Union Budget 2025 Reactions | 'Cutting personal taxes may lead to higher savings and increased SIP flows,' says Deepak Ramaraju, senior fund manager of Shriram AMC

''Though the Budget did not add any negativity to the capital gains, the markets may remain buoyant for the medium term,' he said.

Finance Minister Nirmala Sitharaman tabled the much anticipated Union Budget for FY 2025-26 on February 1, which also marked a record 8th Budget presentation for the 65-year-old. In a major relief to the middle class, Sitharaman announced that there would not be any tax liability on income upto Rs 12 lakh for salaried persons under the new tax regime and raised the basic exemption from Rs 2.5 lakh to Rs 4 lakh.

Speaking on this front, Deepak Ramaraju, senior fund manager of Shriram AMC, said, "The Union Budget for FY 25-26 has focused more on consumption-led economic growth from equity market expectations. The cut in personal income tax may translate into higher discretionary spending and hence sectors like auto, consumer durables, retail, travel & tourism, and selected FMCG companies may outperform the broader markets. Focus on improving crop diversification, innovation, irrigation and favorable credit schemes for farmers may be positive for farm equipment, tractors, fertilizer etc."

"Though the Budget did not add any negativity to the capital gains, the markets may remain buoyant for the medium term. Cutting personal taxes may lead to higher savings, which might result in increased SIP flows, potentially supporting the markets further. Capital market-related sectors such as AMCs, and brokerage houses may expect higher retail participation."

"Overall, the fiscal deficit is pegged at 4.4 per cent of GDP ensuring the fiscal prudence of the government. The finance minister has tried to do a balancing act. The demand side of the economy is supported - especially the agriculture, manufacturing and SMEs are provided with supportive measures; not much tweaks have been made to custom duties or to boost exports. This should support employment and consumption which has taken a back seat in the last 2 quarters. The rural demand may marginally improve further. The capex spending is kept at Rs 11.2 lakh crores, indicating the intention of the government to continue to spend," he added.

"Sectors such as Defense and Railways may stay muted on cutting down of expenditure as well as Oil and Gas and PSU on lack of any positive announcement," Ramaraju further said.

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Union Budget 2025 | Nirmala Sitharaman, as Finance Minister, presented her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', the Modi govt gave income tax relief for those making up to Rs 12 lakh per year in salaried income. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.