Many gifts awaited in Union Budget for financial year 2025-26

From Newsbuddy Desk

India’s economic growth rate has been somewhat weak in the first half (April-September 2024) of the financial year 2024-25. In the first quarter (April-June 2024), the GDP growth rate fell to a low of 5.2 percent. Similarly, the GDP growth rate is estimated to be 5.4 percent in the second quarter (July-September 2024). Due to this, this growth rate is estimated to decrease to between 6.6 percent to 6.8 percent in the financial year 2024-25, whereas in the financial year 2023-24, India’s GDP growth rate was 8.2 percent. The main reasons for the low economic growth rate in the first half of the financial year 2024-25 are the Lok Sabha elections held in the country and due to the implementation of the code of conduct, there has been a huge reduction in the capital expenditure and other expenditure of the Central Government. Also, the monsoon situation in the country has also not been good.

Although the central government has achieved success in curbing inflation, but due to the high level of inflation, the overall spending capacity of the common citizens, especially the middle class families, has definitely been adversely affected and there is a danger of some middle class families falling into the category of families living below the poverty line. The higher the number of middle class families in any country, the higher the economic growth rate of that country remains because the middle class family uses the maximum part of its income on purchasing various types of products (products like two-wheelers, four-wheelers, refrigerators, air conditioners and new flats and buildings etc.). This accelerates the economic cycle and due to increased demand of these products in the market, their production is increased by various companies, this increases the income and profitability of these companies and new employment opportunities are created in the country.
In India, the spending capacity of middle class families has been adversely affected for some time now, so on 1 February 2025, it is now expected from the Union Finance Minister Nirmala Sitharaman that she will announce a special income tax exemption for middle class families in the Union Government budget for the financial year 2025-26. Many economists of the country also say that not only income tax but also corporate tax reduction should be announced. Mohandas Pai, one of the founding members of Infosys, says that the 30 percent income tax rate applicable on income above Rs 15 lakh should now be applicable on income above Rs 18 lakh. The limit of income tax free income should be increased from the currently applicable amount of Rs 7.75 lakh to Rs 10 lakh. The limit of investment to be made under Section 80C of Income Tax should also be increased from Rs 1.50 lakh to Rs 2 lakh. The limit of income tax exemption on interest paid on loan taken for house construction should be increased from Rs 2 lakh to Rs 3 lakh.

The monetary policy is also going to be announced by the Reserve Bank of India in the month of February 2025. It is now expected from the Reserve Bank of India that they will definitely reduce the repo rate by at least 25 or 50 basis points. Because, due to no change in the repo rate for the last 24 consecutive months, the burden of installment amount of loan taken by middle class families from banks for house construction and purchase of four wheeler vehicles etc. has increased a lot. The incidents of default in payment of installments of such loans taken from banks and micro finance are also seen increasing. Now the rate of inflation comes to a high level only due to the food items (fruits and vegetables etc.) becoming somewhat expensive, whereas the rate of core inflation has now come under control. Food inflation cannot be reduced by keeping interest rates at a high level. Therefore, the Reserve Bank of India now needs to pay special attention to this.
Due to the Lok Sabha elections held in the first quarter of the financial year 2024-25, there has been a decrease in capital expenditure in the country. That is why now it is being constantly demanded that the One Nation One Election law should be implemented in the country soon because due to frequent elections in the country, the central and state governments stop their budgetary expenditure due to the implementation of the code of conduct, which affects the economic development of the country. Therefore, seriousness will be shown on increasing capital expenditure in the budget to be presented in the Lok Sabha for the financial year 2025-26. Although a provision of capital expenditure of Rs 7.50 lakh crore was made in the budget for the financial year 2022-23, a provision of capital expenditure of Rs 10 lakh crore was made in the budget for the financial year 2023-24 and Rs 11.11 lakh crore in the budget for the financial year 2024-25. Now, there is a possibility of provision of capital expenditure of at least Rs 15 lakh crore for the financial year 2025-26. This will help in accelerating the slowing economic activities in the country and will also create crores of new employment opportunities, which is also very much needed by the country at present.

Efforts should now be made to curb the freebies schemes being run by various states. These schemes cause more loss and less benefit to the economic development of the country. The situation of Kerala, Punjab, Himachal Pradesh and Delhi is in front of us all. Due to running such schemes, the condition of budgetary deficit of these states has reached a pathetic state. Punjab used to be among the most prosperous states of the country at one time, but today the budgetary deficit in Punjab has reached a frightening situation. Due to which these states are not able to spend more money on capital expenditure today because neither the income of these states is increasing nor the budgetary deficit is being controlled.
Foreign direct investment in India has also been declining for some time. It was 4.3 percent of GDP in the September 2020 quarter, which has now fallen to 0.8 percent of GDP. This subject will also be seriously considered in the budget for the financial year 2025-26. A reduction in corporate tax rates was announced in the budget for the financial year 2019, which had a very good impact on foreign direct investment and in September 2020 it increased to 4.3 percent of GDP. Now once again, a reduction in corporate tax can also be considered in this budget.

In the budget for the financial year 2025-26, some relief can also be provided to the industries creating maximum employment opportunities because today there is a great need to create crores of new employment opportunities in the country. Special facilities can be provided especially to micro, small and medium industries. Yes, technology based industries will also have to be encouraged because we have to make our industries competitive at the global level. Even today about 60 percent of India’s population lives in rural areas, so more attention will be given to the agriculture sector and cottage and small scale industries in rural areas through this budget, so that employment opportunities are created in rural areas itself and the migration of citizens towards cities can be stopped.