Emphasis will be on social security, financial balance and rapid economic growth

Finance Minister Nirmala Sitharaman will present the Union Budget 2025 on February 1, 2025. This time the budget is coming at a time when India’s GDP growth has registered a decline. GDP growth declined to 5.4% in the second quarter of the financial year. Experts believe that the government can announce important measures in this budget to accelerate economic growth.

Focus on social security

This time the government can give special emphasis on social security.

• Current Status:
  • According to the 2022 report of the International Labor Organization (ILO), government expenditure on social protection in India is very low.
  • Unorganized Sector:
    • Most of the workers in India work in the unorganized sector.
    • The problems of weaker sections have increased since the Covid pandemic in 2020.

Possible announcements:

• The government may announce increase in social security expenditure in the budget.
• It is possible to announce new schemes for workers and the unorganized sector.

Emphasis on reducing fiscal deficit

The government will focus on strengthening its financial position.

• current goal:
  • The fiscal deficit target for FY25 has been set at 5.9%.
  • The government may set a target to bring it down to 4.5% in FY26.
• Compliance with FRBM Act:
  • Over the past few years, the government has emphasized controlling the deficit under fiscal responsibility and budget management (FRBM).

Ways to increase GDP growth

GDP growth slowed to 5.4% in Q2 FY25.

• Major reasons:
  • Lok Sabha elections of May 2024.
  • Economic activities were affected due to scorching heat and monsoon rains.

Government’s viewpoint:

• Developed country’s target by 2047:
  • India needs 7-8% GDP growth every year to become a developed nation by 2047.
• Focus on employment generation:
  • To increase employment, schemes to encourage the manufacturing sector and labour-intensive industries may be announced in the budget.

Strategy to increase growth rate

1. Increasing investment on infrastructure:
   • Accelerating construction of roads, railways and airports.
2. Encouragement to Manufacturing:
   • Expansion of production based incentive (PLI) schemes.
3. Employment Generation:
   • New schemes for labour-intensive industries like textiles and agriculture sector.
4. rural Development:
   • Investment in agriculture sector to strengthen rural economy.