Bhubaneswar: February 1 will see a budget for Bharat and India. For which, the budget size of the Union govt may touch the landmark of Rs 50 lakh cr.
The Union Finance Minister Nirmala Sitharaman in her seventh consecutive Union Budget in the Lok Sabha will be going to focus on both the rural and urban India to keep the Indian economy wheels keep pace with the PM Modi’s target of becoming third largest economy in the world.
As per data released by ICICI bank report, consumption index showed a tick up in consumption spending in October 2024 on the back of festive demand but has decelerated since then.
See the images below that shows a decline in 2-wheeler and Passenger vehicle sales, besides a slowdown in GST collections hinting big at slowing down of private consumption..
“Moderate wage growth in corporate India vis-a-vis high food inflation impact was seen as two wheeler sales saw large downward momentum in December 2024,” the report observed.
Similarly, as per Axis Bank report, the rural economy is still not showing signs of a full recovery to touch the pre-Covid levels.
The above data hints at a slide in urban consumption level in the country and simultaneously, the rural India engine is also not running at full throttle.
WHAT NIRMALA SITHARAMAN WILL DO?
While in order to give a boost to urban consumption, Union FM will tweak the personal income taxes to give more money at hands for disposal, top bankers believe that the Budget 2025-26 will focus more on rural India to instill the kick in rural consumption.
Almost all top economists of private (ICICI & AXIS) and public sector banks (Bank of Baroda, SBI) are unanimous on the approach of Union Budget 2025-26 to address the slowing GDP for slackening of private investments.
BUDGET 2025-26 RURAL FINE PRINT
- In order to boost rural demand, the allocation of PM-KISAN will be hiked to around Rs 75,000 in 2025-26 from Rs 60,000 in 2024-25.
- The Budget may increase the PM-KISAN amount to Rs 8000 from Rs 6000.
- MGNREGA scheme will see the highest allocation of Rs 1 Lakh crore .
- As recently PM Modi in a Delhi election rally promised houses for all, Pradhan Mantri Awas Yojana allocation may be hiked to Rs 1 lakh Cr from Rs 85000cr now.
- Increase the Kisan Credit Card loan limit to Rs 5 lakh from Rs 3 lakh now.
- PM SINCHAI yojana will see a higher allocation.
- Budget may trim the food subsidy expenditure
- Fertilizer subsidy will be retained at the same level.
JOB FOCUS
- Outlay for Skill India programme will be hiked to over Rs 4000cr.
- After success of PLI in mobile manufacturing, Budget may announce Production Linked Incentive (PLI) schemes for MSME sectors.
PUMP PRIMING GROWTH
In order to crowd in the slackening private investements, the budget 2025-26 may go for increased capital expenditure.
Data with ICICI bank showed that During Apr-Nov 2024, total expenditure has increased by 3.3% YoY only.
The slow growth was attributed to a drop in capital spending, which has fallen by 12% YoY as against an increase projected in the Budget. (See the images below)
The report says to pump priming the growth, in Budget estimates of 2024-25, govt may have to increase the capex by 65% Year-on-Year.
- 2025-26 Capital expenditure (Capex) may be at Rs 11.1 lakh cr
