India's Economic Growth Expected to Moderate in FY25 as Union Budget Prioritizes Inclusive Growth
New Delhi: Amid rising global uncertainties, including looming tariffs under the second term of US President-elect Donald Trump, India's Finance Minister Nirmala Sitharaman is expected to unveil a budget that prioritizes agriculture, small businesses, household consumption, and job creation.
The eighth budget of the National Democratic Alliance (NDA) government's third term in office is likely to focus on inclusive growth, with an emphasis on advancing the government's agenda for promoting sustainable growth. According to sources familiar with discussions in the government, Sitharaman's proposals are expected to include measures to boost household consumption, which accounts for over half of India's economy and is its biggest growth engine.
Industry body Confederation of Indian Industry (CII) has proposed various measures to boost consumption, including cutting excise duty on auto fuels, lowering tax rates on personal income up to ₹20 lakh, stepping up guaranteed rural job wages, and providing social transfers to farmers. The government's initiatives are also expected to focus on skilling, research, and job creation in areas related to artificial intelligence (AI).
Agriculture sector is another key area of focus for Sitharaman's budget, with a focus on value-added crops, including fruits, vegetables, and unique horticultural products to boost farmers' incomes. Measures are likely to enhance investment in technology, improve production methods, develop marketing infrastructure, and reduce post-harvest losses.
The agriculture sector supports 42.3% of the population and contributes 18.2% of India's GDP. The government may also announce initiatives to ensure that farmers receive quality agricultural inputs, including high-grade seeds to improve yields and overall productivity.
In addition to these priorities, Sitharaman is expected to support small businesses through various initiatives, including collateral-free loans up to ₹15 crore. Industry leaders have pitched for targeted incentives to enhance the sector's productivity, improve farmers' incomes, and integrate Indian agriculture into the global supply chain more effectively.
"We want a strong emphasis on rural and agriculture-based initiatives in the upcoming budget," said Anurag Shrivastava, founder of farm-focused startup Kisaan Mitra. "This approach aims to position agriculture as a significant contributor to India's growth story, reflecting its historical roots as an agrarian economy."
Overall, Sitharaman's budget is expected to focus on creating a more inclusive and sustainable growth model for India, with a major emphasis on advancing the government's agenda for promoting agricultural productivity and supporting small businesses.
Key Provisions Expected in Budget:
- Measures to boost household consumption
- Initiatives to support farmers, including value-added crops and quality agricultural inputs
- Targeted incentives for upgrading rice mills with energy-efficient technologies
- Collateral-free loans up to ₹15 crore for MSMEs
- Enhanced focus on skilling, research, and job creation in areas related to AI.
India's Economic Growth Outlook:
Growth is expected to moderate to 6.4% in FY25 after an average of 8.3% in the three preceding financial years.