ICICI Bank lists six Major Issues that Might Dominate Budget 2025

Expectations for Finance Minister Nirmala Sitharaman’s growth-stimulating proposals are growing as the Union Budget draws near. Adjusting tax rates, streamlining revenue expenditures, and emphasizing infrastructure spending and job creation are essential issues.

Budget 2025: Important Expectations

There is a lot of conjecture over what Finance Minister Nirmala Sitharaman could reveal on February 1 to encourage economic development and increase spending, as the Union Budget is only a few days away.

It is anticipated that the 2025 budget will balance economic expansion with budgetary restraint. India needs a growth-oriented budget to move closer to becoming an economic powerhouse in the face of declining industrial activity, poor urban consumption, and growing international protectionism.

ICICI Bank experts highlight the following six significant issues, which are anticipated to take center stage in the next budget. Let’s examine.

1. Modifications to tax rates: ICICI Bank claims that because of the slow salary increase in corporate India and the comparatively high rate of food inflation, the government may concentrate on giving consumers more money. “In the next budget, we anticipate that the government will adjust the income tax rates and announce measures further to enhance the appeal of the new tax regime,” the bank stated. To reduce the inverted duty structure and boost Indian manufacturing’s competitiveness, the bank also anticipates more modifications to customs duties.
2. Ongoing emphasis on revenue expenditure rationalization: According to ICICI Bank, the government has been concentrating on enhancing spending quality and rationalizing the rise of revenue expenditures since FY22. The bank claims that revenue expenditures have lagged below long-term trends for several ministries, including Jal Shakti, Housing and Urban Affairs, MSME, Labor and Employment, and Electronics and IT. However, overspending may occur in the Ministry of Chemicals and Fertilizers, Communication, Home Affairs, and Railways throughout the year.
3. PLI allocation may stay modest: To spur job creation, ICICI Bank anticipates that efforts to increase the production-linked incentive (PLI) program in labor-intensive industries like electronics and textiles, as well as programs targeted at MSMEs, would continue to be prioritized.
4. Job generation may continue to be a priority: ICICI Bank thinks that, in light of India’s demographic dividend, the government would continue to concentrate on initiatives that will improve job prospects in the nation. The bank stated that besides job-linked incentives, the emphasis on skill development will continue to guarantee quicker employment for the nation’s young.
5. The allocation of capital expenditure loans to states and the roads ministry might be increased: The government is expected to fix capital expenditures at ₹11.5 lakh core in FY26, which is 15% more than FY25 actuals, according to ICICI Bank. This would raise capital expenditures to 3.2% of GDP, somewhat more than the 3.1% of GDP anticipated to be reached in FY25. According to historical patterns, the majority of capital expenditures are expected to go into three main areas: defense, railroads, and roads and highways, the bank stated.
6. Fiscal deficit target may be at 4.5% of GDP in FY26: According to ICICI Bank, the government willikelydict a budgetary deficit of 4.5% of GDP in FY26. At the same time, the actual figure may be even lower. Nonetheless, the bank thinks the government would probably scale back budgetary consolidation to 0.3% of GDP this year due to the economic slowdown. This indicates a ₹16.1 lakh crore fiscal deficit, ₹12.1 lakh crore in net borrowing, and ₹14.8 lakh crore in gross lending. The government would most likely use debt-to-GDP as a fiscal policy anchor after this, according to ICICI Bank.