Pre-Budget consultations: Lifting private investments, consumption and jobs dominate talks with FM Sitharaman

Finance minister Nirmala Sitharaman has received a wide gamut of suggestions, including for incentives to spur private investments and employment, tax cuts to lift sagging urban consumption, and a comprehensive manufacturing policy, as she concluded on Monday her weeks of customary stakeholder consultations for the upcoming Union Budget.

The pre-budget consultations were held against the backdrop of a sharp deceleration in economic growth in the September quarter amid subdued urban demand and a contraction in public capex in the aftermath of the 2024 general election.

The Budget for 2025-26 will be presented less than two weeks after a change of the guard in the US, with analysts expecting several policy changes in the world’s largest economy with potential to disrupt global trade and investment inflows, amid persistent geopolitical headwinds.

Stakeholders, including economists and experts and representatives from industry, agriculture, infrastructure, financial services, capital markets, small and medium businesses, trade, social sectors and trade unions, put forth their views and demands before the minister and senior finance ministry functionaries. The consultations with nine broad groups comprising over a hundred participants have been conducted since December 6.

Suggestions aplenty

Economists attending the meeting pushed for a comprehensive manufacturing policy--including a strategy on imports tariffs--and incentives to ensure a broad-based resurgence in private investment.

These, they said, would spur job creations and help prop up urban consumption, the slowdown in which has been blamed for the recent growth setback. Some of them also recommended steps to boost farm sector growth, which will help keep a lid on inflation.

Industry bodies, such as CII, Assocham and PHDCCI, pushed for a cut in the personal income tax rate and sustained public capex push. Confederation of Indian Industry president Sanjiv Puri, for instance, called for the need to cut the marginal tax rates for personal income up to Rs 20 lakh per annum, arguing that it could lead to a virtuous cycle of consumption, higher growth and greater tax revenue.

Financial sector and capital markets representatives have sought steps to boost liquidity for non-banking financial companies and to further deepen the bond market.

Farm sector representatives have sought doubling of the PM-Kisan income support to Rs 12,000 a year, review of the minimum support price regime, cheaper long-term credit and removal of goods and services tax on key farm inputs. MSMEs have sought greater and easier credit flow at lower costs.

Other suggestions by stakeholders include the need to cut costs of doing business, further lowering of companies’ compliance burden and pursuing privatisation of state-run firms. Senior trade executives also sought adequate budgetary support to keep exports zero rated.

The meetings were also attended by minister of state for finance Pankaj Chaudhary; finance secretary Tuhin Kanta Pandey; economic affairs secretary Ajay Seth; chief economic adviser V Anantha Nageswaran and other senior officials of the finance ministry.

During the course of these meetings, Sitharaman assured the experts and representatives that their “suggestions would be carefully examined and considered while preparing the Union Budget for 2025-26”, the finance ministry said in a statement.

Moreover, from January 10, even citizens can share their valuable suggestions and ideas for the Budget on the MyGov platform.

“Citizens are encouraged to actively participate in this annual initiative, aimed at making the Budget-making process more inclusive with the spirit of ‘Jan Bhagidari’,” the ministry said.