BAJAJ BROKING
January 29, 2025
6 mins read
With the Union Budget 2025 just around the corner, one that is sure to contribute to various sectors across the board, here are 8 in particular you need to keep a lookout for.
This year’s Union Budget is all set to be announced on the 1st of February by Finance Minister Nirmala Sitharaman. Each Union Budget has played a crucial role in shaping the face of India’s economy and in the growth of each sector. This budget is no exception. In fact, with the slowdown of domestic economic growth and rising global uncertainty, this budget will play a crucial role in helping the economy continue its growth trajectory.
When it comes to the expectations of the investors and stakeholders from the policy-makers, there are 8 sectors in particular one should have an eye out for. Here we will break each of these sectors down and have a look at what kind of changes these sectors might be subjected to in the Union Budget 2025.
Banking Sector
The banking sector in India plays a major role in helping the country’s economy grow and thrive. However, one of the many challenges faced by the sector is the issue of non-performing assets (NPAs). However, RBI’s Financial Stability Report, published in December 2024, talks about a positive shift taking place where gross NPAs for Scheduled Commercial Banks are concerned. The Gross NPAs have hit a 12-year low of 2.6% in September 2024 from 3.9% in March 2023.
Of the expectations that the banking sector has from the Union Budget 2025, some are listed below:
No favourable treatment is expected to be provided for deposits. The only exception to this will be handpicked public banks and insurance companies in terms of receiving capital infusion.
The capex plans by the policymakers and any housing development provisions are expected to influence the cement and metal industries.
To reduce reliance on imports and promote domestic production, the chances of potential import duty adjustments are also expected.
Consumer Sector
India is a country of more than 1.4 billion population and is one of the most active and largest consumer markets in the world. By 2026, after passing Japan and Germany, India is expected to become the third-largest consumer market in the world with the US and China occupying the top two spaces. The main reason for this growth is the affluent population in the country, which is expected to double from 40 million in 2023 to 88 million in 2028.
With the evolution of the consumer sector in the country, mainly due to improvements in digital literacy, stakeholders have certain expectations from the Union Budget:
Possibility of mid to high, single-digit increase in cigarette taxes.
Higher fund allocation to consumer-driven programs like PM Awas Yojana.
Possible tax relief measures to help lower and middle-class consumers.
The possibility of a reversal in customs duty on gold is less likely.
Infrastructure Sector
With India targeting a growth of $5 trillion this year, the country has to look into developing its infrastructure to achieve this goal. With the Union Budget 2025 around the corner, stakeholders hope that certain expectations are met to help the country develop its infrastructure to support its overall societal and economic growth.
Some of the expectations from the Budget 2025, centred around the infrastructure sector include:
Close monitoring of the CAPEX for Ministries like Rail and Roadways, especially keeping the slowdown in government spending in mind.
Stakeholders also hope that the government will announce larger-scale projects like the creation of dedicated freight corridors.
Additional Read: Union Budget 2025: What to Expect for Real Estate
Auto Sector
India’s auto sector has seen tremendous growth in the past couple and years and the industry itself has gone from a simple vehicle manufacturing one to one that is now providing mobility solutions. This has also led to India becoming a key player in the global automotive landscape.
The Budget 2025 and the expectations that stakeholders have from it could help the auto sector of the country prosper further. Some of these expectations include:
Potential allocations to programs like PM E-Drive and Auto PLI Policy
Encourage the production of electronic vehicle components locally.
Possible tax cuts or an increase in funding for programs for MGNREGA
Enhancements in tax breaks for home loan interest and more fund allocation for housing.
Additional Read: Union Budget 2025: What to Expect for Automobile Industry
NBFC or Non-Banking Financial Companies
India’s NBFC sector has seen a remarkable transformation which has led to it being recognized as a crucial player in the country's financial landscape. Particular segments of the sector, like microfinance, housing finance and consumer finance have particularly contributed to its growth.
When it comes to the NBFC sector, some of the expectations that stakeholders have from policymakers include:
Hope for the reduction of loan limit when enforcing the SARFAESI Act from ₹2 million to ₹1 million.
Possible introduction of credit guarantee schemes for the microfinance sector like those available for SMEs.
