What to Expect in the Union Budget?

As we get closer to Budget 2025, there is a lot of excitement and anticipation from businesses and market players. The Union Budget is expected to play a key role in shaping India’s economic future, balancing both careful financial management and policies that promote growth.

Union Budget 2025-26 expectations

Below are six key expectations from Union Budget 2025-26:

Economic Growth Stimulus: Focus on boosting economic recovery post-pandemic, with measures to support key sectors like manufacturing, infrastructure, and digital transformation.

Tax Reforms: Expect possible changes to the income tax structure to make it more progressive, and possibly to simplify compliance for taxpayers. There may also be tax incentives for businesses investing in innovation.

Infrastructure Investment: Significant focus on infrastructure projects, particularly in rural areas, transport, and clean energy to spur job creation and long-term economic growth.

Social Welfare and Healthcare: Increased allocation for healthcare, education, and social welfare schemes, especially to support marginalized communities and address post-COVID challenges.

Green Economy Initiatives: More funds and incentives for green projects, renewable energy, and climate change mitigation efforts, aligning with global sustainability goals.

Fiscal Discipline: A careful balance between fiscal expansion to stimulate growth and maintaining fiscal responsibility to manage inflation and public debt.

Table of Content

1. Union Budget 2025-26 expectations
2. US-India forum anticipates stable, predictable tax environment 
3. Key numbers to watch in the budget

US-India forum anticipates stable, predictable tax environment 

• The US-India Strategic Partnership Forum has asked India’s Finance Minister, Nirmala Sitharaman, to ensure a stable and predictable tax system in her upcoming budget. 
• The request came from the US-India Tax Forum, a special group within the US-India Strategic Partnership Forum. 
• The group believes a stable tax environment will help boost investment and business confidence. 
• They also mentioned that the industry is looking forward to the Union Budget for 2024-25, which will be the first budget of the re-elected government. 
• The budget is expected to include measures to promote growth across different sectors.

Key numbers to watch in the budget

Fiscal Deficit: The government is aiming for a fiscal deficit of 4.9% of GDP in FY25, with plans to reduce it to 4.5% by FY26. Markets will keep an eye on any updates to this plan.

Capital Expenditure: The government plans to spend ₹11.1 lakh crore on capital projects in FY25, though election delays might reduce the final amount spent. A focus on capital spending is expected to continue in FY26.

Debt Plan: In 2024, the government’s debt was 57% of GDP. The goal is to bring it down to 60% of GDP by FY27.

Borrowing: The government plans to borrow ₹14.01 lakh crore in FY25. If RBI dividends are lower, borrowing could be affected in FY26.

Tax Revenue: The government expects to collect ₹38.40 lakh crore in tax revenue for FY25, with ₹22.07 lakh crore from direct taxes and ₹16.33 lakh crore from indirect taxes.

GST Collections: GST revenue is expected to be ₹10.62 lakh crore in FY25, though recent growth has slowed. People will be watching closely for FY26 estimates.

Nominal GDP: The economy is expected to grow by 10.5% in FY25, with real growth (adjusted for inflation) at 6.4%. The FY26 forecast will help us understand inflation trends.

Dividends: The government expects ₹2.33 lakh crore from RBI and financial institutions, plus ₹56,260 crore from state-owned companies (CPSEs) in FY25.

Disinvestment and Asset Sales: The government plans to raise ₹50,000 crore from selling assets in FY25. In FY26, we’ll get an idea of their target for the following year.

Conclusion
As anticipation builds for the Union Budget 2025, various stakeholders, including domestic and international forums, have laid out their expectations and recommendations. Key focuses are expected to include a stable tax environment, increased welfare spending, and a reduction in the fiscal deficit.  Investors are likely to keep a close eye on the developments, with many turning to stock market app for real-time updates on how the budget impacts market trends.