Union Budget 2025: Expectations of the Infrastructure Sector

The Union Budget 2025 is set to make infrastructure development the cornerstone of India's economic strategy. As the country gears up for the much-awaited annual event, the focus on infrastructure will continue, highlighting the government's commitment to driving economic growth and achieving long-term sustainability.

A key highlight of Budget 2025 is the expected increase in capital expenditure (capex) by 10-12% for FY 2025-26. This increase will prioritise sectors such as railways, road transport, highways, and housing, aligning with the government’s vision to stimulate economic growth and address challenges arising from rapid urbanization.

Modernisation of Railways in Budget 2025

The railway sector is anticipated to receive significant attention in Budget 2025, with allocations estimated to increase to ₹2.9 lakh crore to ₹3 lakh crore. This funding will support the expansion of the Indian Railways network, and advanced high-speed Vande Bharat trains, and enhance rail freight services. These investments aim to improve connectivity and operational efficiency, making the railway sector a vital contributor to India’s infrastructure development goals.

Emphasis on Public-Private Partnerships

To accelerate infrastructure growth, the government is likely to promote public-private partnerships (PPP) for critical projects in ports, airports, and roadways. Enhanced viability gap funding (VGF) and supportive policy frameworks are expected to attract private investments, fostering collaboration between public and private sectors to expedite infrastructure creation.

Tax Incentives in Budget 2025 to Drive Infrastructure Growth

The Union Budget 2025 may introduce several tax measures to support infrastructure development and innovation. Key proposals that the industry is expecting from Finance Minister Nirmala Sitharaman’s speech are:

Measures for Special Purpose Vehicles (SPVs): Allowing the offset of losses from one SPV against profits in others.
Simplified tax regimes: Offering reduced tax rates for infrastructure projects, especially in green energy sectors.
Incentives for private investment: Encouraging participation in ambitious programs like space exploration and renewable energy projects.
Carbon credit policies: Introducing favourable tax regimes to promote environmental sustainability and green initiatives.

These measures will create a conducive environment for investment, ensuring infrastructure growth aligns with India’s developmental goals.

Focus on Green and Sustainable Energy

Sustainability will be a cornerstone of Budget 2025, with a dedicated green energy fund expected to support hydropower and other renewable energy projects. This aligns with India's commitment to reducing its carbon footprint and transitioning toward cleaner energy solutions.

Budget 2025: Paving the Way for India's Future

The Union Budget 2025 is poised to be a defining moment for India's infrastructure sector. By increasing capital expenditure, focusing on railway modernization, promoting PPPs, and introducing supportive tax measures, the government aims to unlock the full potential of infrastructure development.

With a strategic push in Budget 2025, the infrastructure sector is set to play a pivotal role in boosting connectivity, boosting economic growth that has slowed down in FY25. These initiatives not only promise immediate economic benefits but also lay the foundation for sustainable and inclusive development.

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