India's 2025 Budget: Navigating Growth and Fostering Innovation

Economic Outlook and Growth Projections

India's economy is projected to grow between 6.3% and 6.8% in fiscal year 2026. This commendable projection, amidst global uncertainty, highlights the potential of strategic investments in key areas like manufacturing, infrastructure, and digital transformation. These sectors are poised to unlock significant productivity gains and create numerous job opportunities.

Prof Vishwanathan Iyer, Professor of Finance at Great Lakes Institute of Management, Chennai, emphasizes the importance of the 2025 budget in sustaining this momentum. He highlights the need for planned investments in small and medium-sized enterprises (SMEs), skill development, and AI-driven innovation as crucial drivers of continued economic growth.

Deregulation and Ease of Doing Business

Dr. Vikas Prakash, Director - PGPM & Professor at Great Lakes Institute of Management, Gurgaon, champions deregulation as a key theme for the budget, echoing the spirit of the 1991 reforms. He advocates for a "get out of the way" approach, empowering the private sector to drive investment. This includes streamlining regulations at the state level, such as rationalizing stamp duty and reforming the Factory Act. Dr. Prakash also suggests revisiting incentives for MSMEs to encourage growth and economies of scale.

"If we recall the 1991 budget presentation we see it was more of getting out of the way of the business than giving fiscal incentives," remarks Dr. Prakash, emphasizing the potential of liberating private sector investment.

Empowering Higher Education for Future Success

The education sector faces the dual challenge of fostering excellence and expanding access. Dr. Jones, Principal and Head of the Institute of Management, Great Lakes Institute of Management, Gurgaon, reflects on the mixed bag of the previous budget and calls for increased investment in higher education. He highlights the need for greater funding for scholarships, student aid, and infrastructure development.

Dr. Jones points to the significant gap between India's education spending (4.5% of GDP) and that of developed nations (6-14%). He argues, "A nation that educates its citizens has a longer chance of global success," advocating for increased prioritization of education in the 2025-26 budget.

Arti Dawar, Deputy CEO of Shiv Nadar School, stresses the importance of reaching a 50% Gross Enrolment Ratio (GER) by 2035. She anticipates increased industry collaboration for skill development and investments in technology-driven solutions. Ms. Dawar also highlights the need for streamlining patent applications for educational institutions.

Sector-Specific Insights and Expectations

Across various sectors, experts weigh in on their expectations for the budget. From manufacturing and retail to AI and healthcare, calls for strategic investments, streamlined regulations, and targeted incentives resonate. Experts emphasize the importance of fostering innovation, boosting domestic production, and enhancing India's global competitiveness.

For instance, Abhishek Dua, CEO & Co-Founder of Showroom B2B, advocates for expanding the Production-Linked Incentive (PLI) scheme to include retail and simplifying processes for MSMEs. In the healthcare sector, Mr. Raja S., Founder and Managing Director of Hearzap, underscores the need for continued investment in rural healthcare infrastructure and digital health adoption.

Building a Sustainable and Inclusive Future

The budget also presents an opportunity to advance India's sustainability goals and address critical issues like climate change. Mr. Rajesh Patel, Co-founder & CEO of Snowkap, calls for increased focus on climate risk management and policies that encourage ESG integration in business operations.

"By continuing to reduce duties on renewable energy, the government is not only advancing its climate commitments but also encouraging innovation and investment in green technologies aligning with India’s net-zero ambition by 2070," notes Mr. Patel.