Budget 2025 lands softly—markets hesitate as capex slows
Subscribe to enjoy similar stories. The first full budget of Modi 3.0 government’s arrived at a precarious time. India, the world’s fastest-growing major economy, is now grappling with a seven-quarter-low GDP growth rate in Q2 FY25.
More concerning is this has been tagged as a “structural slowdown," caused by slowing government capital expenditure, weak manufacturing, sluggish exports, and lacklustre private investment. Read this | Budget to offer blueprint of reforms under Modi 3.0 Naturally, expectations from the budget were sky-high, and the markets reflected this optimism, with the Nifty 50 breaching 23,600 ahead of the announcement. While the budget delivered on key fronts—tax reliefs to boost consumption and continued focus on rural support and emerging industries—its fragmented approach to infrastructure left some sectors underwhelmed.
As a result, the broader Nifty 50 index remained flat on budget day. At the heart of India’s growth troubles lies weak consumption demand. Rural consumption has struggled for years due to erratic weather, while urban demand has been hit by persistent inflation and the fading of post-pandemic spending momentum.
Given that private capex is unlikely to pick up without a surge in demand, the budget’s focus on tax reliefs was well-placed. Read this | Budget 2025 | A ₹1 trillion largesse for India's middle class Finance minister Nirmala Sitharaman underlined this focus, stating, “A country is not just its soil; a country is its people." And the much-anticipated tax reliefs followed. Under the new tax regime, salaried individuals earning up to ₹12.75 lakh will pay no tax, a sharp increase from the previous ₹7.75 lakh exemption limit.
Read more on livemint.com