GST and the taxes on corporate profit tax and products are expected to remain the same.
Pharma and Healthcare Sector
According to the latest report by the Great Place to Work, India’s healthcare sector is targeting $320 billion by 2028. The growth in the healthcare sector is mainly due to the sector’s growth in exports and partnerships, efficiency driven by mergers and acquisitions and the use of India’s skilled workforce.
Some of the expectations the Healthcare Sector has from the Union Budget 2025 include:
The possibility of tax deductions and PLI schemes for anti-diabetic and weight-loss medications could enhance support for R&D.
Moderate increase in the funding for Ayushman Bharat and institutes like AIIMS.
Additional Read: Union Budget 2025: What to Expect for Healthcare Sector
Oil and Gas Sector
By 2040, the primary energy demand is expected to double to 1,123 million tonnes of oil equivalent. This is because India’s GDP is also expected to grow to US$ 8.6 trillion by then.
Some of the main expectations that the sector has from the Union Budget 2025 include:
Compensation for LPG under-recovery even with FY2024 seeing no relief for the same.
This compensation could result in Indian Oil Corporation Limited (IOCL) being a major beneficiary.
Prioritizing India’s long-term goals where its energy mix is concerned.
Defence Sector
The Global Power Index has stated India’s defence sector stands at No.4 when it comes to its firepower. The year 2025 holds the target for the Indian government to reach a defence production target of US$ 25 billion.
With this in mind, the budget expectations concerning the defence sector include:
Emphasizing initiatives that increase the country’s defence exports.
Adoption of initiatives that help facilitate defence procurement.
Stakeholders also hope for better capital allocations towards the sector.
More support for renewable initiatives to help the power sector maintain its green energy momentum.
The Union Budget 2025 will play a major role in helping these 8 sectors grow and thrive further. With many of these sectors hoping to fulfil certain goals by the end of this year, the expectations that the stakeholders have from the policymakers seem justified. These 8 sectors, namely banking, consumer, infrastructure, auto, NBFC, pharma and healthcare, oil and gas and the defence sectors are the ones that investors need to keep an eye out for during the budget 2025.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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Though the 2025 Union Budget will affect various sectors across the board, here are the 8 main sectors you need to keep an eye out for before it:
The Banking Sector
The Consumer Sector
The Infrastructure Sector
The Auto Sector
The NBFC or Non-Banking Financial Companies Sector
The Pharma and Healthcare Sector
The Oil and Gas Sector
The Defence Sector
The expectations of the banking sector include
No favourable treatment for deposits, except in handpicked public banks and insurance companies in terms of receiving capital infusion.
Potential import duty adjustments are also expected to support domestic production.
The expectations of the consumer sector include:
Mid to high, single-digit increase in cigarette taxes.
Higher fund allocation to consumer-driven programs like PM Awas Yojana.
Tax relief to help lower and middle-class consumers
The main expectations of the infrastructure sector include:
Possible increase in CAPEX for Ministries like Rail and Roadways
Announcements of larger-scale projects like the creation of dedicated freight corridors
The main expectations of the auto sector include:
Allocations to programs like PM E-Drive and Auto PLI Policy
Encourage the production of electronic vehicle components locally.
Tax cuts or increase in funding for programs for MGNREGA
Tax breaks for home loan interest and more fund allocation for housing.
The main expectations the NBFC sector has include:
Reduction of loan limit for enforcing SARFAESI Act from ₹2 million to ₹1 million.
Introduction of credit guarantee schemes for the microfinance sector.
The main expectations of the pharma and healthcare sector include:
Tax deductions and PLI schemes for anti-diabetic and weight-loss mediations.
Moderate increase in the funding for Ayushman Bharat and institutes like AIIMS.
The main expectations of the oil and gas sector include:
Compensation for LPG under-recovery
Prioritizing India’s long-term goals where its energy mix is concerned.
The main expectations of the defence sector include:
Emphasizing initiatives to increase the country’s defence exports.
Adoption of initiatives that help facilitate defence procurement.
Better capital allocations.
More support for renewable initiatives to help the power sector maintain its green energy-momentum.
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