Investors: Keeping the growth engine running in Budget 2025
India has experienced a sharp rise in foreign direct investment (FDI) inflows and a surge in domestic equity market participation. Gross inward FDI during April-November 2024 increased to $ 55.6 billion from $ 47.2 billion a year ago, according to the Reserve Bank of India’s data (January 2025 bulletin).
To sustain this momentum, Budget 2025 could introduce policies aimed at easing regulatory frameworks, streamlining compliance, and offering tax incentives for both domestic and foreign investors. Moin Ladha, Partner at Khaitan & Co, believes the government may announce 100% FDI in the insurance sector, up from the current 74%, to attract global investors.
Capital markets, too, anticipate potential capital gains tax reforms, rationalising long-term and short-term rates to encourage greater participation. Tax breaks for FPIs and venture capital inflows could further fuel investment in startups and technology.
Regulatory simplification will also be key. Streamlining compliance, particularly for MSMEs and startups, would improve ease of doing business. Dinesh Gulati, COO of IndiaMART, emphasised the need for a simplified tax structure to reduce compliance costs for small businesses.With India positioning itself as a global financial hub, Budget 2025 could make investors a primary focus, fostering growth and ensuring a favourable investment environment.
The unemployed: Tackling job market challenges in Budget 2025
Despite India’s economic expansion, job creation has struggled to keep pace with growth in the country’s working-age population. Budget 2025 is expected to reinforce the government’s commitment to skilling, employment generation and labour-intensive industries.
CII President Sanjiv Puri urged for a renewed focus on labour-intensive industries such as apparel, footwear, furniture, tourism, real estate and construction — sectors with high employment potential. Expanding production-linked incentives (PLI) for these industries could significantly boost hiring.
Skill development is likely to be a key budgetary focus, particularly in AI, robotics and renewable energy. Swaminathan Subramanian, COO at SMFG India Credit, advocates for greater industry participation in skilling programs and expansion of support for first-time job seekers and women professionals.
Policies incentivising companies to hire fresh graduates — such as the internship program in 500 top companies that was announced last year — may be expanded. Additionally, wage subsidy programs, apprenticeship incentives and employment-linked tax benefits could encourage job creation.
With India aiming to become a global workforce powerhouse, Budget 2025 is likely to allocate significant resources toward employment generation and skill-building initiatives.
India Inc: Strengthening corporate growth through Budget 2025
Corporate India has been a major beneficiary of government-backed tax cuts, PLI schemes, and infrastructure investments. With India targeting a $10-trillion economy by 2032, Budget 2025 is expected to reinforce measures that support business expansion, boost exports and foster innovation.
Gaurav Grover, CEO Ofi India, highlights the need for simplified tax structures, faster GST refunds and improved logistics infrastructure to enhance ease of doing business.
Corporate India is keen on further rationalisation of tax rates, particularly for mid-sized companies. Extending the 22% corporate tax rate benefits to a broader range of firms could drive competitiveness.
PLI schemes — already fueling sectors like semiconductors, mobile manufacturing and renewables — may be expanded to new industries. Shetal Mehta, Co-Founder of Suchi Semicon, emphasises the need for additional incentives in semiconductor manufacturing to strengthen India’s position in global electronics.
With a push toward ‘Make in India’ and ‘Atmanirbhar Bharat’, Budget 2025 will likely introduce more industry-friendly policies to fuel corporate expansion and global competitiveness.
Rural India: The driving force behind consumption growth in Budget 2025
Factors such as rising consumption (as seen in the growing demand for consumer goods) and increasing digital adoption have lately put rural India at the heart of economic and political strategy-making in India. Budget 2025 is expected to retain that focus by prioritising rural India in respect of employment, infrastructure and credit access.
Employment programs like MGNREGA could see increased allocations, particularly to support rural infrastructure development. Bandhan Bank’s Siddhartha Sanyal, in a piece for The Economic Times, suggests broadening MGNREGA’s scope to include skill-building initiatives for long-term economic benefits.
With agriculture being a major driver, incentives for mechanisation, irrigation projects, and crop diversification are expected. Thomas John Muthoot, Chairman of Muthoot Pappachan Group, underscores the importance of rural credit schemes to boost productivity and incomes.
Additionally, strengthening digital infrastructure in villages — broadband connectivity, fintech access and e-commerce integration — could bridge the rural-urban divide. The FMCG and automobile sectors may benefit from GST relief on essential goods or targeted cash transfer schemes to sustain demand.
Budget 2025 is expected to bolster rural development, ensuring employment, financial inclusion, and digital connectivity to drive long-term growth.
Budget 2025: Defining the core beneficiaries of India’s economic agenda
As India moves towards a $10 trillion economy, Budget 2025 must strike a delicate balance between economic expansion and social welfare. Investors, the unemployed, corporate India and rural populations are all potential focus groups in Sitharaman’s upcoming budget.
Will new ‘castes of character’ emerge in Budget 2025? All eyes are on Sitharaman’s speech, which will determine the government’s economic priorities and beneficiaries for the coming year.
