The much-anticipated Union Budget 2025-26 is set to be presented by Finance Minister Nirmala Sitharaman on February 1, 2025. With industries, experts, and citizens eagerly awaiting the announcements, the focus is on measures that could drive growth, reduce inflation, and improve the overall quality of life. Here’s a snapshot of the key expectations and recommendations shaping the buzz around Budget 2025:
1. Income Tax Relief for Individuals
- Tax Cut Proposal: Industry bodies like CII and PHDCCI have urged the government to reduce income tax rates, particularly for individuals earning up to ?20 lakh per annum. This move aims to enhance disposable incomes, stimulate demand, and create a virtuous cycle of consumption-led growth.
- Simplified Tax Structure: Suggestions include a streamlined tax system with fewer compliance burdens, revised TDS/TCS rates, and expanded tax slabs. Former Infosys CFO TV Mohandas Pai proposed zero tax on income up to ?5 lakh and reduced rates for middle-income earners.
2. Excise Duty Reduction on Fuel
- Fuel Price Relief: With global crude oil prices dropping significantly, industry leaders have called for reduced excise duties on petrol and diesel. This measure could lower inflation, boost disposable income, and aid lower-income households.
3. Support for Employment-Intensive Sectors
- Job Creation Focus: Sectors like garments, tourism, footwear, and MSMEs are seeking targeted measures to create jobs and integrate India into global value chains.
4. Strengthening Rural Consumption
- MGNREGS Wage Hike: Recommendations to raise daily wages under MGNREGS from ?267 to ?375 aim to increase purchasing power in rural areas.
- PM-KISAN Increase: Proposals include raising PM-KISAN payouts from ?6,000 to ?8,000 annually.
- Consumption Vouchers: Industry bodies suggest introducing vouchers for low-income households to drive rural demand.
5. Tackling Dumping by China
- Protecting Domestic Industries: Safeguards against the dumping of goods by China have been a recurring demand to ensure fair competition for local businesses.
6. Real Estate Sector Expectations
- Affordable Housing: Industry leaders propose increasing the deduction limit on home loan interest and redefining affordable housing.
- Stalled Projects Resolution: Positive developments in resolving legacy issues bring hope for stronger consumer trust.
- Luxury and Commercial Growth: High-end housing and commercial office leasing continue to thrive, driven by global investments.
7. Broader Economic Measures
- Climate Change Focus: Suggestions include expanding fiscal support for renewable energy and sustainable practices.
- MSME Credit Flow: Enhanced access to credit for MSMEs remains a top priority.
- GST and TDS Simplification: Simplified tax procedures are expected to reduce compliance burdens and support businesses.
8. Abolishing Securities Transaction Tax (STT)
- Investment Relief: Industry bodies have proposed abolishing STT, aligning it with long-term capital gains tax adjustments introduced last year.
As Budget Day approaches, the anticipation for impactful measures grows. Will this budget ease the tax burden, bolster rural and urban consumption, and create pathways for sustainable growth? Only time will tell.
Stay tuned for more updates and insights!
? Coming up next week!
General Market Overview:
Indian markets experienced mixed performance this week, influenced by both global and domestic factors. Sensex and Nifty closed marginally lower on Friday due to profit booking in IT and banking stocks.
- Market Outlook: Analysts expect consolidation in the next few sessions, with support from strong DII buying. FIIs are likely to remain net sellers, focusing on large-cap stocks.
- Concerns: Persistent inflation worries, crude oil price volatility, and uncertainties surrounding US economic data might weigh on market sentiment.
- Other Factors: Earnings from heavyweights like Reliance and HDFC Bank, along with geopolitical developments, will be critical in determining market direction.
- Satvik Electronics IPO: Opens on January 8, 2025, with a price range of ?350-375 per share. Closes on January 10.
- Nexa Pharmaceuticals IPO: Opens on January 9, 2025, and closes on January 12. Price range: ?825-850 per share.
- Kalyan Infrastructure IPO: Opens on January 10, 2025, and closes on January 12. Average cost of acquisition: ?610 per share.
- January 8 (Monday): TCS, Infosys, Shree Cement
- January 9 (Tuesday): Reliance Industries, HDFC Bank, Asian Paints
- January 10 (Wednesday): Wipro, Aditya Birla Fashion, Nestle India
- January 11 (Thursday): Tata Motors, Maruti Suzuki, SBI Cards
- January 12 (Friday): Hindustan Zinc, Dabur India, Biocon
Important Economic Data to Watch:
- India Manufacturing PMI: Flash reading for January 2025 to be released. December PMI was 57.5.
- India Services PMI: Flash reading for January 2025 to be announced. December figure stood at 58.2.
- Euro Area Consumer Confidence: January flash reading expected. December index was -13.2.
- UK Manufacturing and Services PMI: Flash readings for January 2025 to be released. December figures were 50.2 (Manufacturing) and 52.0 (Services).
- US Initial Jobless Claims: Data for the week ending January 6 to be announced. Previous claims were 223,000.
- US Manufacturing and Services PMI: January flash readings to be shared. December figures were 47.8 (Manufacturing) and 54.5 (Services).
- India Foreign Exchange Reserves: Data for the week ending January 5, 2025, to be released. Previous reserves were $698.5 billion.
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Chakrivardhan Kuppala., Wrote for Economic Times.
Chakrivardhan Kuppala., wrote for Money Control
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