Budget 2025: Industry Leaders Cite Declining Rupee as Key Challenge
Industry leaders have identified key expectations and concerns that Finance Minister Nirmala Sitharaman needs to address while preparing for her eighth Union Budget. Taxation, fiscal policies, and market operations have been called upon to undergo reforms. Perhaps the most urgent concern is the sliding rupee, which experts feel will be very much a matter of concern in fiscal management.
What the government needs to do is increase its infrastructure spending and find measures to stimulate private expenditures, says Aamar Deo Singh, SVP Research at Angel One. "The record low that the rupee has hit against the U.S. dollar raises fiscal management concerns. It will be interesting to see how the Finance Minister addresses this major challenge", he added.
Devarsh Vakil is the Head of Prime Research for HDFC Securities. He advocates for clear predictable tax policies since investor confidence was dented from the tax surcharge. Restore indexation on debt funds benefits and reduce capital gains tax to long-term benefit rates. For share buy backs, Vakil even suggested that their tax burden on shareholders be met by allowing proper deductions for the costs of acquisition shares. He added, "This budget is expected to address key issues such as FDI, fiscal deficit, disinvestment, and energy transition, while restoring investor and public confidence in the government's economic strategy".
Kotak Securities MD & CEO Shripal Shah said there must be some measure of relief offered to lower-earning taxpayers from income tax for it would encourage more consumption or spend in segments driven by such consumption. Moderate capital gains and STT on the securities may attract more investors and better the markets' sentiments: "Reductions in tax for smaller taxpayers might trigger higher disposable incomes, enhance spending, and create growth drivers further down the demand chain", says Shah.
The AMFI Chief, Venkat Nageswar Chalasani, appealed for reforms in mutual fund sectors. He recommended revival of indexation benefits for debt funds, creation of a new Debt-Linked Savings Scheme, and bringing parities in taxation treatments of investments. The two other suggestions could be the easy regulation and simplification in TDS procedure in NRI and removal of GST laws for mutual fund schemes.
Macro challenges in the budget are also on the anvil to be addressed. Experts argue that targeted reforms in public expenditure with fiscal discipline must come about to boost investor confidence and keep the economic spurt going.
While expectations are high, the government is challenged with the dual task of meeting growth aspirations with fiscal prudence as it deals with one major concern-the decline of rupee-and in a well-structured framework for sustainable development.
