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Anticipating 2025:India's fiscal future

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India, soon to step into the new fiscal year, prepares for the presentation of the Union Budget 2025 by Finance Minister Nirmala Sitharaman in early February. This marks an important moment for the Budget in the context of responding to domestic aspirations alongside global economic challenges.

The government is likely to forecast for the next fiscal the nominal growth rate of the economy to continue in the range of 10.3%-10.5%, giving a sense of optimism over the last year's growth projection of 9.7%. This anticipated growth is said to be underpinned by growing public capital expenditure, a buoyant agriculture sector, and soaring exports. Even amidst such tough growth projections, the government sticks to fiscal prudence, proclaiming a fiscal deficit of below 4.5% to GDP next financial year.

In keeping with these changes in the global and domestic environment, the budget is expected to announce specific steps under important categories: Textiles and Garments: Various disturbances in global supply chains, with political instability prevailing in neighboring Bangladesh, have forced India to ensure growth for its textile industry. The government is, therefore, considering financial support, tariff reductions, and other incentives to stimulate domestic production and increase its share in the global market. Steel Industry and Green Initiatives: The steel ministry has asked for ₹150 billion in the budget to provide incentives for the production of low-carbon steel, keeping in mind environmental commitments. This move reflects India's deep dedication towards the goals of reducing greenhouse gas emissions and establishing sustainable industrial practices.

To stimulate domestic consumption and ease the tax burden on people, the budget is expected to announce some reductions in personal income taxes. This would serve to enhance demand from salaried people who have been stagnant owing to slow wage growth and rising inflationary pressures. The infrastructure, healthcare, and education sectors remain key areas of focus for the government as it strives for collective growth and an improved quality of life for its citizens.

Delivering the Union Budget for the year 2025 is envisioned as a profound roadmap in balancing economic growth, fiscal discipline, and social welfare. By flagging sector-related challenges and tapping emerging opportunities, India looks at strengthening its rank as a resilient and progressive economy on the world scene.

By Rizaal Dhawan


 

 

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