The 2025 union budget sends one clear message: spend, spend, spend.
With tax cuts fattening wallets, investors piled into stocks of carmakers, FMCG giants, and food delivery firms in a rare Saturday trading session.
Short-term demand got a shot in the arm, and investors cheered, but big-ticket reforms? Nowhere to be seen.
That puts the pressure on the Reserve Bank of India — if it slashes rates next week, the markets could finally see off the gloom.
Middle-class bonanza
For middle-class taxpayers, the headline was simple: less tax, more cash.
Those earning up to ₹1.27 million annually (around $14,700) will now pay no personal income tax, up from the previous threshold of ₹775,000.
This move effectively injects ₹1 trillion ($11.5 billion) of forgone revenue into the economy, with an aim to boost household spending, consumption, and a stock market sugar rush, for now.
The Nifty FMCG index surged over 4% in intra-day trading, while shares of Hindustan Unilever, Dabur, ITC, Maruti Suzuki, and Macrotech Developers gained between 2% and 5%.
Wealth advisor Deven Choksey called it a win-win: consumers will spend more, and the government rakes in higher GST collections.
Infra gets a boost — but the stocks don’t
Beyond tax cuts, the budget splashed $11.5 billion at an Urban Challenge Fund to fully revamp cities into “growth hubs”, with $1.15 billion allocated for year one.
The government also plans to reinvest $115 billion from asset monetization over the next five years to 2030.
Read more: Sorry: India’s economic fortunes aren’t changing any time soon
Infrastructure stocks initially popped but then saw profit-taking, dropping 3–10%.
L&T, IRB Infra, and Ircon were major losers, while smaller players like Power Mech Projects, GPT Infraprojects, and SPML Infra held their ground.
On the other hand, agriculture-related stocks surged as much as 9% after Finance Minister Nirmala Sitharaman rolled out budget measures to boost crop diversification, irrigation, and farm credit.
Startups, AI, and deep tech get some love
The budget earmarked $2.6 billion to expand R&D, establish an AI Centre of Excellence, and increase funding for top-tier universities.
A second $1.2 billion Fund of Funds was announced to support Indian VCs, with a deep-tech fund in the pipeline.
The first Fund of Funds, launched in 2016, had allocated $920 million to nearly 100 VC funds as of December 2022.
Read more: India wants its own ChatGPT. Will Budget 2025 deliver?
Snapdeal co-founder Kunal Bahl called the re-upping a “force multiplier” for India’s VCs.
Gig workers and battery manufacturers for EVs and smartphones also got incentives, though details were scarce.
Energy, defence left in the cold — but not insurance
Energy stocks were a bit drained as an 18% increase in spending failed to impress investors.
Power Grid Corporation was among the biggest losers on the Nifty 50 index, down 4%, while green energy stocks such as Adani Green Energy, SJVN, and NTPC Green Energy surrendered most of their early gains.
But the biggest letdown? Defence, where expectations were high.
Read more: Budget 2025 won’t drop bangers, but India’s RBI might remix the beat
Instead, planned spending dropped by 8%, making Bharat Heavy Electronics the worst performer on the Nifty 50, falling 3%. The Nifty India Defence Index mirrored the decline.
In the insurance sector, though, Sitharaman threw open the gates, raising the FDI cap from 74% to 100%. The move sets the stage for foreign giants to play a bigger role in the industry.
Investors cheered — LIC, SBI Life, and Star Health surged among the day’s top gainers.
Thumbs-down moments
If this budget had a gaping hole, it was employment.
Compared to the first budget after Prime Minister Modi’s re-election last year, the finance minister barely mentioned job creation.
She sidestepped the ambitious plan announced last year to push India’s top 500 firms into offering internships to 10 million young workers. And the previous emphasis on manufacturing-led job creation also faded, with only footwear and tourism getting a mention.
And crypto? It got nothing — India’s punishing 1% tax on every transaction remains untouched.
Read more: Budget 2025 won’t fix India’s crypto problem — here’s why
But this budget did pump money into the middle class and sent consumption stocks soaring. Even if long-term fixes were missing, with defense, energy, and employment left behind.
Now it’s all on the RBI. If rate cuts don’t come through, this sugar rush could crash hard — and fast.
Contributions from Amitoj Singh. Graphics by Alia Chughtai. Edited by Ankush Chibber and Thyagu Adinarayan. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
