Updated 11:44 IST, January 30th 2025
'Crucial Steps For Growth...' - UBI Report Bets Big On India Ahead Of Budget 2025
In FY 2024, the economy faced a slowdown after a growth rate of 8 per cent. In the July-September quarter, the growth rate fell to 5.4 per cent.

As per a report by the Union Bank Of India (UBI), the next 10 days will be pivotal for India's economic trajectory, as upcoming Budget on February 1 and the Reserve Bank Of India's Monetary Policy Committee (MPC) meeting on February 7 will lay policy map to give a push to the economy.
UBI Report Observations
in FY 2024, the economy faced a slowdown after a growth rate of 8 per cent. In the July-September quarter, the growth rate fell to 5.4 per cent.
The report said the government will focus on fiscal consolidation. The report expected that the government will consolidate the fiscal deficit target to 4.5 per cent of GDP in FY26 from 4.8 per cent in FY25.
"The fiscal impulse is expected to be negative with consolidation driven by a fall in expenditure as percentage of GDP rather than pickup in revenues (despite likely repeat of record high RBI dividend in FY26 above Rs 2 lakh cr). More importantly, the quality of spending has come under pressure this year on delay in capex post elections with the public spending also hitting absorptive capacity in few sectors leading to calls for diversification in this Budget," the report added.
UBI Report Suggestions
The report supported greater emphasis on stimulus measures in the upcoming budget to bolster private capital expenditure (capex) and address weak demand.
"Focus on stimulus measures will be watched like tax cuts for the middle class, tax rate equalization on bank deposits vis-a-vis other risk assets, boost to capex budget and sector-specific steps like for MSMEs, renewables, tourism etc," added the report.
It is also anticipated that the MPC is likely to initiate a 50 basis point rate cut, and the RBI will take action to ease liquidity constraints and support economic growth. These measures will mark the start of a shallow rate-cut cycle to help stimulate demand.
The RBI's focus on liquidity measures has already been evident, as the central bank has provided liquidity booster shots in recent months to combat slowing growth. The report cautioned that despite these expected moves, concerns remain about the quality of public spending, which has faced pressure in FY25 due to delays in capex and rising subsidy burdens, particularly in the fuel and fertilizer sectors.
As a result, the government's fiscal impulse for FY25 is expected to remain negative, with consolidation driven more by a reduction in expenditure as a percentage of GDP rather than an uptick in revenue growth.
However, Sitharaman is likely to maintain a cautious approach by sticking to the fiscal consolidation targets, while balancing the need for growth-boosting reforms.
Get the latest live news on Republic Business, along with breaking news and top headlines from Budget 2025, business, economy, markets, and around the world.
Published 11:35 IST, January 30th 2025