Top 5 key policy changes Nomura expects in Budget 2025
As we are close to the Budget 2025-2026, Nomura has predicted a mix of fiscal consolidation and growth-oriented measures. Nomura has highlighted five Major policy changes which will be there in this budget.
Under the potential threat of Donald Trump’s administration, the government is expected to prioritize public capex growth, foreign investment, and tax reforms in this year’s Budget, against the backdrop of weak consumption and the depreciating rupee.
The 5 highlighted key points are
1. Personal Income tax slab to be tweaked to boost consumption: Nomura expects a revision in the personal income tax slab to increase the disposable income for middle-class households. The groups with lower Income, with a higher propensity to consume can drive a near-term demand.
This properly aligns with the government’s aim to stabilize the weak demand. Such a move can provide instant relief to households while supporting boost economic growth
2. In FY26 Public capex Growth is Targeted at 12.50% YoY: It is expected that Public Capital Expenditure is about to rise by 12.50% year on year in FY26, which aligns with the government’s commitments of fiscal medium-term. Even though the capex for FY25 is estimated to fall short, the administration remains committed to the growth led by the infrastructure.
Gross market borrowing rose marginally to ₹14.4 lakh crore in FY26 from ₹14 lakh crore in FY25 which could lead to a reduction in government buybacks, is forecast by Nomura. In all these, the Public Investment remains critical to crowding in sustaining growth momentum and private investment.
3. Concessional corporate tax rate: The government may announce a concessional corporate tax scheme soon for the firms using India for production, which will attract global value chains and may make India a manufacturing hub. Higher import duties will be applied on the finished products to tackle China’s dumping practices and Lower custom duties on intermediate inputs are expected.
With these measures, India aims to become the top manufacturer globally with competitive rates, while fostering domestic value addition.
4. Surging agriculture and rural income: Agriculture is contributing a major share of India’s GDP i.e.17%. It is much needed to bring reforms in this sector to enhance productivity and increase exports – Stated by Nomura.
On the other hand, the agriculture budget has also seen a compound annual growth rate of 5.4% since FY20, with INR 1.32 lakh crore of allocations to the agriculture and welfare department in FY25.
It is expected that a surge in rural spending will boost the agriculture sector growth which further will ensure food security and a rise in the standard of living.
5. Foreign investments and stability in the Rupee: Nomura is anticipating a rise in customs duties on gold imports to balance the current account deficit which is rising due to imports.
Additionally, it also states that increasing the FDI limit from 100 to 74 percent in the insurance sector can attract foreign capital. These strategies highlight a balanced approach to stabilizing the rupee and addressing external vulnerabilities.