While Finance Minister Nirmala Sitharaman is all set to table the Union Budget 2025-26 on February 1, 2025, Deloitte maintained that the government is expected to introduce measures that would help boost private consumption going forward. If the slowdown of private consumption continues, it will further delay the revival of the private capex cycle and it is therefore imperative to give a boost to private consumption. The forthcoming Budget is expected to do well to provide a relief to the middle class, whose purchasing power has been eroded significantly due to persistently elevated inflation of the past few years without hardly any income tax relief.
Anand Ramanathan, Partner and Consumer, Products and Retail sector Leader, Deloitte India, said, “India’s GDP growth is expected to moderate to 6.3 per cent in FY25, per World Bank estimates, reflecting the combined impact of fiscal consolidation and tighter global credit conditions. Core inflation remains at a manageable 4.8 per cent, but food inflation poses challenges at 5.1 per cent due to global supply chain disruptions. The country’s current account deficit is projected at 1.9 per cent of GDP, supported by a 13 per cent rise in services exports, mainly IT services, which contribute $325 billion annually. This economic backdrop underscores the need for prudent fiscal policies that prioritise consumption revival, infrastructure development and innovation-driven growth.”
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Meanwhile, according to the RBI’s November bulletin, the slowdown witnessed in the second quarter of the current financial year (2024-25) is behind us as private consumption is again driving the domestic demand. The country’s economy is exhibiting resilience, underpinned by festival-related consumption, and a recovering agriculture sector, RBI’s ‘State of the Economy’ article said.
Deloitte pointed out three key expectations from the upcoming Budget for the retail sector and these include introduction of higher income tax exemptions to boost disposable income, reduction of GST rates on mass-consumption FMCG products, and providing targeted tax incentives for rural market development and innovation.
Here is a list of expectations from Union Budget 2025-26, as outlined by Deloitte:
Expectation 1
Higher income tax exemptions to boost disposable income: Deloitte said that the government should relax the basic income tax exemption limit under the old regime from Rs 2.5 lakh to Rs 3.5 lakh and raise the standard deduction under the new tax regime from Rs 50,000 to Rs 75,000.
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