Finance Minister Nirmala Sitharaman will present the Union Budget 2025 on February 1, 2025. Key expectations include income tax relief for middle-class taxpayers, reduced excise duties on fuel, and enhanced support for electric vehicles. The government is likely to prioritize capital expenditure and infrastructure projects, while also pushing reforms for startups and MSMEs. Increased spending on healthcare and education, along with measures to boost economic growth, inflation control, and exports, are also on the agenda.
Key Expectations from Budget 2025
Income Tax Relief for the Middle Class: One of the most anticipated measures in the upcoming Union Budget 2025 is the potential reduction in income tax for individuals earning up to Rs 15 lakh annually. The aim is to provide significant relief to middle-class taxpayers, thereby increasing their disposable income and stimulating consumer spending. In addition to this, industry bodies like the Confederation of Indian Industries (CII) have suggested raising the income tax exemption limit to Rs 20 lakh to further encourage consumption and bolster economic growth. A reduction in personal income tax would likely give a much-needed boost to the country’s consumer-driven economy.
Excise Duty on Fuel to Stimulate Consumption: The reduction of excise duties on petroleum products is another area of focus. Industry leaders argue that lowering fuel taxes could increase disposable income for consumers, driving higher spending and boosting consumption across various sectors. With fuel prices impacting the cost of goods and services, any reduction in excise duties could provide immediate relief to the public and spur economic activity. Lower fuel costs could also indirectly enhance consumer confidence and support the overall recovery of the economy as it grapples with challenges from high inflation and slower growth.
Boosting the Electric Vehicle (EV) Sector: The electric vehicle industry is hoping for a significant push in Budget 2025, as it seeks measures to accelerate its growth. Key demands include granting infrastructure status to EV charging stations, which would unlock easier access to financing and support the expansion of EV infrastructure across the country. Additionally, enhancing performance-linked incentives for domestic EV manufacturing could provide a strong incentive for local production, reducing dependency on imports. This would not only drive the transition to cleaner energy but also create jobs and reduce carbon emissions, aligning with the government’s push for sustainability and environmental goals.
Government Capital Expenditure and Infrastructure Investment: The central government’s capital expenditure is expected to be a priority, especially as the economy faces challenges due to slowing GDP growth. The government may significantly increase spending in infrastructure projects to stimulate the economy. After the capex allocation was reduced last year due to the general elections, a rebound in this area is essential to drive job creation and long-term economic growth. Infrastructure spending, particularly in roads, railways, and urban development, could create a multiplier effect, leading to greater economic activity across multiple sectors. Investments in key projects are expected to be a major catalyst for growth, ensuring the country’s infrastructure is future-ready and able to support a growing economy.
Support for Startups, MSMEs, Healthcare, and Education: The government is expected to introduce policies to support startups and micro, small, and medium enterprises (MSMEs), which are crucial for job creation and innovation. These policies may include tax benefits, easier access to credit, and a focus on boosting entrepreneurship. Additionally, increased allocations for healthcare and education are anticipated, particularly in light of the lessons learned from the COVID-19 pandemic. The focus is likely to be on strengthening public health infrastructure, digital education, and skill development programs. These initiatives will aim to improve the country’s human capital and ensure long-term sustainable growth in these vital sectors.
