Case Study: Indian Consumer Sentiment and Union Budget 2025

 

Case Study: Indian Consumer Sentiment and Union Budget 2025

Synopsis The Indian economy has witnessed a shift in consumer sentiment, characterized by declining confidence and evolving expectations regarding fiscal policies. The Union Budget 2025 presents an opportunity to address concerns such as inflation, tax relief, financial security, and digital transformation. This case study explores key consumer trends and expectations, offering recommendations to enhance economic stability and growth. Some highlights on corporate expectations.

 

Economy at a Glance

Indicator	2023	2024	2025
GDP Growth Rate (%)	8.2	6.4	6.0
Inflation Rate (%)	6.0	5.7	5.9
Unemployment Rate (%)	7.1	6.8	6.5
Fiscal Deficit (% of GDP)	5.9	5.7	5.5
Stock Market Expectation (BSE)	74,000-82,000	78,000-86,000	81,000-90,000
Digital Payments Adoption (%)	53	60	67
EV Market Adoption (%)	45	53	59

 

Consumer Sentiment Trends

Year	Budget Satisfaction (%)	Economic Optimism (%)	Inflation Concern (%)
2022	73	-	-
2023	70	-	57
2024	67	57	57
2025	67	53	59

 

 

 

 

Key Findings

• Declining Budget Satisfaction: Satisfaction has fallen from 73% in 2022 to 67% in 2025.
• Economic Optimism Tempered: Only 53% believe the economy will grow faster, down from 57% in 2024.
• Inflation and Financial Security Concerns: Inflation is a top worry for 59% of respondents.
• Income Tax Relief Expectations: Consumers demand an increase in tax exemption limits and standard deductions.
• Stock Market Projections: 62% expect the BSE Sensex to remain between 81,000-90,000 in 2025.
• Growing Digital Economy: Digital payments adoption increased by 7% in a year.
• EV Market Interest: 59% of vehicle buyers prefer electric mobility options.

Corporate expectation

As we approach Budget 2025, corporate expectations are centered around key measures to combat inflation, foster economic stability, and encourage business growth. Companies are hoping for targeted tax reliefs, particularly for the MSME (Micro, Small, and Medium Enterprises) sector, to help offset rising operational costs driven by inflation. There's also a strong demand for clarity on interest rate policies, as higher rates have increased borrowing costs. Corporates expect the government to provide incentives for technology adoption, innovation, and green initiatives, especially for sustainable business practices. Measures to boost domestic demand, strengthen the supply chain, and incentivize exports are anticipated to mitigate inflationary pressures. Finally, businesses are hopeful for a more predictable regulatory environment to ensure long-term planning amidst the ongoing economic challenges posed by inflation

In the lead-up to Budget 2025, different sectors have specific expectations from the government to address inflation and support growth:

1.      Manufacturing & MSMEs: The manufacturing sector, particularly MSMEs, anticipates tax breaks and access to cheaper financing to counter rising costs from inflation. There’s also hope for policy measures to boost automation, innovation, and sustainability in production processes. Streamlined regulations and fiscal incentives to enhance exports are also expected.

2.      Technology: The tech sector expects government support in the form of R&D incentives, tax benefits for innovation, and investments in digital infrastructure. With the rising cost of operations, businesses are looking for ways to offset inflation while maintaining growth in AI, cybersecurity, and digital transformation.

3.      Agriculture: In agriculture, corporates are looking for reforms that will address rising input costs like fertilizers and fuel, alongside subsidies and grants for technology adoption. Support for rural infrastructure and supply chain improvements will be crucial to maintaining farm productivity amidst inflationary pressures.

4.      Banking & Financial Services: The banking sector seeks measures to stabilize interest rates, reduce NPAs (Non-Performing Assets), and improve liquidity in the system. Corporate tax reductions or deferred payments may help financial institutions cope with inflation and stimulate lending to businesses in need of capital.

5.      Retail & Consumer Goods: Retailers are hoping for measures to reduce operational costs, including import duties on raw materials and tax relief on goods sold at the consumer level. The sector is keen on incentives to boost domestic consumption and offset the impact of inflation on purchasing power.

6.      Infrastructure & Real Estate: The infrastructure and real estate sectors are calling for an increase in government spending on infrastructure projects and tax incentives for builders. This will help counter the escalating construction costs driven by inflation and improve long-term growth prospects.

7.      Energy & Utilities: The energy sector is seeking fiscal support for renewable energy projects and clearer policies regarding the transition to green energy. With inflation pushing energy prices up, companies expect the government to reduce taxes on raw materials for energy production and introduce energy-saving measures for consumers and industries.

8.      Healthcare & Pharmaceuticals: The healthcare industry anticipates subsidies or tax cuts on medical supplies and equipment to ease the burden of rising costs. Pharmaceutical companies hope for incentives to increase the production of essential medicines and boost export potential while controlling inflation in healthcare services.

 

 Recommendations

1. Tax Reforms: Increase the basic income tax exemption limit beyond Rs. 3 lakh and revise the standard deduction.
2. Inflation Control Measures: Introduce subsidies and regulatory checks on essential goods.
3. AI and Cybersecurity Regulations: Strengthen legal frameworks to curb AI misuse and cybercrime.
4. Stock Market Stability: Implement policies that encourage long-term investments.
5. Digital Economy Boost: Further incentivize digital transactions to accelerate financial inclusion.
6. Green Mobility Promotion: Expand EV subsidies and infrastructure development.
7. Start-up Ecosystem Strengthening: Introduce favorable policies to ensure sustainability and growth.

 

Discussion Questions

1. How can the Indian government balance fiscal responsibility with tax relief demands?
2. What measures can help curb inflation and financial insecurity concerns?
3. How can AI-related cybercrime risks be mitigated through policy interventions?
4. Will the move toward electric mobility receive sufficient policy backing in the budget?
5. What implications does Donald Trump’s re-election have for India’s trade policies?
6. How can the government ensure that India’s start-up ecosystem continues to thrive?

 

References

1. Kantar. (2025). Union Budget 2025 Survey. Retrieved from [source link].
2. Economic Times. (2025). Budget Expectations and Market Trends. Retrieved from [source link].
3. Reserve Bank of India. (2025). Economic Growth and Inflation Report. Retrieved from [source link].
4. Government of India. (2025). Fiscal Policies and Budget Allocation. Retrieved from [source link].