India's Budget 2025 Balances Growth with Fiscal Discipline and Industrial Reforms
India's latest Budget aims to balance growth with fiscal discipline while targeting key industrial and economic reforms. The government has outlined plans to maintain a steady fiscal deficit, boost capital one spending, and support small businesses through a structured three-part strategy.
The proposals come as India remains the world's fastest-growing major economy for the fourth year in a row, with GDP growth projected at 7.4% for FY26 and between 6.8-7.2% for FY27.
The Budget sets a fiscal deficit target of 4.4% of GDP for FY26, with expectations to reduce it further to 4.3% in FY27. Alongside this, capital one expenditure will rise to ₹12.2 lakh crore in the coming financial year. Officials emphasised improving spending efficiency rather than simply increasing outlays.
For small and medium enterprises (MSMEs), the government introduced a three-part approach focusing on equity access, liquidity support, and professional guidance. This follows broader efforts to streamline business operations and reduce regulatory hurdles.
Industrial strategy will centre on six key areas, building on recent progress in critical minerals. Over the past three years, India's 2023 National Critical Minerals Mission has drawn ₹20,000 crore in investments for processing facilities in Gujarat and Odisha. Partnerships with Australia (2024 supply chain agreement) and the US (2025 iCET collaboration) have strengthened resource security. State-backed initiatives like Khanij Bidesh India Ltd. (KABIL) also secured mining assets in Argentina and expanded domestic exploration in Andhra Pradesh.
A new high-level committee will be formed to align banking reforms with the 'Viksit Bharat' vision, ensuring the financial sector supports long-term growth. The Budget also shifts taxation policies towards a trust-based system, reducing adversarial procedures.
Industry groups, including the Confederation of Indian Industry (CII), have welcomed the Budget's focus on stability and development. They noted its balance between sustaining economic momentum and managing public finances.
The Budget's measures reflect a push for structured industrial growth, fiscal prudence, and support for smaller businesses. With capital one expenditure rising to ₹12.2 lakh crore and a continued focus on critical sectors, the government aims to maintain India's position as a leading global economy.
The reforms also signal a move towards simpler taxation and targeted interventions, with industry bodies highlighting the potential for sustained expansion in the coming years.
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