Dear Readers,

The month of March brings a joyous occasion of Holi which is the festival of sprinkling of colours and is celebrated throughout the country. Holi festival is a symbol of joy, love, harmony and victory of good over evil. As we all know the festival celebrates the triumph of Lord Vishnu as Lord Narasimha over the evil King Hiranyakashipu, who was trying to kill his own son, Prahalad, a great devotee of Lord Vishnu. Additionally, Holi serves as a religious function as well wherein during the previous evening bonfires are lit in a ceremony known as Holika Dahan (burning of Holika who was Prahlad’s evil aunt). Cereals and pulses are also being harvested during this season.

Indian Economy: For the Indian economy, the rating agencies and banks have forecasted a GDP growth of 6-6.4% for FY25 and 5.9-7% for FY26. In order to boost domestic demand and economic activity, the RBI recently lowered the repo rate. The dynamics of global trade and economic stability may be impacted by prospective U.S. tariff on exports from India and many other countries like China, Mexico, Canada.

For India in particular, tariffs will hurt sectors like pharmaceuticals, electrical/industrial machinery, gems & jewellery, iron & steel, textiles, vehicles, apparels and chemicals. Despite the unpredictability of energy prices and uncertainties in the global financial market, average inflation in India is predicted to decrease to 4.2% in the upcoming fiscal year. Average inflation in 2024-25 so far has been 4.4% well below 6% ceiling and only slightly higher than RBI’s 4% target.

Due to capital outflows and uncertainty surrounding international commerce, the Indian rupee continues to depreciate against USD in 2025. Analysts predict that during the upcoming months, market mood will be restrained by the uncertainty surrounding Donald Trump’s tariff threats and their effects on international economies.

Kotak Institutional Equities believes that because the markets are still trading above historical averages and at a substantial premium to the MSCI Emerging Markets Index, they will probably be range bound this year.

However, India’s strong medium-term development prospects, which are anticipated to maintain high values, mitigate the Nifty’s downside.

To summarise, while India’s economy is projected to grow at a healthy rate in the upcoming fiscal year, it faces challenges from global trade uncertainties, inflation risks and currency fluctuations. Domestic factors such as government tax relief, strong agricultural performance and supportive monetary policy are expected to bolster economic growth.

Union Budget 2025: Finance Minister Nirmala Sitharaman presented her eighth consecutive budget. This takes Ms. Sitharaman closer to the record of 10 budgets presented by former Prime Minister Morarji Desai over different time periods.

This year’s budget reinforced the foundation of the country’s progress towards the coveted “Viksit Bharat“ status. Recognising the taxpayer’s contribution, the finance minister has made various simplifications in the Income Tax rules and reduced the tax rate to fuel consumption, thereby giving a boost to the economy. FM has tried her best to boost domestic growth so that the economy faces minimal impact of the geopolitical uncertainties. Stress has been given to bring down debt and give a boost to capital expenditure. FM has allocated `11.21 lakh crore for capital expenditure in the 2025-26 budget.

The budget facilitated exports like handicrafts, marine goods and leather products. There are sector-specific measures as in the case of MSMEs for toys, footwear, food processing, etc.

Allocation of funds for R&D is likely to boost innovation. Our Finance minister however has right-fully continued to stress on infrastructure building as the long-term growth initiative.

Revenue deficit in 2025-26 is targeted at 1.5% of GDP. This is lower than the revised estimate of 1.9% in 2024-25. Fiscal deficit in 2025-26 is targeted at 4.4% of GDP, lower than the revised estimate of 4.8% of GDP in 2024-25. In 2025-26, Rs.1,37,757 crore has been allocated to agriculture which is 2.7% of the union budget.

To rein in inflation, the government has announced plans to boost agricultural output and enhance post-harvest handling. To equip young people with skills so that they succeed in a digital economy, 50,000 Atal Tinkering Labs in government schools over the next 5 years and the Centre of Excellence in Artificial Intelligence (AI) are planned.

The Union Budget 2025-26 thus outlines a comprehensive approach to stimulate economic growth through tax reforms, infrastructure investment, and support for key sectors. While immediate relief measures are evident, the success of these initiatives will depend on effective implementation and the addressing of structural economic challenges.

Conclusion: Budget focuses on agricultural growth and sustainable development. The revision of MSP is also expected along with growth in rural economy and rural consumption.

Policymakers are attempting to rekindle the entrepreneurial spirit of risk-taking by lowering corporate and income tax rates, increasing infra-structure spending, boosting agriculture and allied activities, and a whole lot of other measures.

States are busy hosting investment promotion events showcasing the business opportunities there and several corporate houses have already pledged to invest. The streamlining of the Income Tax Act and its regulations will bring a sense of relaxation to taxpayers. The fear psycho of debts has gripped the entrepreneurs.

To achieve Viksit Bharat, the animal spirit of the entrepreneurs must be revived and needs to be saved from external factors that affect the finances of the enterprises temporarily. Lenders should consider restructuring loans and offering moratorium periods in the event of any unavoidable circumstances. If support is given during critical times, entrepreneurs will be able to take further risk. Political leaders and lenders should join hands with entrepreneurs in fructifying the mission of nation building through employment generation and wealth creation.

Dr. H.P. Kanoria

Editor