Union Budget 2025, the epitome of balance

Vaibhav Sanghavi, CEO, ASK Hedge Solutions

Vaibhav Sanghavi, CEO, ASK Hedge Solutions

In my outlook for 2025, which I recently penned, I had mentioned that this year is likely to be a year of government-led policy reforms. It will determine the direction of the how we as an economy aims for sustainable growth. This Budget clearly lays that path not only on headline growth but also constitution of that growth.

It is important to understand the backdrop of the macro environment before Budget got announced. Facing volatility from global regime changes and policies (tariffs, protectionism, interest rates etc) along with sub optimal GDP growth in previous two quarters, it was imperative for the government to catalyse the growth.

We have seen the policies in the last 10 years consistent with investment-led measures focussed on supply side with a clear intent of having a larger multiplier effect. While it helped to being the fastest growing economy in the world, it still felt little sub-optimal to the potential we have as a country.

In the overall equation of GDP growth of investments + consumption + net exports, it was time to activate the “consumption” piece to aid sustainable growth. The best part of consumption is that it is largely insulated to the shorter-term turbulence of global macro conditions. Thus, in an environment where global growth is likely to weaken further, this piece had to be encouraged to get the desired momentum.

This government, of what we have seen till date, doesn’t believe in half hearted measures. Thus, when time came for supporting the middle class or the consuming class, it has gone all in.

The changes to tax slabs along with the rebate is path breaking. Having zero income tax till Rs 12 lakh of income will hugely increase disposable income in the hands of the taxpayer. It is a momentous step forward.

While the income-tax measures garnered all the attention, it is heartening to see the careful balance it provides along with fiscal consolidation. Capex (along with state allocation) finds equal attention with the defence budget leading the way. In my view, we should likely see private capex coming back as capacities starts getting utilised further on back of higher consumption.

One more thing which the Budget has focussed on is the “Ease of Business”. This doesn’t need major resources but needs that mind space and mindset of Government machinery to help create a business-friendly environment. We have seen several proposals in the budget document from removing bottlenecks to decriminalising provisions etc. This surely helps and it needs to be continued on a mission mode as this has lot of scope to improve on. “Ease of Business” has the potential to enlarge the overall pie of revenue and growth by itself.

It has been a power packed Budget with careful balance across all big parameters including boost in consumption, continued capex and fiscal consolidation. Finance Minister Nirmala Sitharaman has weaved her magic to achieve what seemed to be an extremely difficult task.