Budget 2025 Expectations: A Critical Juncture for India's Economy

If India were a Formula 1 team, alarm bells would already be ringing. The track ahead is challenging, rival teams are growing more unpredictable, and it's clear that execution and strategy need a serious overhaul. With the growth story veering off track and high-frequency indicators showing signs of stress due to external factors, the upcoming Union Budget 2025 must prioritize two critical areas: boosting consumption and driving investments.

Addressing the New Unbalanced Twins

Finance Minister Nirmala Sitharaman has consistently highlighted that the Indian economy has transitioned from a twin-balance sheet problem to a twin-balance sheet advantage, thanks to the government’s focused efforts. This shift indicates that banks are no longer burdened with bad loans, and corporates have deleveraged their balance sheets, positioning them well for expansion.

Stimulating Demand and Investment

In its recent bulletin, the Reserve Bank of India has stated that the time is apposite to rekindle the animal spirits, create mass consumer demand, and trigger a boom in investment. However, demand has to be stimulated by employment and job creation. The government should also look at giving some tax relief for individuals in the upcoming budget to strengthen the domestic ecosystem.