“Budget 2025 Expectations Part 1: What to Expect and How It Could Impact Your Finances”

Key Expectations from Union Budget 2025

The upcoming Union Budget 2025 is anticipated to include innovative measures to drive growth across critical sectors like infrastructure, agriculture, MSMEs, and more. Here’s a quick overview of the key recommendations and proposals based on a report by the State Bank of India:

Infrastructure Development

The government may introduce alternative funding options, such as tax-free and tax-paid bonds, to reduce borrowing costs and encourage infrastructure development.

Agriculture Sector

• A Credit Guarantee Fund Trust for Agri & Allied Sectors (CGFTAAS) could be established to provide coverage for fresh loans, including Agri Value Chain Financing (AVCF).
• Recommendations also include implementing strategies from the 2021 agricultural value chain report to improve efficiency.

Housing Sector

• The definition of affordable housing under Priority Sector Lending (PSL) might be revised:
  • Projects costing up to ₹65 lakh in metro cities and ₹50 lakh in other regions could now qualify as affordable housing.

Support for MSMEs

• New PLI schemes could be introduced for textiles, handicrafts, food processing, leather, electronics, and auto components.
• Increased allocation to the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and incentives for banks to boost MSME loan coverage are also proposed.

Sustainability and Disaster Management

• A green eco classification could be introduced to align investments with India’s climate goals under the Nationally Determined Contributions (NDC).
• An Emergency Fund is proposed to mitigate financial losses from natural disasters through a public-private insurance initiative.

Education Sector

The government may promote partnerships with global institutions and set up overseas centers for Indian educational institutes to attract international students, supporting India’s goal of becoming a knowledge-driven economy.

Startups Seek Tax Relief and Digital Push

• Startups are advocating for simplified processes and enhanced digital infrastructure to boost growth and attract investors.
• Access to working capital is essential, but traditional lenders often hesitate due to early-stage losses.
• Startups invest significantly in technology and processes to achieve product-market fit.
• This highlights the need for improved financial support mechanisms to aid their growth.

IESA Advocates for Increased Support for the Semiconductor Sector

• The India Electronics and Semiconductor Association (IESA) is urging the government to allocate more funds to the electronics and semiconductor sector.
• In its recommendations, IESA proposed a $20 billion boost to the production-linked incentive (PLI) scheme over the next five years to enhance the sector’s growth.

Industry Leaders Highlight Need for Strategic Support in Electronics and Semiconductors

• Industry leaders have called for greater budgetary support for the electronics and semiconductor industry ahead of the Budget presentation.
• Ajai Chowdhry, co-founder of HCL and chairman of the EPIC Foundation, stressed the importance of achieving “strategic autonomy” amid global economic and geopolitical challenges, particularly in light of US technology export restrictions.

Budget Priorities

Analysts expect the finance minister to focus on boosting consumption, accelerating economic growth, and maintaining fiscal discipline while promoting resilience and sustainability across key sectors. These measures aim to build a stronger, more sustainable, and inclusive economy for India.

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