Budget 2025: Union Budget 2025 is at an important juncture that could be quite impactful for India’s economy and stock market. Amid challenges like slowing growth, foreign capital outflows, and global uncertainty, Finance Minister Nirmala Sitharaman’s approach is a matter of curiosity for all. This second full-fledged budget of the Modi 3.0 government will be presented on February 1. What are experts expecting and how this budget could transform market sentiment, let’s find out.
Market’s Overall Challenges: An Overview
Indian stock market is currently facing some big challenges:
• Signs of slowdown in economic growth.
• Continuous pressure of foreign capital outflows.
• Uncertainty surrounding US Federal Reserve’s interest rate policies and global trade policies.
Kotak Mahindra AMC MD Nilesh Shah says globalisation is leading to a shift towards protectionism. He highlighted the need for a growth-oriented budget, which includes tax cuts for urban consumption and incentives for private investment, while maintaining fiscal prudence.
Measures to Boost Market Sentiment
Experts say some key reforms could uplift the stock market:
1. Income Tax Reforms:
Some changes are expected in income tax, including revision of tax rates. This could leave more disposable income with consumers, which will stimulate economic growth and consumption.
2. Infrastructure Investment:
Higher allocation in infrastructure projects will boost long-term economic growth and job creation. This can be a positive push for investor sentiment.
3. Capital Gains Tax Simplification:
Rationalising capital gains tax is a major demand. The proposed changes include:
• Reduction in LTCG (Long-Term Capital Gains) tax rates.
• Revision of indexation benefits.
• Increasing deduction thresholds under Section 54 and 54F.
According to Sofiya Syed of Direct Tax Division of Dewan P.N. Chopra & Co., these measures will greatly boost investor confidence.
4. Securities Transaction Tax (STT) Revision:
Tradejini COO Trivesh D says that bringing STT rates to the old level will be a market-friendly move. 0.0125% for futures and 0.0625% for options rates will enhance trading volumes and investor participation.
5. Support for Key Sectors:
Measures are expected for small businesses, rural employment, and sustainable industries such as renewable energy and electric vehicles, which will build long-term economic resilience.
Balance of Growth and Fiscal Discipline
Along with growth-oriented measures, fiscal consolidation is also necessary. Experts say strategic divestment of non-core PSUs can bridge fiscal gaps. BOT (Build-Operate-Transfer) and HAM (Hybrid Annuity Model) projects can take priority over EPC (Engineering, Procurement, and Construction) as their capital expenditure is lower.
Green Portfolio PMS VP Sreeram Ramdas expects capital expenditure allocation to be more than ₹2.95 trillion. But rising debt-to-GDP ratio and interest costs demand a careful planning.
Expert Outlook: What is the stake?
Invasset PMS Partner Anirudh Garg says the impact of budgetary measures will depend on these factors:
• Economic growth.
• Fiscal sustainability.
• Business efficiency.
Conclusion
Budget 2025 is a unique opportunity that can lay the foundation for sustainable growth while addressing immediate economic challenges. Tax reforms, infrastructure investment, and targeted sectoral support will not only boost market sentiment but will also help give India a strong position in the global economic landscape. All eyes are on February 1, when an impactful and game-changing budget will be awaited.
