Following the Economic Survey’s projection of India’s real GDP growth at 6.3-6.8% for FY26, a Bank of Baroda report estimated that nominal GDP growth could range between 9.8-10.3%, assuming a GDP deflator of 3.5%.

The GDP deflator, a key metric, adjusts nominal GDP (which includes inflation) to reflect real GDP, offering a clearer picture of actual economic growth by accounting for overall price level changes.

“We assume a GDP deflator of around 3.5%, which would translate nominal GDP growth to 9.8-10.3% in FY26,” the report said.

1) Consumption push by promoting public and private spending, and fill-up to personal disposable income in the rural and urban economy: To give an impetus to private consumption, it would be essential to boost disposable income and stimulate demand. This could be achieved through reduction in income tax, lower import duties and GST rates rationalization.

With respect to Customs duty, in the Budget 2025, the industry wishes for rationalisation of custom duty rates by reducing duties for various inputs that are used for manufacture of consumer products and increasing duties on direct import of finished products. This would promote domestic manufacturing in line with the government’s Make in India initiative and provide a level playing field to domestic manufacturers.

2) Digitization and amnesty scheme: On the ease of doing business front, there could be enhanced focus on digitisation of customs compliance processes relating to submission of physical documents for adjudication and assessments. Submission of letters and documents could be made digital and measures such as API connectivity for uploading of data and customs duty payment could be introduced.

There are inordinate delays in finalization of Special Valuation Branch assessments with respect to related party import of goods resulting in assessments pending for multiple years and decades in some cases. A statutory time limit should be introduced for finalisation of SVB assessments and finalisation of provisionally assessed Bills of entry.

Currently, hundreds of crores of Bank Guarantees (BGs) are submitted with the Customs authorities by the industry and delay in completion of assessments and verifications results in increased cost of BGs. For instance, the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (applicable to import of goods under Free Trade Agreements), have stipulated a timeline of 60 days for completion of verification process but the same reportedly is not being agreed fully.

Further, in order conclude the legal customs litigations and disputes, an amnesty scheme along the lines of Vivad se Vishwas or other similar schemes would be a welcome decision.

3) Product Linked Incentive Scheme (PLI): Expanding the PLI Scheme for the consumer goods industry could help boost domestic manufacturing, reduce import dependency, and enhance India’s global competitiveness in sectors like electronics, household appliances, food and beverages, textiles, and furniture. This move would also align with the government’s focus on Make in India, pushing the country towards greater self-reliance in the production of essential consumer goods, says Paresh Parekh, Partner and National Leader for Tax – Consumer & Retail Sector at EY India.

Union finance minister Nirmala Sitharaman arrived at the ministry of finance. She will present Union Budget 2025 at the Parliament today.

Sitharaman will today present record eighth consecutive Budget that is expected to contain measures to shore up weakening economic growth and ease the burden on the middle class struggling with high prices and stagnant wage growth while being fiscally prudent.

A pressing and long-unanswered question for our nation is how we can address the poor operational ratios of the railways. The data clearly points to key action areas: aligning passenger fares with actual service costs, optimizing manpower expenditure through technology, and prioritizing economically viable projects.

By fast-tracking Public-Private Partnership (PPP) initiatives, similar to the successful highway models under NHAI, the ministry of railways can unlock immense growth opportunities and drive a more efficient, sustainable future for India’s rail sector.

The latest assessments indicate a stable global economic landscape over the near term. Nonetheless, downside risks on account of geopolitical stress points, policy uncertainty, and possible trade policy shifts remain on horizon.

In the above context, even though India has displayed resilience, it has not been immune to the emerging challenges. The growth numbers for the current fiscal year have reported a discernible moderation. Challenges on account of high prices, muted domestic demand and investments have raised concerns. Addressing these issues is crucial, and the upcoming Union Budget presents an opportunity to restore the confidence levels.

This will be the first full budget of the new government, presented against the backdrop of moderating economic growth, says FICCI.

During a pre-budget consultation with the Centre, the Karnataka government urged the release of Rs 11,495 crore in special grants recommended by the 15th Finance Commission, approval for the Mekedatu project, and special matching grants for the development of Kalyana Karnataka, a backward region. Last month, Union finance minister Nirmala Sitharaman met with finance ministers from states and union territories to gather their demands and suggestions for the Union Budget 2025-26, set to be presented on February 1.

Representing the Karnataka government led by chief minister Siddaramaiah, revenue minister Krishna Byre Gowda emphasized the need for Rs 5,300 crore allocated in the Union Budget for the Upper Bhadra project, which aims to supply water to drought-prone central Karnataka. He also sought special grants for Kalyana Karnataka and the ecologically sensitive Western Ghats.

Taxpayers, especially those in the lower middle-income bracket, may receive relief in finance minister Nirmala Sitharaman’s upcoming Budget as the Narendra Modi government aims to boost consumption in a slowing economy, according to economist Rumki Majumdar.

She said that the finance minister will offer relief to taxpayers under the new tax regime, which eliminates exemptions but provides a broader tax base. This relief could particularly benefit individuals earning between Rs 7 lakh and Rs 10 lakh annually.

“They are likely to focus on the Rs 7-10 lakh income slab, where additional exemptions could be introduced. That is a possibility,” Majumdar said in an interview with PTI, noting that recent months have shown positive growth in rural development, driven by strong agricultural yields.

#1 With the record INR2.1 trillion dividend from the RBI, the government must adopt a balanced approach and further reduce the fiscal deficit target for FY2025. A part of the additional resources must be allocated to the social sector.

#2 The government must expand the scope of PLI schemes, especially for sectors that can create more jobs, such as textiles, handicrafts and leather. The schemes must continue in sectors that have seen success, such as electronics, auto and semiconductors.

#3 To improve global liquidity (once the Western central banks start easing their monetary policies), the government can raise the ceiling for investment size and remove location restrictions to attract more foreign investment. Multi-brand retail and e-commerce are some sectors that may benefit from this, says Dr. Rumki Majumdar, Economist, Deloitte India.

The Union Budget 2025-26, set to be presented on Saturday, is expected to strike a balance between economic growth and fiscal prudence while addressing the expectations of taxpayers, businesses, and key industries.

Industry leaders and experts are looking for measures to boost consumption, incentivize capital expenditure, and support crucial sectors such as real estate, MSMEs, healthcare, artificial intelligence (AI), electric vehicles (EVs), and renewable energy. Fiscal consolidation also remains a key focus.

A major area of interest is tax relief for individuals and businesses. Taxpayers are hoping for revisions in tax slabs under the new regime, including higher exemption limits and standard deductions. There is also a growing demand to make annual income up to Rs 10 lakh tax-free.

Additionally, expectations are high for an increase in the standard deduction limit, which currently stands at Rs 50,000 under the old tax regime and Rs75,000 under the new one.

Digitalisation via API route – Requisite details may be filed through Application Programming Interface (‘API’) so as to reap benefits of technology and reduce manual errors. Wherein, API connectivity can be primarily used for uploading data schema for Bill of Entry or Shipping Bill preparation, making custom duty payment, etc.

Access to ICEGATE Portal similar to GSTN – Borrow the successful concept of Goods and Services Providers (‘GSP’) from GSTN, to be able to transmit huge volume of data speedily and securely from Customs Broker’s system or importer and exporter’s system to/from ICEGATE portal

Licensed GSPs can be given access – Considering that GSPs already have an infrastructure in place and taxpayers are familiar with them and they have requisite skillset and manpower to implement such a large change, says EY.