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Budget 2025: India Inc Must Double Up to Match Centres Pace for Next 50 Years, SBI Report

Budget 2025: SBI Report urges India Inc. to align with the government's vision, emphasizing infrastructure, progressive tax reforms, and fiscal discipline for long-term growth.

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Harsh
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Budget 2025

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The SBI Research report ahead of the Union Budget 2025-26 emphasises the need for India Inc. to align with the government’s long-term vision of creating a robust infrastructure, both physically and socially, to support various income groups. This alignment is crucial for India’s growth trajectory, particularly in manufacturing and infrastructure development.

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India’s Path Towards Becoming the World’s Manufacturer

India has shown strong economic recovery post-pandemic, with robust profitability and viable financing options. A deep and vibrant capital market, combined with a strong banking system, is driving this growth. The report suggests that India’s strategic positioning to become a global manufacturing hub will thrive on these investments, which are crucial to building the country’s infrastructure and ensuring future growth.

Need for Progressive Tax Reforms

SBI's report calls for a more progressive tax regime, which would foster better tax compliance and boost disposable income. By encouraging more people to adopt the New Tax regime, the government can enhance consumption across various income groups. While this may lead to some reduction in tax collections, the long-term benefits could include stronger economic growth and better fiscal health.

Fiscal Deficit and Growth Outlook

Fiscal prudence remains essential as the government continues to consolidate its finances. The report predicts that the fiscal deficit could stabilize at 4.5% of GDP by FY26, amounting to Rs 15.9 lakh crore. This figure is expected to be the "new normal" as global uncertainties persist. Smart borrowing strategies, like gross market borrowings, will help manage the deficit and support inclusive growth.

Direct Taxes and Women-Centric Schemes

The contribution of direct taxes to India’s total tax revenue reached 58% in 2023-24, the highest in 14 years. Personal income tax collections have grown significantly, surpassing corporate tax contributions for the first time in five years. However, the report also highlights concerns regarding women-centric schemes introduced by various states. While these schemes aim to empower women, they could strain state finances if not carefully managed. The report proposes exploring a universal income transfer scheme to reduce subsidies and improve fiscal stability.

As India looks ahead to its long-term growth, SBI's report on Budget 2025 outlines key areas where India Inc. and the government must work together. From progressive tax reforms to strategic fiscal management, the focus should be on sustaining economic growth while ensuring inclusivity for all. By following this path, India can solidify its position as a manufacturing giant in the global economy.

SBI report Budget
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