Union Budget 2025-26 Expectations: Key Anticipations Across BFSI Sector as FM Nirmala Sitharaman Prepares to Present Budget

Union Budget 2025

Finance Minister Nirmala Sitharaman is gearing up to present the Union Budget 2025-26 in the Lok Sabha on February 1, amidst high expectations from various sectors and stakeholders. Business leaders, investors, and the common man are eagerly awaiting announcements that could shape the country’s financial and economic landscape.

While the Budget is traditionally presented on February 1, this year’s date falls on a Saturday. The government is yet to confirm whether the presentation will follow this timeline. The Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have announced that trading will remain open on February 1 to accommodate the Budget presentation.

Key Expectations from Union Budget 2025

  1. Income Tax Relief: Industry experts and citizens alike are calling for significant relief in income taxes to boost disposable income and consumption.
  2. Tax Holidays and GST Exemptions: Sectors like renewable energy and small businesses are seeking targeted benefits such as corporate tax holidays and GST exemptions.

Recent Developments Ahead of Budget

  • Budget Consultations: The Finance Minister recently concluded a month-long consultation with industry stakeholders, gathering insights to shape the Budget.
  • Financial Inclusion Review: On January 15, the Finance Ministry will review the progress of schemes like Jan Suraksha and Mudra Yojana, underlining the government’s focus on inclusive growth.

FM Sitharaman’s Eighth Budget

This year’s budget will mark Finance Minister Nirmala Sitharaman’s eighth Budget presentation, including six annual and two interim Budgets. With this being the second full-fledged Budget of the Modi 3.0 government, it is expected to set the tone for India’s long-term economic trajectory.

What Do Industry Leaders Predict for Union Budget 2025?

Sameer Bansal, MD & CEO, PNB MetLife stated, “While India is a fast-growing economy fueled by its rising middle-class population of [25-45] year olds, the proportion of people above the age of 60 is equally increasing at a rapid pace. Financial stability is a cornerstone of a secure future. One of our hopes for the upcoming budget is to see support for pension and annuity plans which are key financial instruments for the retirement planning needed to create that stability.

Tax support for pension plans offered by life insurers, on par with the National Pension Scheme, will provide both greater choice and allow diversification of assets into multiple pension plans. At the same time, while we recognize and applaud the ongoing deliberations on removing GST on term life and health policies, we urge the government to also consider removing GST on premiums for annuity plans to support pensioners and make annuities more affordable and accessible.

These actions would give people greater flexibility to create and protect financial stability, which in turn is an important building block for the continuing economic growth of our country.”

Anup Rau, MD & CEO, Future Generali India Insurance Company mentioned, “India’s insurance sector is poised for its most significant reforms to date. The Insurance Regulatory and Development Authority of India (IRDAI) has set an ambitious vision of “Insurance for All by 2047”, prompting stakeholders to explore innovative yet prudent ways to expand affordable coverage. Affordability will drive accessibility thereby enhancing reach and penetration of insurance across the country.

On the health insurance side, there is a need to enhance the deduction limit under Section 80D, which has remained unchanged for nearly a decade now despite significant surge in healthcare costs. India, which surpasses South Asian peers with a medical inflation rate of 14 per cent, last witnessed an enhancement in the deduction limit in 2015-16. It is best if the limit for medical insurance is linked to inflation and gets revised automatically every year or once in a couple of years. Also, the benefits need to be extended to the New Tax regime as well since increasing health insurance penetration is critical. So, we expect the upcoming Budget to announce some hike in the deduction limit on health insurance premiums.

Another important issue, which requires attention is that of removing GST on health insurance, which is currently being charged at 18 per cent. On one hand, it will make health insurance more affordable and on the other it would help the government to focus on improving penetration as it would shift much of the burden of healthcare coverage to the private sector. This would also allow market forces to drive better outcomes.

Lastly, we expect the Insurance Laws Amendment Bill to receive final approval to unlock the sector’s full potential.

A virtuous cycle of growth and investment can only gain momentum when there is adequate insurance as a shock absorber against unforeseen events. The above-mentioned measures will go a long way in making insurance more affordable and hence accessible to masses and drive higher penetration in the country.”

