Budget 2025: Representatives from various industry bodies requested a reduction in personal income tax rates to increase disposable income for the middle class, a cut in excise duty on fuel, and measures to boost employment-intensive sectors during their pre-Budget meeting with the finance minister on Monday.
The industry groups also raised concerns about the global dumping of excess stock by China, including in India, and the challenges posed to food security and inflation due to the “climate emergency” at the fifth pre-Budget consultation meeting. The Union Budget for 2025-26 is scheduled for presentation on February 1.
The meeting was attended by the finance minister, the Finance Secretary, the Secretary of the Department of Investment and Public Asset Management (DIPAM), the Secretaries of the Department of Economic Affairs, the Chief Economic Adviser to the Government of India, and others.
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After the meeting, CII President Sanjiv Puri spoke to the media, noting that while the Indian economy is performing well, there are significant global challenges. “We are witnessing a large influx of dumped products from China into various markets, including India. Additionally, the climate emergency is impacting food security, nutrition, and inflation. In this context, we have made several suggestions and proposals,” he said according to Businesstoday.
Budget 2025 Expectations
Reduction in Personal Income Tax Rates
Industry leaders, like CII President Sanjiv Puri, have called for a reduction in personal income tax, particularly for those earning up to Rs 20 lakh per year. This change is expected to increase disposable incomes, boost consumption, and support economic growth.
FICCI Vice President Vijay Sankar and PHDCCI President Hemant Jain have also emphasized that the middle class needs relief due to rising living costs and inflation. Lower taxes could help drive demand and reduce inflation.
Reduction in Excise Duty on Fuel
According to News18, CII has pushed for a reduction in excise duties on petrol and diesel. Since global crude oil prices have dropped by 40% since May 2022, lowering the excise duty could reduce inflation, increase disposable income, and stimulate spending, especially among lower-income households.
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Support for Employment-Intensive Sectors
The government has been urged to provide targeted measures for sectors that create many jobs, such as garments, footwear, tourism, and MSMEs. By focusing on these sectors, India could boost employment and become more integrated into global supply chains.
Rural Consumption and Food Security
CII Director General Chandrajit Banerjee stressed the importance of improving rural consumption. Suggestions included increasing daily wages under the MGNREGS from Rs 267 to Rs 375, raising PM-KISAN payouts from Rs 6,000 to Rs 8,000 annually, and offering consumption vouchers for low-income households. These steps could enhance purchasing power and encourage spending in rural areas.
Addressing Dumping by China
A concern raised by industry groups is the dumping of excess stock by China, which has affected Indian industries. They have asked the government to introduce protective measures to safeguard local businesses and ensure fair competition.
Tackling Broader Economic and Structural Challenges
CII and other organizations have highlighted the need to address inflation, improve credit access for MSMEs, and simplify tax processes like GST and TDS. Additionally, there are calls for more support for renewable energy projects and sustainable practices to combat climate change’s impact on food security and inflation.
Real Estate Sector’s Expectations
The real estate sector, valued at over $300 billion, is looking forward to the Budget for measures that can boost growth. Despite a 4% drop in housing sales in 2024, mainly due to rising prices and high borrowing costs, there are expectations for positive changes.
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1. Affordable Housing Push
Developers are hoping for an increase in the interest deduction limit on home loans, which could help drive demand in the affordable and mid-income housing markets. There is also a request to redefine affordable housing and expand tax benefits under Section 80C, along with lower interest rates.
2. Addressing Stalled Projects
While some progress has been made in resolving stalled projects like Jaypee Infratech and Supertech Ltd, other issues, such as with Unitech Ltd, still need attention. Stronger policy measures are needed to resolve consumer grievances and ensure smoother project completion.
3. Growth in Luxury and Commercial Real Estate
The luxury housing market has continued to grow, with notable projects like DLF’s ‘The Dahlias.’ In the commercial real estate market, office space leasing has reached new highs, driven by foreign companies setting up Global Capability Centres in India and the growth of managed office spaces.
The Union Budget 2025-26 is expected to address both the challenges and opportunities that lie ahead for India’s economy. By focusing on boosting disposable incomes, tackling inflation, and supporting critical sectors, the Budget can set the stage for a strong and inclusive economic future.
