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Union Budget 2025-26: Tax Growth, Inflation and PSU Sales

3 February 20251 min read
ECONOMYUnion Budget2025-26: TaxGrowth, Inflationand PSU Sales3 February 2025safalsetu.com

Why in the news

Post-Budget 2025-26 views covered tax growth, inflation, PSU sales and revenue confidence.

Key facts

  • Income-tax target: 14.4% growth versus nominal GDP growth of 10.1%.
  • Direct taxes: 12.5% growth projected through efficient administration and voluntary compliance.
  • Past income-tax growth: 19.7% in FY23, 25% in FY24, about 20% expected in FY25, so the target looks moderate.
  • Inflation: tax relief is not seen as inflationary since prices reflect scarce supply; it should boost savings, investment and consumption.
  • Non-tax revenue goals expected to be met; oil PSU profitability not a major worry as oil prices stay subdued.

Concerns: PSU privatisation

  • Plan: list PSUs, then cut the state stake to 51% through minority sales.
  • Buyers shun firms with large land and legacy liabilities, such as Bharat Earth Movers in Bengaluru; real estate must be separated first.
  • Slower than routes like NCLT or other funds.

Exam angle

  • Income-tax growth target: 14.4%; nominal GDP 10.1%.
  • Stake level in gradual disinvestment: 51%.

Test yourself

1. In the Budget 2025-26 discussion, income-tax collection was targeted to grow by what percentage?

The target of 14.4% exceeds nominal GDP growth of 10.1%.

2. Under the PSU privatisation approach discussed after Budget 2025-26, the government stake is lowered gradually to what level through minority sales?

PSUs are listed first and the stake is cut down to 51%.

3. Which PSU with large land holdings was cited as an example of a privatisation hurdle after Budget 2025-26?

Bharat Earth Movers in Bengaluru was the land-heavy example.

This topic is part of Daily Current Affairs 3 February 2025 (26 topics).

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