With the Union Budget 2025-26 approaching, expectations are high as it marks the first full budget of Prime Minister Narendra Modi’s third term. The government aims to steer India towards becoming a $7 trillion economy by 2030, focusing on self-reliance and resilience in global value chains to establish India as a manufacturing and innovation hub.
Key Expectations from Budget 2025:
Infrastructure Development: Continued investment in roads, railways, ports, and digital infrastructure is anticipated to boost connectivity and drive economic growth across the country.
Tax Reforms: The budget is expected to abolish the ‘Angel Tax’ on startup investments, encouraging innovation and attracting foreign investments. Additionally, there may be a shift towards a zero income tax for individuals earning less than ₹10 lakh per year.
Support for Startups: Significant reforms are likely to be introduced to attract foreign investments in startups, with a focus on cross-border collaborations and access to international markets.
Technological Advancements: The budget is set to prioritize technological growth, building on previous allocations for AI initiatives and aiming for further advancements across various sectors.
Sector-Specific Investments: There are expectations for substantial funding in renewable energy development, with at least ₹5,000 crore earmarked for extending the ISTS waiver for renewable energy transmission.
Inclusive Growth: The government plans to expand welfare schemes and introduce new initiatives targeting rural development, healthcare, education, and skill development, with a particular focus on empowering women and marginalized communities.
Economic Challenges: Balancing fiscal consolidation with economic growth amidst rising inflation will be crucial. The government aims for a nominal GDP growth rate of at least 10.5% beyond FY25 to achieve its economic goals.
Power Sector Insights:
As part of its efforts to boost the power sector, the Modi government is expected to announce various reforms in the upcoming budget. Investors are closely watching power stocks such as Tata Power, NHPC, NTPC, and JSW Energy ahead of the budget announcements.
Brokerage firm CLSA has advised investors to consider these stocks selectively due to cyclical demand patterns in the power sector.
NTPC: Target price of ₹459; currently trading at ₹322.75.
NHPC: Target price of ₹120; trading at ₹76.16.
CESC: Target price of ₹195; trading at ₹140.
As Finance Minister Nirmala Sitharaman prepares to present the Economic Survey today, all eyes will be on how these expectations are addressed in the Budget 2025-26.