Also Read | Finance Minister Invites Public Suggestions for Union Budget 2025-26, Promotes ‘Jan Bhagidari’

Amit Agarwal, CEO, Howden India stated “As the Union Budget 2025 approaches, we call upon the government to take bold and visionary steps to fortify India’s insurance landscape. Our armed forces stand as the ultimate protectors of our nation, braving unimaginable risks every day. It is only fitting that a centrally funded life and health insurance scheme be made mandatory for them at all levels—this is not just financial security, but a tribute to their unwavering service.

Equally crucial is the need to nurture a strong talent pipeline for the insurance industry. Establishing government-backed educational institutes and skill development centers will empower young professionals, ensuring insurance reaches the grassroots and secures every Indian’s future.

Additionally, granting a GST waiver on retail life insurance and offering greater tax incentives for corporates providing group life and health policies will be transformative. These measures will accelerate the ‘Insurance for All by 2047’ vision, paving the way for a more resilient and financially inclusive India. We look forward to a budget that prioritizes these reforms and propels the industry to unprecedented heights.”

Shachindra Nath, Founder and Managing Director, UGRO Capital, stated, “The upcoming Union Budget presents a significant opportunity to strengthen India’s financial ecosystem and drive inclusive growth. We urge the government to expand the PSL(Priority Sector Lending) definition to include emerging sectors like renewable energy, women-led enterprises, and digital infrastructure, aligning with India’s evolving economic priorities. Establishing a dedicated regulatory framework for NBFC catering to PSL will further enable focused lending to underserved segments. Additionally, measures such as concessional refinancing from institutions like SIDBI and NABARD, along with credit guarantee schemes, can lower borrowing costs and mitigate risks, encouraging greater participation from banks and investors. Allowing bank loans to NBFC-PSLs to qualify as PSL will ensure consistent capital flow, empowering MSMEs and other critical sectors to scale operations and contribute to the nation’s growth. By implementing these measures, the budget can pave the way for a robust financial ecosystem, fostering innovation, entrepreneurship, and equitable development across India.”

Pramod Sharda, CEO of IceWarp India and Middle East stated that, “As we approach the Union Budget 2025, we anticipate strategic reforms that bolster India’s digital ecosystem and drive technological self-reliance. The past few years have highlighted the transformative power of digital adoption across industries, and it is imperative that this momentum is sustained through forward-thinking policies.

We hope the government continues to prioritize investments in digital infrastructure, particularly in Tier 2 and Tier 3 cities, to bridge the digital divide and unlock the untapped potential of these regions. A reduction in GST rates on enterprise technology solutions would encourage businesses to adopt advanced tools, boosting productivity and fostering innovation.

Additionally, it is crucial to address cybersecurity, as the rise in digital adoption brings with it the need for robust frameworks to safeguard data and digital assets. Incentivizing investments in R&D for indigenous technology development will also be a step towards achieving digital independence.

Startups in the technology domain are a driving force behind India’s economic growth. We look forward to budgetary provisions that support their scaling efforts through relaxed compliance, simplified taxation, and increased funding opportunities.

At IceWarp, we remain committed to empowering organizations with cutting-edge enterprise communication and collaboration solutions, and we are optimistic that Budget 2025 will create a conducive environment for businesses to thrive in the ever-evolving digital landscape.”

Gaurav Parasrampuria, CFO, Magma General Insurance Limited (erstwhile Magma HDI General Insurance Company Ltd.)

“In the upcoming Union Budget 2025 announcement, we remain optimistic about the government’s commitment to encouraging the insurance sector. We expect measures aimed at increasing insurance penetration, such as tax incentives for policyholders under section 80D and initiatives to reduce GST on health insurance premiums while retaining the benefit of input tax credit for the industry.

These actions will make insurance more accessible to a wider audience as well as stimulate growth and innovation within the industry. In line with the government’s vision of ‘Insurance for All by 2047,’ we are hopeful for policies that will support this determined goal, ensuring that every citizen has access to adequate insurance coverage, securing their financial future.”

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