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Informist, Saturday, Feb. 1, 2025

MUMBAI - Following is a summary of first views of economists, industry honchos, and market experts on the Union Budget for 2025-26 (Apr-Mar), presented in Parliament by Finance Minister Nirmala Sitharaman on Saturday:

ECONOMISTS

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NOMURA INDIA ECONOMIST AURODEEP NANDI

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The Budget gives a simultaneous boost to the government's steadfast record of post-pandemic fiscal discipline, while also addressing the slump in urban consumption by offering income tax concessions to the middle class, while retaining the broad focus on capex, manufacturing, and exports. The fiscal wizardry of the numbers has been the ability to cut fiscal deficit from 4.8% of GDP in the current financial year ending March to 4.4% of GDP in FY26, while simultaneously announcing income tax concessions and retaining a decent public investment outlay.

Much of this has been possible on the back of a bonanza of RBI dividend and expectations of healthy income tax collections. Overall, the Budget is in line with our expectations, and the fiscal prudence keeps India's fiscal risk premia low. It should provide greater legroom to the Reserve Bank of India to begin lowering its policy rate at the February meeting of the Monetary Policy Committee.  

(Gowri Lakshmi)

INDUSTRY LEADERS

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PARADIGM COMMODITY FOUNDER AND CEO BIREN VAKIL

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The government wants to promote production of the extra-long staple cotton variety by introducing better seeds and allocating INR 5 billion for the 'Cotton Technology Mission', as this variety is higher priced than the already existing Bt cotton. The Centre has hinted at providing technological support for increasing productivity of the already existing medium staple variety.

The price of extra-long staple cotton is around INR 75,000 per candy (1 candy = 356 kg), while that of Bt cotton is around INR 55,000 per candy. Moreover, the extra-long staple variety is produced in a few countries such as Egypt and the US, but the prices are much higher. Hence, producing such a variety in the country will help with better price realisation and make Indian cotton competitive in the international market.

Farmers had stopped growing the extra-long staple variety cotton as it takes a lot more labour, technology and time to grow, but due to the fund allocation, farmers will be encouraged to shift to planting more of this variety, and it will also boost the textile industry as major textile firms require this variety of cotton. 

(Taniva Singha Roy)

SUNVIN GROUP CEO SANDEEP BAJORIA

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There are no measures for oilseeds and edible oils in this Budget. However, the finance minister has spoken about pulses and cotton. The focus on achieving self-sufficiency in pulses is a good step. Tur prices are falling below the minimum support price. Hence, farmers hesitate to sell them at lower prices.

Lower cost and freight quotes from Myanmar for new crops, along with the availability of cheaper African stock, have put pressure on market sentiment. The government wants farmers to get what they deserve. This will benefit the overall pulses market. In addition, this year's Budget highlights boosting cotton production, particularly of extra-long staple (ELS) cotton, a variety that is typically imported.

(Anjali Lavania)

ISMA DIRECTOR GENERAL DEEPAK BALLANI

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The government's assistance to farmers by issuing Kisan credit cards and raising the loan cap in tandem with expanding financial infrastructure ought to bring about welcome relief and increase agricultural activities in the country.

The association appreciates efforts targeted towards irrigation, because they contribute towards earning more and saving on inefficiencies within the agriculture sector. These measures strengthen the association's efforts on sustainability combined with economic development within the agricultural sector, where sugarcane remains the mainstay of the sugar industry.

The 'Dhan Dhanya Krishi Yojana' aims at increasing productivity in low-productivity districts. This is expected to liberate farmers and ensure fair benefits for all participants in the agricultural sector. 

(Taniva Singha Roy)

KAMA JEWELRY MANAGING DIRECTOR COLIN SHAH

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The reduction of jewellery (customs) duty from 25% to 20% is a welcome move. For a country like India which is known for its high jewellery consumption, this will definitely boost the demand in the domestic market, especially in luxury. Similarly, slashing of duty on platinum findings from 25% to 5% is yet another bold move which will prove beneficial for the entire gems and jewellery industry.

