 194 will support efficiency and financial sector growth, as stated by BFSI leaders in a recent panel discussion. - How the Union Budget may address rural and agricultural growth?
Enhanced allocations for MGNREGA, PM Kisan, and rural infrastructure like roads and irrigation are expected. These initiatives aim to stimulate rural consumption, support farmers, and foster inclusive growth. - What are the key expectations for the employment sector?
The government will likely prioritize job creation in labor-intensive sectors and semi-urban areas. Programs like PM Kaushal Vikas Yojana 4.0 will enhance skilling, employability, and productivity, addressing unemployment and boosting incomes.
CURRENT STATE OF THE BUDGET (FY2024-25)
- What are the key financial aggregates for FY25?
Total expenditure for FY25 as per July’s Union Budget 2024-25 is Rs 48.20 lakh crore, with capital expenditure at Rs 11.11 lakh crore, a 16.9 per cent increase from FY24. Revenue expenditure is pegged at Rs 37.09 lakh crore. - What are the deficit estimates for FY25?
The fiscal deficit for FY25 is expected at 4.9 per cent of GDP, with a revenue deficit of 1.8 per cent and a primary deficit of 1.4 per cent. - What are the revenue receipts and tax contributions?
Revenue receipts as per July’s Union Budget 2024-25 at Rs 31.29 lakh crore, with net tax revenue at Rs 25.83 lakh crore. Major contributors include Rs 10.20 lakh crore from corporation tax, Rs 11.87 lakh crore from income tax, and Rs 10.61 lakh crore from GST. - What about capital receipts and borrowings?
Capital receipts are estimated at Rs 15.51 lakh crore, with borrowings and other liabilities at Rs 16.13 lakh crore to support developmental expenditures. - How much allocation was given to states and Union Territories?
Transfers to states and Union Territories as per the previous budget are pegged at Rs 22.91 lakh crore, ensuring states have resources to meet their developmental goals. - What are the major sectoral allocations for FY25?
Education receives Rs 1.25 lakh crore, health Rs 89,287 crore, rural development Rs 2.66 lakh crore, transport Rs 5.44 lakh crore, and urban development Rs 82,577 crore. Defence is allocated Rs 4.55 lakh crore. - What are the major allocations for flagship programmes?
Flagship schemes include Rs 30,171 crore for PM Awas Yojana (Urban), Rs 37,500 crore for Samagra Shiksha Abhiyan, Rs 12,467 crore for PM Poshan, and Rs 7,300 crore for Ayushman Bharat – PM Jan Arogya Yojana.
