Union Budget FY25-26: A prudent approach to fiscal discipline and sustainable growth

The Union Budget for FY25-26 strikes a balance between fiscal discipline and the need for sustained economic growth. The government’s decision to reduce the fiscal deficit target from 4.8% to 4.4% is an important step towards long-term financial stability. Although economic growth is estimated to decline from 8% in the previous fiscal to between 6.3% and 6.8% (real GDP growth), this reflects a more stable and sustainable growth rate given the global economic challenges.

 

Empowering the middle class:

A key aspect of the budget is the revision of the personal income tax slab. This will increase the disposable income of the middle class, which will encourage consumer spending and boost the economy. Although inflation and wage growth constraints are a matter of concern, tax relief will support the household budget and boost domestic demand.

 

Support to agriculture and rural development:

The budget has given special attention to agricultural reforms. The government has announced a national mission to promote high-yield crops and expanded credit facilities for farmers. These measures will increase rural incomes and boost agricultural productivity, helping to achieve the goal of inclusive growth. In addition, by focusing on sustainable agriculture practices, the government is laying the foundation for long-term rural development, which will reduce regional disparities and boost overall economic growth.

Attracting Foreign Investment:

On the investment front, it has been decided to increase the limit of Foreign Direct Investment (FDI) in the insurance sector to 100%. This move will help attract global capital and strengthen the financial services sector. Currently, the pace of private investment is slow, but this reform, as well as efforts to ease regulatory processes, will pave the way for strong private sector participation in the future.

 

Balanced Focus on Fiscal Discipline:

The government’s focus on fiscal discipline indicates long-term economic stability. The effort to reduce the fiscal deficit will strengthen investor confidence and keep the economy stable despite global economic uncertainties. Moreover, this budget lays a strong economic foundation by maintaining a balance between development plans and fiscal discipline.

 

Conclusion:

The Union Budget for FY25-26 presents a balanced outlook, with an emphasis on supporting consumption, agricultural growth and foreign investment while also ensuring fiscal responsibility. While some challenges still remain, the budget’s focus on long-term stability and sustainable growth presents a positive outlook for India’s economic journey. Tax relief, agricultural reforms and steps to boost investment point to a bright economic future for India