Union Budget - 2025

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Print media again proved to be one of the best sources for consuming news. Spent half of my Sunday reading Hindustan Times filled with Budget insights.

Here are some insights, you will seldom find elsewhere:

1. In FY2025, Overall spending fall short of 2.2% from budgeted estimates, Capital expenditure shortfall is staggering 8.3% and on the other hand Revenue Expenditure was higher by 0.5% from budgeted numbers.

2. The Nominal GDP growth assumed in the budget is 10.1% (as compared to 10.5% in July 24 Budget). In real terms Economic survey has forecasted the range of 6.3 - 6.8%. Don’t expect a big bounce back to some double-digit growth or near 10% growth.

3. No one benefits from Old tax Regime now, except high rent payers. (>60k). RIP Old tax regime, hope you soon find a way out of our syllabus too.

4. The already small basket of taxpayers will get much smaller now. This fact along with the growing importance of Income Tax Collections in the govt. revenue pool shows that this privileged minority is also becoming an increasingly important source for the economy.

5. The income tax and corporate tax collections ratio increased from 1.14 in 2023-24 to 1.33 in 2025-26.

6. The relief in tax structure is estimated to put 1 Lakh Crores in the hands of people, How the Tax Multiplier works out will be interesting to watch for.

7. Even after the tax rate cuts, Tax buoyancy (ratio of tax revenue growth to GDP growth) is expected to remain same as the last fiscal.

8. The govt. aims to attain a Debt to GDP level of about 50% by Fiscal 2031 from 57% now.

9. Politics - BJP appealed Delhi and its core voter base (middle class) by reducing tax rates and appealed Bihar (elections this year) by launching different programs. (Just for context - Delhi contributes over 10% to the Income Tax collections as against GSVA of 3.6%)

10. Geopolitics - Bhutan to get highest external aid - 2150 Cr., Afghanistan's aid cut half from 200 Cr., 50% increase in Maldives' to 600 Cr., 100 Cr. Budget to develop Chabahar fort in Iran.

11. Govt. has kept it's subsidy bills flat, and thereby growth in revenue spending muted.

12. Govt. to augment farm productivity in regions (100 Districts) with low farm productivity and crop intensity. (Just for context China has been reducing the use of fertilizer for 8 consecutive years, while increasing agricultural output.)

13. Health spending is budgeted to be 1.94% of the Total budget and 0.28% of GDP. And the same for education are 2.54% and 0.36% respectively.

14. Allocation to renewable energy sector 53% to 26.5k Cr, eliminates customs duties on waste and scrap of several critical minerals.

15. Allocated 20,000 Crs. for R&D in Nuclear Energy Sector, for development of small modular reactors. Govt. aims to achieve 100 GW  atomic energy by 2047.

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