India's 2025 Budget: Navigating Economic Growth and Sector-Specific Opportunities

Sustaining Economic Momentum

India's projected GDP growth of 6.3% to 6.8% in fiscal year 2026 hinges on the strategic direction of the 2025 budget. Professor Vishwanathan Iyer of the Great Lakes Institute of Management, Chennai, emphasizes the importance of focusing on manufacturing, infrastructure, and digital transformation to drive productivity and job creation. Investments in small and medium-sized enterprises (SMEs), skill development, and AI-driven innovation are crucial for sustained economic expansion.

Dr. Vikas Prakash, also of Great Lakes, commends the projected growth amidst global uncertainty, echoing the sentiment of recent business surveys. He highlights the Chief Economic Advisor's focus on deregulation, drawing parallels to the 1991 budget that prioritized easing business operations over fiscal incentives. This approach aims to address the lagging private sector investment. Dr. Prakash advocates for state-level "Ease of Doing Business" initiatives, including rationalizing stamp duty and reforming the Factories Act. He also suggests reevaluating MSME incentives to encourage companies to scale up and achieve economies of scale.

Education: Investing in the Nation's Future

Dr. Jones, Principal at Great Lakes, Gurgaon, reflects on the mixed bag of the previous budget. While support for world-class institutions increased, access for less privileged students suffered due to cuts in scholarships and student aid. He points to the stark gap between India's education spending (4.5% of GDP) and that of developed nations (6-14%). Dr. Jones urges for increased allocation in the 2025-26 budget, particularly for digital learning, skills development, technical and professional education, and teacher upskilling. He also anticipates continued focus on internationalization initiatives and R&D. "A nation that educates its citizens has a longer chance of global success," he asserts.

Arti Dawar, Deputy CEO of Shiv Nadar School, emphasizes the need for increased collaboration with industry for internships and skill-based training, and greater investment in technology-driven solutions. She advocates for enhancing access to education through initiatives like the PM Vidyalakshmi scheme and streamlining patent applications for educational institutions to fuel innovation.

Sector-Specific Insights and Expectations

Aditi Nayar, Chief Economist at ICRA Limited, analyzes the core sector growth, noting a slight easing in December 2024. Despite this, she expects moderate IIP growth in the coming months.

Manufacturing: Boosting Domestic Production

Abhishek Dua, CEO of Showroom B2B, suggests expanding the Production-Linked Incentive (PLI) scheme to include high-demand sub-sectors like retail, attracting investment and reducing import dependency. He also champions simplified processes for MSMEs and incentives for local manufacturing and export-oriented policies to boost "Make in India" and "Atmanirbhar Bharat" initiatives.

Retail: Driving Consumer Demand

Kashika Malhotra of Brandman Retail anticipates the budget will address key retail concerns. She suggests potential reductions in GST and customs duties on certain goods to stimulate consumer spending and measures like faceless assessments for smoother GST compliance.

AI & Technology: Embracing Innovation

Sourabh Deorah, CEO of AdvantageClub.ai, highlights India's burgeoning AI market and underscores the importance of investing in research, digital infrastructure, and emerging technologies. He calls for simplified taxes and targeted incentives for startups to foster innovation and scalability.

Sourabh also advocates for expanded tax benefits for salaried employees under the new regime to encompass wellness services, reflecting the evolving needs of today's workforce.

Pharmaceuticals: Fostering R&D and Innovation

Dr. Saurabh Arora, Managing Director of Auriga Research, hopes for renewed focus on pharmaceutical R&D, including weighted tax deductions and a potential performance-linked model for technology upgrades, similar to the PLI scheme.

Healthcare: Strengthening Accessibility and Infrastructure

Raja S., Founder of Hearzap, emphasizes the need for continued investment in rural healthcare infrastructure, digital health adoption, and public-private partnerships. He believes that strengthening primary and preventive care, along with investments in training and research, is essential for affordable and accessible healthcare.

Real Estate: Recognizing Emerging Asset Classes

Vaibhav Khanna of Ezstays highlights the potential of student housing as an emerging asset class. He anticipates budget measures to incentivize investment in this segment, such as tax benefits for student housing-focused REITs.

ESG: Prioritizing Sustainability

Rajesh Patel, CEO of Snowkap, calls for a strong focus on climate risk management and policies that encourage ESG integration in business operations. He sees the continued reduction of duties on renewable energy as crucial for achieving India's net-zero ambitions.

Insurance: Adapting to Evolving Healthcare Needs

Deepanker Mahajan of CoverYou emphasizes the need for comprehensive insurance solutions for healthcare professionals, addressing the emerging digital threats and instances of violence. He advocates for increased financial literacy and insurance awareness within the healthcare sector.