Budget 2025 among the most balanced budgets; to bring bulls out of shackles

Budget 2025 Highlights: As expected, the union government has very little room for fiscal maneuvering and has tried to maintain a fine balance

Budget 2025-26: The Union Budget for FY25-26 presents a clear roadmap for the continuation of the journey towards a "Viksit Bharat" by focusing on inclusive development and enhancing the spending power of the Indian middle class.

 

As expected, the union government has very little room for fiscal maneuvering and has tried to maintain a fine balance. The numbers of both revenue and expenditure look quite realistic and should be easily achievable. The personal income tax collection, corporate tax collection, disinvestment receipt and central government capex numbers all look fairly realistic. This is a big positive.  ALSO READ: Budget 2025 Market Highlights: FMCG, Realty shares shine; Sensex ends flat at 77,506, Nifty 23,482

 

 

The marginal disappointment, on expected lines, is the fact that the centre will miss the FY25 target on capex. This was largely on account of the expended monsoons and the union government elections. The budgeted increase of around 10 per cent on the revised estimates seems again, fairly decent. It’s not as aggressive spending as it has been in the past but then what needs to be kept in mind is the fact that as the base effect kicks in, the incremental growth does tend to moderate. If the target for FY26 is indeed met, the nominal gross domestic product (GDP) growth rate should be upwards of 10 per cent.

 

What has been extremely positive is the unwavering focus on fiscal consolidation. The estimate for fiscal deficit has been cut to 4.8 per cent for FY25 from an initial expectation of 4.9 per cent and the FY26 expectation has been pegged at 4.4 per cent. This should ideally pave the way for measured and moderate rate cut by the Reserve Bank of India (RBI) (in turn lending support to the credit growth) and a possible upward revision in our sovereign rating. This will be an interesting space to watch.

 

The other big announcement was on the rationalisation of personal income tax rates. This was quite contrary to expectations and should ideally be met by a loud cheer by the middle class. The increase in disposable income should be a positive for the consumption sector, which has been an area of concern in the recent past. We, believe that this was, possibly one of the biggest announcements in the Union Budget.

 

The defence spending moved up 7.5 per cent. While the number may look modest, the key thing to note is that markets were quite nervous on this front but ideally, this should be a positive. The recent correction in defence stocks should likely be arrested by this measure.

 

The government’s focus on manufacturing continues to remain intact. The announcement of the national manufacturing mission and rationalisation of customs duty amongst other things should be a big positive. This will be the pivot that will propel us to being the third largest economy in the world.

 

In conclusion, this has been amongst one of the most balanced budgets in a long time. The government has done an admirable job of finding the perfect balance between fiscal prudence, consumption boost, and giving the economy a growth impetus. All of this should do two very important things – a higher consumption means private sector capex should start accelerating even further, and the recent slump in the GDP growth rate will be likely reversed. All in all a budget that will be the key to unlocking the bulls out of the shackles!!    =============  Disclaimer: Manish Jain is Executive Director & Head of Fund Management at Centrum Broking Limited. Views expressed are his own.