The Indian stock market is facing issues arising from the slowdown in economic growth, foreign capital outflows, and uncertainty over global factors like the US Federal Reserve’s interest rate trajectory and trade policies under Donald Trump.
Against this background, the market participants are eagerly looking at the Union Budget 2025 to be presented by Finance Minister Nirmala Sitharaman on February 1. This is an opportunity that can positively impact the Indian stock market since the challenges will have been met while growth and fiscal prudence are enhanced.
Balancing Growth and Fiscal Prudence as the Indian Stock Market Suffers Due to Economic Growth
Experts say the Budget 2025 will have to walk the tightrope between growth and fiscal prudence. “Given the global economic shift towards protectionism, it is a growth-oriented budget the country needs. Tax cuts for urban consumption, incentives for private investments, could be some much-needed support,” said Nilesh Shah, MD, Kotak Mahindra AMC.
Simultaneously, Shah made emphasis on the need for fiscal rectitude. His vision to consolidate the fiscal deficit perceives strategic PSU divestiture as an efficient means of correcting the fiscal wrong.
Some Initiatives to Get the Sentiment Back on Market Streets
Market analysts hope the budget will implement reforms that can trigger consumption, hasten manufacturing, and provide jobs. Reforms on income taxes are believed to include the restructuring of tax rates, increasing disposable income, and hence boosting economic activities.
Other expected moves include an increased allocation for infrastructure schemes, rationalization of capital gains tax, and measures to facilitate start-ups and small enterprises. Some of the suggestions that might positively impact the Indian stock market include reducing long-term capital gains tax rates and increasing the indexation benefit.
According to Green Portfolio PMS’ Sreeram Ramdas, expenditure of more than ₹2.95 trillion in terms of capital outlays, mostly from BOT (build-operate-transfer) and HAM (hybrid annuity model) projects, might be the push toward economic growth in a cost-neutral manner.
India’s equity markets are keenly awaiting Union Budget 2025, as this budgetary initiative is expected to contain short-term risks while also developing long-term security.
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