Union Budget 2025: A New Dawn for Bonds

Bond market players are cautiously optimistic following the Union Budget 2025 announcements. The government's commitment to a fiscal deficit target of 4.4% for FY26, within market expectations, alongside conservative borrowing figures, has set a positive tone. Debt fund managers highlight the government's efforts to boost consumption while ensuring a conducive environment for investment, essential for sustainable growth.

Expectations are high for the 10-year benchmark gilt yields to fluctuate between 6.50% and 6.75% in the short term. The bond market is now keenly awaiting the RBI's rate-setting committee meeting, with anticipations of a 25 basis points interest rate cut to further stimulate the economy.

Budget 2025 Updates: A Closer Look

Significant changes in income tax slabs have been introduced, with no income tax for earnings up to Rs 12 lakh, offering relief to the salaried middle class. The new vs old income tax regime debate continues, with taxpayers evaluating which option benefits them the most.

Ram Kamal Samanta, senior VP - investments, Star Union Dai-ichi Life Insurance, emphasizes the need for a consumption booster for near-term recovery and a conducive investment environment for sustainable medium-term growth.