Union Budget 2025-26: Accelerating India's march towards Viksit Bharat

The government has chosen to focus on four ‘C’s to ensure holistic growth — consumption, capex, continuity (of existing programmes) and consolidation (of the fiscal).

 

The income tax tweaks announced will have twin benefits of leaving more money in the hands of consumers and supporting bank deposits.

 

Capital expenditure, a tenth higher on-year, will boost demand for sectors such as steel, cement and capital goods.

 

The setting up of a ‘Partial Credit Enhancement Facility’ by NaBFID is supportive of capex in the infrastructure sector and the bond market development.

 

Continuity on the reforms front — ease of doing business, boosting employment, and upskilling for productivity — will result in a conducive environment and aid India’s long-term growth prospects.

 

 

Setting up of a high-level committee to review all non-financial sector regulations, certifications, licences and permissions, and the launch of Investment Friendliness Index of States are steps in the right direction for ease of doing business.

 

The enhancement of the credit guarantee cover for MSMEs from Rs 5 crore to Rs 10 crore should make more credit available to these units, which are significant employment generators.

 

Skilling should benefit from setting up of National Centres of Excellence as well as sector-specific steps.

 

The government has maintained its steadfast commitment to fiscal consolidation with its fiscal deficit for FY25 estimated at 4.8 per cent and the FY26 number being budgeted at 4.4 per cent. Rationalisation of government borrowings will soften the interest rates, leaving more space in the bond market for India Inc.

 

Overall, the intent on display is par for the course. Relentless execution is just as crucial in the march towards Viksit Bharat.  (The writer is managing director, Crisil Ratings Ltd)