As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2025-26 on Saturday, key areas of focus are expected to include fiscal consolidation, infrastructure spending, and sector-specific incentives, according to leading global brokerages and financial institutions.
Jefferies predicts that income tax cuts could boost consumer discretionary spending, while welfare scheme expansions may help drive rural recovery. The brokerage also highlighted potential positive developments for electronics manufacturing, such as expanded production-linked incentives (PLI) or semiconductor manufacturing schemes. Additionally, increased allocations to renewable energy programs and adjustments to solar cell and module duties are anticipated.
Jefferies also expects a potential increase in the foreign portfolio investment (FPI) limit for banks and insurance companies from 74% to 100%. Meanwhile, the expansion of the interest subsidy scheme for urban housing could benefit affordable housing lenders. The brokerage noted that changes in tobacco taxation are unlikely in this budget.
CLSA pointed out that a hike in excise duty on auto fuels could impact the margins of Indian Oil, Bharat Petroleum, and Hindustan Petroleum, while increased LPG subsidies would be a relief. The brokerage added that higher allocations for infrastructure projects, import duty hikes on steel, or reductions in coking coal duties could benefit steel producers.
A Bank of America report stated that revenue growth is expected to maintain a steady pace, with a shift in focus from deficits to managing debt. It emphasized that fiscal policy easing and a revival of capital expenditure (capex) spending would play a crucial role in GDP growth.
Macquarie suggested that the government might impose import or safeguard duties to counter the dumping of commodities from China.
Morgan Stanley highlighted fiscal consolidation, infrastructure development, and sector-specific incentives as key areas to watch.
The Union Budget will be presented by Finance Minister Sitharaman on February 1, 2025.
(Inputs from IANS)
