Union Budget 2025: Fiscal Policy and Reforms for Economic Stability

The Union Budget 2025 prioritizes fiscal consolidation and economic stability, ensuring a balanced approach to growth, investment, and debt management. The government remains committed to maintaining a sustainable fiscal deficit, enhancing public expenditure efficiency, and implementing reforms to boost investor confidence.

Key Announcements​

1. Fiscal Deficit Reduction Roadmap​

• Revised fiscal deficit for 2024-25 set at 4.8% of GDP.
• Targeted fiscal deficit for 2025-26 lowered to 4.4% of GDP.
• The roadmap aims to gradually bring down the fiscal deficit over the next six years, ensuring debt remains on a declining trajectory.

2. Revised Estimates for 2024-25​

• Total receipts (excluding borrowings): ₹31.47 lakh crore.
• Net tax receipts: ₹25.57 lakh crore.
• Total expenditure: ₹47.16 lakh crore.
• Capital expenditure: ₹10.18 lakh crore.

3. Budget Estimates for 2025-26​

• Total receipts (excluding borrowings): ₹34.96 lakh crore.
• Net tax receipts: ₹28.37 lakh crore.
• Total expenditure: ₹50.65 lakh crore.
• Gross market borrowings: Estimated at ₹14.82 lakh crore.

4. 50-Year Interest-Free Loans to States​

• ₹1.5 lakh crore allocated as 50-year interest-free loans for state capital expenditure and infrastructure-related reforms.
• Encourages states to participate in economic reforms and infrastructure growth.

5. Asset Monetization Plan (2025-30)​

• New asset monetization plan to unlock ₹10 lakh crore for new infrastructure projects.
• Regulatory and fiscal policies will be fine-tuned to maximize returns.
• Builds on the success of the 2021 Asset Monetization Plan.

6. Public-Private Partnership (PPP) Expansion​

• All infrastructure-related ministries will develop a three-year PPP project pipeline.
• States encouraged to seek support from the India Infrastructure Project Development Fund (IIPDF).
• Focus on urban transport, energy, and digital infrastructure.

Impact of These Reforms​

1. Strengthened Fiscal Discipline​

• Reducing the fiscal deficit ensures long-term financial sustainability.
• Lower borrowing levels will reduce interest costs and inflationary pressures.

2. Higher Capital Investments​

• 50-year interest-free loans provide additional fiscal space for states.
• More capital spending on infrastructure and public services.

3. Private Sector Participation in Infrastructure​

• PPP expansion will attract private capital and enhance efficiency in project execution.
• Asset monetization provides a new funding source for economic growth.

4. Enhanced Investor Confidence​

• Clear fiscal consolidation roadmap reassures domestic and foreign investors.
• Predictability in tax and borrowing policies strengthens market stability.

Conclusion​

The Union Budget 2025 lays a strong foundation for fiscal responsibility and economic stability. By reducing the fiscal deficit, increasing public investment, and leveraging private capital, the government is ensuring sustained growth and financial security for India. These measures reinforce the nation’s commitment to becoming a Viksit Bharat (Developed India) while maintaining economic prudence and responsible governance.