It’s that time of the year again. India is ready to welcome its Union Budget 2025. Nirmala Sitharaman, the present Finance Minister of India will present Narendra Modi led government 3.0’s Union Budget of the year 2025. This will be her eighth consecutive budget presentation, with six annual and two interim budgets. It also marks the first full year budget of the Modi Government’s third term at the Center.
Before we discuss this year’s expected Budget, here is a look at the ‘Black Budget of India’ presented in the year 1973-74:
The 1973-74 Union Budget is distinctly referred as the ‘Black Budget’ in history. That year, India was facing some profound economic challenges along with certain government policies that impacted the country’s financial situation of that time. Owing to the India-Pakistan War of 1971 India was going through a significant financial crunch as the war expenses had sucked up the government treasury. Further worsening the situation, the country also experienced natural disasters, even drought that majorly affected the agricultural production. The simultaneous occurrence of events led to a reduction in government revenue, a rise in expenditure and a broadening budget deficit.
The Union Budget of 1973-74 was presented by then Finance Minister Yashwantrao B. Chavan on 28th February 1973, under the leadership of Prime Minister Indira Gandhi. He had revealed a fiscal deficit of Rs 550 crore, a hefty sum rather unprecedented at that time, in that era. This fact reveals the collapsing situation of India, facing a deep economic distress where there was an ever broadening fiscal deficit (the gap between the government’s total revenue and expenditure). During the budget speech, Chavan was quoted saying, “The situation in the country has worsened due to drought, there has been a huge decrease in food garin production, which has increased the budget deficit.”
The Indian Government had made some important announcements in the budget that included a provision of Rs 56 crore that nationalized coal mines, insurance companies and the Indian Copper Corporation. The government had stated that nationalizing coal mines will help in meeting the increasing demands of the energy sector. The ‘Black Budget’ was focused on cutting down the financial expenses and adopting necessary financial discipline.
The nationalization measures, along with key economic difficulties are considered to forebear the Emergency 1975.
Expectations from the 2025 Union Budget
The anticipations are already around for the upcoming budget, with individuals and industries laying forth their expectations and demands. Finance experts are expecting that there might be income tax exemptions for the tax payers, accompanied by policies that will boost economic growth with a capex push and GST rationalization.
The budget 2025 comes over amidst ongoing economic challenges, where there are deep inflation concerns with the GDP growth projected to be slow, hitting down to four-year low at 6.4%. Now the task would be to balance growth, revenue generation and fiscal discipline altogether.
Key expectations are with the real estate sector that wants an increased deduction on home loan interest that makes housing affordable, renewable energy can be a key focus, the auto industry bagging for a policy boost, needed reforms in energy sector, a revisit to the provisions of the LTA (Leave Travel Allowance), and more.
The major question also lies with the change in tax slabs, will the government raise the basic exemption limit and cut income tax? Will there be an addition or a removal of the income tax slabs? The current tax rates are 5%, 10%, 15%, 20% and 30%. Experts suggest that restructuring the slabs would make tax fairer. Moreover, there are also hopes of a hike in standard deductions available under the old and new tax regime.
The Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) will be open on February 1st owing to the presentation of the Union Budget despite a Saturday.
Meet the team
The Budget preparation team led by Finance Minister Nirmala Sitharaman has Economic Affairs Secretary Ajay Seth and Chief Economic Advisor V Anantha Nageswaran as its crucial members. Apart from these, several new members are now part of the team that includes:
Tuhin Kanta Pandey (Finance and Revenue Secretary)
Manoj Govil (Expenditure Secretary)
M Nagaraju (Financial Services Secretary)
Arunish Chawla (DIPAM Secretary)
The budget 2025 comes over amidst ongoing economic challenges, where there are deep inflation concerns with the GDP growth projected to be slow, hitting down to four-year low at 6.4%. Now the task would be to balance growth, revenue generation and fiscal discipline altogether. It will reflect on the economic vision of the Narendra Modi Government, but will also reflect upon the key fiscal concerns ahead. Let us wait for February 1, the day that seals India’s economic fate for FY 2025-26!
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