One of the biggest positives of the Budget was the government acknowledging the MSME (micro, small and medium enterprise) sector as one of the four engines that will power India's growth. Under this, increasing the MSME turnover limit from INR 2.5 billion to INR 5 billion is another bold announcement which will propel the growth and strengthen the MSMEs.

The Budget also provided some rejoicing to the diamond sector by removing IGCR (import of goods at concessional rate of duty) condition for import of duty free LGD (lab-grown diamond) seeds which will further increase the appeal of lab-grown diamonds and boost its demand.

Provision of a separate HS (Harmonized System) code for platinum and gold alloys is another positive step that will prevent malpractices and ensure fair play in the industry. 

(Ashutosh Pati)

FORMER FICCI PRESIDENT NAINA KIDWAI

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All benefits that are provided to micro, small, and medium enterprises will now be provided to more companies. There is a larger beneficiary pool. It all depends on how the states take it because so much of the MSMEs communication happens with the states. Tax burden, compliance burden, all have been reduced. Easing the environment for MSMEs is going to be very beneficial and will provide more jobs. 

The thrust on labour-intensive manufacturing for sectors like leather and toys is going to aid employment and will boost the economy. The move to leave the middle class with more money to spend is a fantastic one because even though the government has been going heavy on the capital expenditure, the private sector needed a push and this was their demand. Urban and Rural demand both were suffering, but will now see better days. 

Also, the whole thrust on ease of doing business with the reduction in compliance and easier norms with the decriminalisation of certain norms is very positive for small businesses. 

(Kabir Sharma)

FICCI'S ELECTRONIC COMMITTEE CHAIRMAN MANISH SHARMA

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The investment and turnover norms for the micro, small, and medium enterprises introduced by the Budget today are going to be very transformative for the industry. The new income tax brackets introduced by the Budget are going to boost consumption as disposable income in the hands of the people will go up considerably. Capital expenditure by the private sector will get a big push from these new measures as people below the INR 1.2 million salary bracket will have INR 80,000 more to spend, giving way to demand. 

(Kabir Sharma)

PIRAMAL FINANCE MD JAIRAM SRIDHARAN

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For the past few years, the government has been the main actor in driving GDP growth. This Budget is an invitation from the government - for private consumption and micro, small and medium enterprise sector, to step forward and take the lead. A prudent borrowing plan for next year, contained spending and adherence to fiscal discipline, offers space to fast-track a change in monetary policy stance. So, overall, the Budget lays the groundwork for a rate cut cycle to start, and offers mechanisms for consumption and private sector growth to pick up. (Ashna Mariam George) 

IGRAIN INDIA DIRECTOR RAHUL CHAUHAN

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The Budget was fairly normal for the agricultural sector as it only focused on a few crops such as pulses, edible oil, and cotton and there was no mention of rice, of which the country is a major exporter. There is no push towards other crops.

The government will launch a six-year 'Mission on Atmanirbharta in Pulses' and procure pulses such as tur, urad and masur through agencies such as the National Agricultural Cooperative Marketing Federation of India and National Cooperative Consumers' Federation of India, which will provide a major push to the pulses value chain. This will encourage farmers in India to increase production and reduce import dependency and forex flowing out of the country.

The five-year mission for cotton productivity will facilitate significant improvements in productivity and sustainability of cotton farming, and promote extra-long staple cotton varieties. This will also boost the textile industry and encourage farmers who have been shifting away from cotton cultivation due to falling prices, to get back to cotton production.

(Taniva Singha Roy)

ANALYSTS, EXPERTS

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MCX MD AND CEO PRAVEENA RAI

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The Union Budget reflects the government's vision for moving towards a stronger and more resilient economy. The focus on tax rationalisation and people-skilling will spur consumption and economic growth.

