Budget 2025: The tri-focus imperative
India Budget: As the government prepares to present the Union Budget 2025-26, there are high expectations for allocations to strategic sectors that will drive economic growth, especially after the sharp growth deceleration in the second quarter. In our view, the budget provides an opportunity for the government to reinforce its commitment to the overall growth of the economy with a sustainability perspective. This article looks at three critical areas that require the government’s specific focus to achieve long-term growth.
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1. Infrastructure funding
Over the past few years, the government’s infrastructure funding has seen significant growth. Between fiscals 2020 and 2024, the government capital expenditure (capex) logged a 35% compound annual growth rate (CAGR). However, in the first half of the current fiscal, this crucial funding witnessed a sharp decline, falling 15% on-year (YoY), partly attributable to the general elections and various state elections, including Maharashtra.
To begin with, the Union Budget 2024-25 had seen a moderation in infrastructure funding. Overall, the funding slowdown adversely affected the growth momentum, with the GDP growth in the second quarter slowing to 5.4%.
Infrastructure investments are critical to economic growth as they have
