India Inc hopes for focus on capex, infra in Budget
Finance Minister Nirmala Sitharaman on February 1 will present a record, her eighth consecutive, and the first full year Budget of the current NDA government.
It is likely to be focused on reforms, which are much needed to achieve the target of ‘Viksit Bharat’ by 2047. It is anticipated that the Budget would stick to its path of fiscal consolidation, without compromising on quality of expenditure, according to analysts.
A State Bank of India report states that given the GDP growth slowdown for Q2FY25, there is a call for a policy push to revive growth. The Union Budget is likely to see a tight-rope walk between showing the intended fiscal consolidation, yet providing a push for capex growth and make up for the lost ground in FY25.
It is estimated that India’s fiscal deficit is likely to be Budgeted at 4.5 per cent of the GDP for FY26, amounting to Rs 15.9 lakh crore.
“In the wake of moderating domestic GDP growth, headwinds from weakening global growth, and risks emerging from stronger US dollar and tariff threats by President-elect Donald Trump, this Budget will lay down policies to ensure our growth prospects remain insulated,” Sonal Badhan, Chief Economist at Bank of Baroda (BoB), quoted the bank’s reports.
The bank’s report highlights that important schemes such as the PM-KISAN, MGNREGA, housing for all and free food grains would continue to hold significant importance; just like focus on infra spending. In addition, tax incentives and greater focus on developing skills of the youth would also garner attention.
“While we do not expect many big announcements; rural development, empowerment of youth and women, sharpening the Employment Linked Incentive Scheme and the skilling programme will be in focus. Some focus needs to also come back on capital expenditure in newer areas – away from railways and road, that might be close to a saturation point so far as capacity expansion is concerned,” stated a Yes Bank report.
Dr Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said, “We estimate the Centre can ensure better tax compliance and bolster consumption through enhancing disposable income, by moving all and one under the New Tax regime, at a nominal loss (es) by foregoing certain amount of tax collection.”