We appreciate the government's commitment to enhance productivity in agriculture, support micro, small and medium enterprises, boost manufacturing and secure energy supplies. Specifically, the announcement made on removal of basic customs duty on waste and scrap of metal commodities like copper, lead, zinc and others has the potential to boost the circular economy, enhance raw material supplies, and support domestic manufacturing. 

(Shreya Shetty)

MOODY'S RATINGS SENIOR VICE PRESIDENT CHRISTIAN DE GUZMAN

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India's fiscal strength will remain weaker than most of its investment-grade peers, even though the Union government remains on track to meet its near-term policy goals, as we do not expect a sufficient improvement in the debt burden, or the proportion of the Budget earmarked for debt servicing. 

As the government unveiled its Budget for 2025-26 (Apr-Mar) amid a somewhat dampened macroeconomic backdrop as compared to recent years, it has had to slow the pace of fiscal consolidation to provide firmer support to growth. In particular, announced tax relief measures have constrained the growth of revenue receipts, which will rise at its slowest pace since FY23; as such, falling expenditure as a share of gross domestic product has borne the brunt of the projected narrowing of the fiscal deficit even as the emphasis on capital expenditure has been sustained. 

(Vidhushi RajPurohit)

INDIA RATINGS INFRA HEAD VISHAL KOTECHA

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Although the government's capital expenditure allocation has increased moderately, the emphasis is likely to shift towards effective implementation through the public-private partnership model. This is evident from initiatives aimed at creating a three-year pipeline of projects, an annual monetisation plan, access to PM Gati Shakti data ensuring a steady stream of investments and timely execution.

(Vaishali Tyagi)

CRISIL RATINGS DIRECTOR POONAM UPADHYAY

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The proposed hike in tax collected at source threshold on remittances under the Reserve Bank of India's liberalised remittance scheme from INR 700,000 to INR 1,000,000 should benefit the travel and foreign exchange sectors. It will provide tailwinds for the outbound tourism and airline sector. Students and individuals seeking medical treatment will also benefit.

(Gowri Lakshmi)

COMMODITY EXPERT, POLICY COMMENTATOR G. CHANDRASHEKHAR 

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These proposals could have been implemented at least five years ago. They are being made this year because of high imports of pulses, which has become a concern. In the past three years, production of pulses has declined by 1.2 million tonnes every year. The government has woken up now seeing a decline in production. It is more important to identify the challenges of growing pulses, which do not seem to be mentioned in the Budget. These challenges include cultivation in smaller marginal lands, lack of irrigation, dependence on the monsoon, poor climate resilience, serious incidents of pest attacks, poor agronomic management, no break-through in seed management, and many more which result in low yields.

We need to increase yield, but low yield is a result of underlying structural practices in the first place. Unless the government identifies the problem, yield will not increase. We need better seed technology, better water management, better pest and disease management. We need seeds which are climate resilient.

The farmers are not getting good prices; therefore, they will compromise on their agronomic practice. They will buy average quality inputs and will not put enough effort into cultivation. A farmer is discouraged because of the existing import and export policies, which fail to support their needs. The government continues to increase the minimum support prices, but simply raising them won't actually benefit the farmers. The minimum support price should rise in line with inflation and input costs, but it's also crucial to have a strong and efficient procurement system, along with import and export policies that support, rather than discourage, farmers. The government is pushing for procurement by central agencies, but it is nothing new.

I have been saying that the cotton industry is in bad shape for three years. Cotton acreage is shrinking, yields are declining, and prices are staying high. Our prices are not in sync with global prices. As a result, textile imports have become non-competitive. There is no climate resilience (in cotton seeds). The world has moved onto the Bollgard 6 variety of seeds, which is the latest generation of seeds. We are still stuck at Bollgard 2 variety. We need new generation seeds to improve productivity.

Farmers need stewardship -- they should be advised on when to plant, which chemicals to use, and when to harvest. In regions like Punjab, farmers often rush to plant, like sowing cotton in March instead of waiting until April. Planting too early can be risky, as a delayed monsoon, gaps in rainfall, or early or if the monsoon arrives late, or a gap in August, can all negatively impact the crop. The government must involve agricultural universities and Krishi Vigyan Kendras to provide this necessary guidance and support. 

