Stakeholders Expect Budget to Capitalise on India's Momentum and Improve Credit Access to Businesses Although India maintains its position as one of the biggest economies in the world, GDP growth has recently plummeted to a 7-quarter low of 5.4 per cent in the second quarter of FY25.
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There is hope to witness a budget that appropriately capitalizes India's momentum, by means of fueling consumption and the economic activity in general, said Jayesh Bavle, CFO of Bertelsmann India Investments, adding that as a firm, they are confident that the government will deliver while maintaining a fiscal discipline that was seen in the previous years.
"Keeping tax changes to a minimum will go a long way in re-enforcing the Government's stance around policy stability and ease of doing business in India. There is always room for rationalizing certain tax provisions to keep pace with changing business models and M&A trends. For example, we would love to see amendments to enable deferral of tax on share swap transactions to a point when sellers see liquidity; and expand the scope of companies allowed to carry forward tax losses when there is a bonafide change in shareholding on a progressive basis," said Bavle.
Although India maintains its position as one of the biggest economies in the world, GDP growth has recently plummeted to a 7-quarter low of 5.4 per cent in the second quarter of FY25.
Deepak Ramaraju, Senior Fund Manager at Sriram AMC said that it is expected that in response, the budget will give priority to policies that aid in growth, especially providing better financial assistance to the under-served lower-income demographic.
"Key areas of focus are likely to include investments in infrastructure development, sustainable energy initiatives, a manufacturing sector boost, and continued spending on defense and railways—all of which can play a crucial role in bolstering economic growth and increasing demand for SMEs," said Ramaraju.
From the market perspective, Ramaraju said it is essential to balance " growth-centric spending and fiscal prudence."
"Markets will pay close attention to any guidance that shows GDP growth is higher than 6.5%, as this could be interpreted favorably. A growth-oriented budget is essential, but the government may tread cautiously regarding populist measures, as such steps could exacerbate the fiscal deficit, weaken the Rupee, and potentially delay economic recovery by limiting rate cuts. Any deviations from fiscal discipline or indications of lower growth expectations could lead to market sell-offs," added Ramaraju.
The Indian startup ecosystem, valued as one of the fastest-growing in the world, continues to play a crucial role in driving innovation, creating employment, and contributing to GDP. Against this backdrop, venture capital stakeholders are keenly awaiting budgetary announcements that could address their concerns and unlock further potential.
The startup ecosystem in India is valued as one of the fastest-growing in the world and is only behind China and the USA. Against this backdrop, capital stakeholders and alternative funding platforms are keenly awaiting budgetary announcements that could unlock their further potential.
Access to credit has been a major talking point over the last few years and Ankur Bansal, Managing Director at Blacksoil said that he looks forward to initiatives that facilitate better credit access with flexible financing options like alternative credit, venture debt, and working capital solutions, which are essential for startups and SMEs.
"We also anticipate substantial investments in EV infrastructure, including a robust FAME III initiative and incentives for early-stage EV startups and sustainable technologies. Targeted investments in agritech, climate tech, deep tech, and emerging areas like space tech will further support India's sustainable economic transition. The government should implement measures to attract more foreign capital to spur growth in these critical sectors ensuring India remains at the forefront of global innovation and green economy," said Bansal.
