Budget 2025 Key Takeaways
Here’s my key takeaways from Budget 2025.
No tax for up to Rs 12.75 lakh income for salaried under new tax regime.
From an individual point of view, there is more reason now to move to the new tax regime.
Tax rebate under section 87A increases to ₹12 lakh from ₹7 lakh, making anyone earning up to ₹12.75 lakh tax-free under new regime.
From an economy point of view, this is estimated to put around ₹1 Lakh Crores in the taxpayer’s pockets to boost disposable income and increase consumer spending power.
But will all of this ₹1 Lakh Cr actually be spent by the people?
How much of it will really contribute to the GDP?
These remain the key questions.
However, markets have been euphoric. Consumption related sectors and stocks surged with Nifty Realty index up 3.4%, FMCG and Consumer Durables rising 3% each. Auto, Travel & Tourism stocks also surged.
Key Industry-Wise Impact
EV - The Budget addressed inverted duty structures by eliminating customs duties on cobalt powder, lithium-ion scrap, and 12 critical minerals for EV batteries, while exempting 35 capital goods for battery manufacturing.
Electronics Manufacturing - Duties on components (PCBAs, connectors, camera modules) were cut from 2.5% to 0%, boosting domestic production and reducing costs.
Insurance - Foreign Direct Investment (FDI) limit has been raised from 74% to 100%. This might fuel significant competition in this space from global players. Domestic Insurance stocks (SBI Life, HDFC Life etc) tanked 3-4% post this announcement.
Railways - The budget allocation for the Railways was largely unchanged. The market was expecting a higher allocation. This dampened sentiments. Railway stocks fell 5-8%.
Nuclear Energy - India aims to achieve 100 GW nuclear energy target by 2047 with private sector participation. Companies that could benefit are Walchandnagar Industries, Graphite India, Reliance, LT and NTPC.
Fisheries - The Budget’s ₹2,703 crore fisheries allocation focuses on sustainable deep-sea fishing in Andaman & Nicobar, coupled with KCC loan limits doubling to ₹5 lakh. Godrej Agrovet, Avanti Feeds and Apex Frozen Foods to benefit from this.
Auto - Reduced export duties across all assembly types for two-wheelers under 1600 CC: 40% for fully assembled, 20% for partially assembled, and 10% for completely disassembled units. Hero MotoCorp, Bajaj Auto, and TVS Motors to benefit as it makes exports cheaper.
Pharma - 36 life-saving drugs for cancer, rare/chronic diseases (e.g., Pembrolizumab, Alectinib) now fully exempt from Basic Customs Duty (BCD), cutting treatment costs by 15-20% for patients. Astra Zeneca, Pfizer to benefit.
Overall View
The Tax Relief news has overshadowed other issues that continue to persist.
Few years back we were talking about GDP forecasts of 8%+. Now it is at 6.4%.
Inflation has still not moderated and above target. RBI has not cut the interest rates for long.
Now, RBI has another problem of Rupee Depreciation in hand.
The recent Q3 FY25 earnings have been sluggish. However, we need to wait and watch if the consumption boost in this budget is translating to earnings in the subsequent quarters.
A lot of things need to work together to turnaround the current sluggishness in the economy.
I am optimistic about India.
But from an investing point of view, irrespective of how much ever optimistic I am, I always advocate building anti-fragile portfolios that could handle any type of uncertainties, volatilites and hidden risks.
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Disclaimer: Anand Ganapathy K is a SEBI-registered Research Analyst with SEBI registration number INH000016630. This daily update highlights market trends for your awareness. It does not recommend buying or selling stocks mentioned in this newsletter. Securities market investments carry market risks. Kindly review all related documents before investing.