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The stage for the Union Budget 2025 was aptly set by the Economic Survey which highlighted the need to calibrate employment in the face of the growing influence of AI, focus on domestic capacity building to spur growth and enhance India’s capability to attract FDI in the face of intense competition from contemporary markets. The record breaking eighth consecutive Budget presented by Mrs Nirmala Sitharaman also comes against a challenging scenario of a somewhat flattened GDP growth, tepidity in the stock markets, depreciation in the value of rupee at somewhat disconcerting rates and of course sputtering domestic consumption demand and public/private sector capex. While the reactions of the political hoi-polloi to the Budget will notably be guided by ideological considerations and there could be occasions for nit-picking, the budgetary exercise deserves to the commended for its resilient attempt to balance diverse considerations, sometimes complementary but invariably working at cross-purposes, which have an exponentially multiplier effect in India, given its geographical, social and economic diversity and complex polity.As to the nitty gritties, on a broader plane, and pragmatically at that, the tweaking of norms for the MSME sector and several sector-specific initiatives for such enterprises is likely to be a morale- booster for this sector which was somewhat incipiently bearing the brunt in the recent past. As per initial estimates the contribution of this sector, which has an exponentially heightened employment potential, to the national GDP is likely to rise from the existing 45% to about 60%. The proposal to allow increased FDI of 100% in the Insurance sector by substantially augmenting the flow of funds in this sector is bound to accelerate the penetration of insurance into wider pockets. On the public investment front, the announcement of an outlay of Rs. 1.5 lakh crore in 50 years interest free loans to states underscores ruling the polity’s commitment to achieve sustained economic growth by public capital expenditure.The tweaking in customs rates follows a usual pattern of conforming to sector specific needs and requirements. The real talking point on this budget has been on the Direct Taxes front with a definitive announcement of the introduction of a new Income-tax Act shortly, based on considerations of trust, transparency and simplification with hopefully a somewhat less intrusive focus. The substantial (which may sound as an understatement) liberalization in tax rates will by putting the higher disposable incomes in the hands of a large populace support increased domestic consumption expenditure with resultant accelerating effects on economic growth. The overall attempt at reducing compliances, rationalization of provisions relating to tax deducted and collected at source, simplification of provisions relating to entities engaged in charitable activities would be welcomed by assessees across the spectrum.All in all, a budget dictated by fiscal prudence, political sagacity and economic foresight. Of course, seemingly pump-primed to achieve the goal of “Viksit Bharat” in tandem with the avowed motto of “Sabka Saath, Sabka Vikas, Sabka Vishwas, Sabka Prayas”.
