As February 1st approaches, people from all sectors eagerly await the Union Budget 2025 announcement. As there were elections in 2024, the government initially released an interim budget in early 2024, followed by another budget in July. Over the last few years, we’ve seen the government focus on specific sectors like railways, defense, infrastructure, and housing, which has led to rallies in stocks related to these areas.
But if you observe closely, government spending has decreased in the last few months, with slower consumption in urban areas and corporate earnings falling in H1 FY 2025 due to various factors, including inflation.
On the global front, the US elections have concluded, and Trump has been making some key changes. This is expected to have an impact on global trade, and consequently, on Indian companies as well.
With all eyes on the budget, let’s break down what we can expect from it.
Budget Expectations for 2025
1. High Capital Expenditure (CapEx)
A major area of focus for the government this year is capital expenditure. The government is expected to prioritize sectors like roads, metros, railways, defense, digital infrastructure, and green technologies. This focus will likely drive growth in these industries, particularly in manufacturing, thanks to the expansion of the PLI (Production Linked Incentive) scheme.
2. Rural Spending
Another major expectation is increased rural spending. As per the government’s manifesto, we can expect allocations for housing and agriculture-related schemes, as well as various rural-oriented initiatives. Schemes like Pradhan Mantri Awas Yojana, MNREGA, Pradhan Mantri Krishi Sinchayee Yojana, and Pradhan Mantri Kisan Samman Nidhi are likely to receive increased funding.
3. Global Impact of US Decisions
Following Trump’s victory and subsequent decisions to raise import tariffs and cut taxes to boost US manufacturing, there could be global supply chain impacts. Indian exports may also face challenges due to these changes, so the market is closely watching how the government will support Indian companies at the global level.
4. Employment Generation and Skill Development
In the previous budget, the government introduced initiatives for employment generation and skill development, such as employment-linked incentives and internship programs. The market expects these initiatives to continue with further budget allocations aimed at job creation and employment in the coming years.
Areas of Focus for the Government
Broadly, the government is expected to focus on infrastructure, railways, water management, defence, and consumption. More specifically, several big projects like the National Infrastructure Pipeline and Gati Shakti are already in motion. Increased allocations in these areas could bring in large orders for Indian companies, particularly in defense, railways, and water management, leading to stock rallies in these sectors.
5. Cement Industry Growth
The cement industry is also expected to benefit from the government’s focus on infrastructure development and housing. Cement is a key material in these areas, so expect growth in this sector.
6. Renewable Energy & Green Hydrogen
The government has set an ambitious target of achieving 500 GW of renewable energy capacity by 2030. The budget is expected to provide support for this industry. Additionally, the National Green Hydrogen Mission, introduced last year with an investment of ₹600 crore, is expected to receive further support to drive green energy initiatives.
7. Digital Infrastructure
With an increasing focus on digital infrastructure, the government may also announce allocations for data centers and related infrastructure.
Conclusion
The exact details of the budget, including allocations for each sector, will become clear once the budget is released on February 1st. Afterward, we will be doing a detailed analysis, highlighting which industries and companies stand to gain the most from the budget.
If you find this insightful, please share your thoughts in the comments.