(Shreya Shetty)

AGROCORP INTERNATIONAL HEAD OF RESEARCH INDRAJIT PAUL

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It was a record import for all pulses last year, as demand surpassed production. The government wants farmers to get better remuneration, reduce import dependency, and also save the currency that is going on imports. Hence, this measure, 'Aatmanirbharta in Pulses', is quite good for the next six years.

For tur, urad and masoor, they will procure as much as they will get from farmers this year. They are encouraging farmers to register on the portals of government agencies. In this way, farmers can also get minimum support prices, and will not fall prey to imports. Prices of most pulses have fallen drastically because of the import glut.

This situation will improve farmers' income. However, they won't be able to increase the area under pulses as there is a fight for land among various crops. A measure that the government is yet to take is to increase the yield of particular pulses. They have mentioned high-yielding variety of seeds, so maybe down the line in six years, import dependency may be reduced.

One of the other measures I liked is urea production in India. In previous years, we have seen India depends on imports for urea. The government is starting various urea plants, aiming to produce 1.27 million tonnes of urea in houses. This will help reduce import bill of urea too.

In terms of cotton, it is a good measure the government has taken, because production was lower during the previous year. This five-year mission will facilitate significant improvements in productivity and sustainability of cotton farming, and promote extra-long staple cotton varieties which we import. 

(Anjali Lavania)

GLOBAL GRAINS AND PULSES COUNCIL FOUNDER DEEPAK PAREEK

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The Budget is balanced. Looking towards the future of India, sufficient importance has been given to the agricultural and farming communities. The commitment to buy tur, urad, and masur will stabilise the market, and give support to the farmers. Appropriate allocation needs to be made so that the government is able to buy 50% of the crop because in the current market dynamics, prices of all the three commodities are below their minimum support prices. So more and more government support will be required to ensure that the farmer's produce, when they bring it to the market, is procured.

The government has also increased the allocation to the Ministry of Agriculture. We believe that the money will be spent on more infrastructure development and capital expenses, so that India's overall supply chain and efficiency in agriculture will be improved. 

(Shreya Shetty)

SUPREME COURT ADVOCATE J.K. MITTAL

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There are two things I'm quite impressed with in today's Budget. One, the finance minister promised in the last Budget in July that she would bring the new income tax bill. And she said they would roll it out in Parliament next week. I'm sure it will finally become an act, very soon.

Second, this time, the government has not only given benefits to the middle class with income up to INR 1.2 million, but the entire rate of tax schedules has been restructured, and it is giving benefits to everybody. This is a very good step from a taxation point of view.

I am sure the government is taking steps in the right direction as far as taxes are concerned, because not only is rate rationalisation important, reducing litigation is also very important. And to keep in mind what word she has used – she said trust first and notice after. Trade industry professionals have been saying for the last five decades that tax officers don't trust anyone, and they issue notices on whims and fancies.

This not only causes litigation that is ultimately government loss, but also causes a lot of harassment. The tax department unnecessarily makes out a false case and ultimately, the government loses, and the government also loses trust. It would have been wonderful if she could have brought something related to how officers of the government could be made accountable if they make out a case which is no case at all. 

(Sourabh Kumar)

KEDIA ADVISORY DIRECTOR AJAY KEDIA

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The Union Budget was in line with my expectations. There was specific focus on the agriculture sector this time, such as in the pulses sector. To improve food security, the Mission for Aatmanirbharta in Pulses ensures continuous procurement of tur, urad, and masur.  

Nonetheless, structural issues such as market access, minimum support price concerns, and global price volatility require urgent attention. While oilseed and cotton industry reforms are positive, timely implementation is key. Increased electric vehicles and mobile battery incentives could boost demand for metals like copper and zinc. 

(Ashutosh Pati)

End

US$1 = INR 86.61

Compiled by Vinodini Yadav
Filed by Tanima Banerjee

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