Budget 2025 should focus on increasing Capex, checking fiscal deficit & reducing debt to GDP: EY India

Emphasis on fiscal consolidation, tax system simplification, and investment-driven growth, in the Budget 2025 will lay a solid foundation for sustained economic development in India, asserted global consulting and professional services firm Ernst & Young (EY) India.As India prepares for the Union Budget 2025-26, expectations are focused on a set of strategic reforms that can propel the economy forward.

According to EY India, key areas of focus should be to enhance public expenditure, reduce fiscal deficit, incentivise private sector investment, and introduce targeted tax reforms to foster business innovation.

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Sameer Gupta, National Tax Leader, EY India, said, “The Government has made significant progress in reforms over the last two terms. The focus now should be on accelerating and executing the key policies announced in recent years.”For businesses, particularly small and medium enterprises (SMEs), reducing the complexity of tax compliance is critical, EY India said in a statement Wednesday.

ALSO READ: Budget 2025: 5 schemes Finance Minister Nirmala Sitharaman may top-up To achieve sustainable growth in 2025-26, India must prioritize reducing the fiscal deficit to 4.5 per cent of GDP in 2025-26 while reducing the debt-to-GDP ratio, which stands at 54.4 per cent, well above the FRBM target of 40 per cent, said EY India.To achieve a medium-term real GDP growth target of 6.5 per cent or higher, EY India said it can only be achieved by increasing the government’s capital expenditure, improving capital efficiency and encouraging states to enhance their investment spending.

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To stimulate private sector investment, a progressive reduction in interest rates should be considered.

Additionally, targeted employment schemes should be fast-tracked to uplift urban demand and support economic momentum in 2025-26.

As is the convention, the Budget for 2025-26 will be tabled on February 1, 2025.

The 2025-26 Budget will mark Finance Minister Nirmala Sitharaman’s eighth. All eyes will be on the key announcements and the government’s forward-looking economic guidance for the remainder of the Modi 3.0 tenure.

The Finance Ministry has conducted several pre-budget consultation meetings by far with experts, industry leaders, economists, and state officials. The formal exercise to prepare the annual Budget for the next financial year has begun weeks ago.

(With ANI inputs)