HIGHLIGHTS | Union Budget 2025: No tax on incomes upto Rs 12 lakh, announces FM Nirmala Sitharaman in big relief for middle class
KEY NUMBERS TO WATCH OUT FOR IN BUDGET 2025-26
* Fiscal Deficit: The budgeted fiscal deficit, which is the difference between the government expenditure and income, for the current fiscal (April 2024 to March 2025 or FY25) is estimated at 4.9 per cent of the GDP. As per the fiscal consolidation roadmap, the deficit is to be brought down to 4.5 per cent of GDP in FY26. Markets will keenly watch for the deficit number in the FY26 Budget.
* Capital Expenditure: The government's planned capital expenditure for this fiscal year is budgeted at Rs 11.1 lakh crore. However, slower government spending in the first four months due to Lok Sabha elections delayed the capex cycle and the final numbers for the current fiscal are expected to be lower than budgeted. The capex momentum is expected to continue in the FY26 Budget as well.
* Debt Roadmap: The finance minister, in her 2024-25 budget speech, had stated that from 2026-27 onwards the endeavour of fiscal policy would be to maintain the fiscal deficit in a way that the central government debt is on a declining path as a percentage of the GDP. Markets would closely look for the debt consolidation roadmap from FY27 onwards to see when the finance minister sees general government debt-to-GDP fall to the 60 per cent target. The general government debt-to-GDP ratio was 85 per cent in 2024, which included central government debt of 57 per cent.
* Borrowing: The government's gross borrowing Budget was Rs 14.01 lakh crore in FY25. The government borrows from the market to fund its fiscal deficit. The borrowing number will be watched by the market, especially on the back of lower dividends from the RBI in FY26 compared to Rs 2.11 lakh crore in FY25.
* Tax Revenue: The 2024-25 Budget had pegged gross tax revenue at Rs 38.40 lakh crore, an 11.72 per cent growth over FY24. This includes Rs 22.07 lakh crore estimated to come from direct taxes (personal income tax + corporate tax), and Rs 16.33 lakh crore from indirect taxes (customs + excise duty + GST).
* GST: Goods and Services Tax (GST) collection in 2024-25 is estimated to rise 11 per cent to Rs 10.62 lakh crore. FY '26 GST revenue projections will be watched as the revenue growth has slowed over the last three months in the current fiscal.
* Nominal GDP: India's nominal GDP growth (real GDP plus inflation) in FY25 is estimated to be 10.5 per cent, while the Real GDP growth estimated by NSO is 6.4 per cent. FY26 nominal GDP growth projections in the Budget will give an idea about the inflation trajectory in the next fiscal.
* Dividend: The government estimated Rs 2.33 lakh crore from the RBI and financial institutions and Rs 56,260 crore from CPSEs as dividends in FY25. These two key non-tax revenue numbers will be looked for in FY26 Budget projections.
* Disinvestment & Asset Monetisation: 'Miscellaneous Capital Receipts' -- which include proceeds from disinvestment and asset monetisation -- was pegged at Rs 50,000 crore in FY25 Budget. The FY26 Budget will give a number for next year and a broader asset monetisation roadmap.
* Spotlight would also be on spending on key schemes like NREGA as well as key sectors like health and education.
(Source: PTI)
President Droupadi Murmu feeds Finance Minister Nirmala Sitharaman the traditional 'dahi-cheeni' (curd and sugar) ahead of her Budget presentation.
Tax relief a major expectation from Budget 2025
Speaking about market reactions to Budget announcements, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, "A major expectation from the Budget is a cut in personal income tax to provide relief to the middle class and boost consumption, thereby facilitating growth recovery. The extent of the tax relief remains to be seen. The fact is that there is no fiscal space for big relief.
"The market will be looking for growth stimulating measures; not market-related taxation reliefs like changes in the capital gains taxation," he told news agency PTI.
All eyes on Union Budget 2025-26
The Union Budget 2025-26 is all set to be unveiled at 11 am today, amid expectations of tax relief from businesses and the salaried class. India Inc on the other hand anticipates the Budget to have higher allocations for boosting infrastructure, ease of doing business, and more.
According to the government's pre-Budget Economic Survey which was released on Friday, India's economy is likely to expand by 6.3-6.8 per cent in the coming fiscal, much lower than what is needed to become a developed country, and requires deregulation and reforms in areas like land and labour to stimulate growth.
The state of the economy document indicated that India's world-beating growth is moderating and more needs to be done to achieve the near 8 per cent annual rate needed to achieve the Viksit Bharat target by 2047.