The Modi government will present Budget 2025 on February 1. The government is likely to take several measures such as tax cuts, agri reforms and subsidies for essential goods to stimulate domestic demand and spur consumption. Stocks likely to benefit from the consumption related announcements are Hindustan Unilever, Maruti Suzuki, Godrej Consumer Products, HUL, DMart, HDFC Ltd, Godrej Properties and Tata Motors among others.
Here's a look at what analysts said on the expectations from the likely consumption push in the Union Budget.
Amnish Aggarwal, Director - Institutional Research, PL Capital - Prabhudas Lilladher
The government is expected to rationalize direct taxes to boost consumption and provide relief to the middle class. Likely measures include increasing the standard deduction, reducing tax rates, and adjusting tax slabs.
Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking
The 2025 Budget has the potential to boost consumption through various measures, including increased rural spending, tax reliefs, and job creation initiatives. Expected sops may include expanded subsidies for agriculture, enhanced infrastructure investments, and adjustments to income tax slabs to increase disposable income. Stocks that could benefit from these announcements include Hindustan Unilever, Maruti Suzuki, and Godrej Consumer Products, as they are well-positioned to capitalize on rising rural demand and consumer spending. However, there are concerns that the Budget may not meet expectations if fiscal constraints limit the proposed incentives.
Ajay Garg, CEO, SMC Global Securities
Given the challenges posed by inflationary pressures, the slowdown in some sectors, and the need for a strong recovery post-pandemic, it is highly likely that the government will focus on boosting consumption in Budget 2025. The government could introduce several sops and policy measures aimed at stimulating domestic demand, improving disposable incomes, and encouraging consumption-led growth. The government is expected to take steps to boost consumption, with income tax relief, support for rural sectors, subsidies for essential goods, and incentives for durable goods and vehicles. Key sectors such as automobiles, FMCG, consumer durables, retail, housing, and e-commerce are likely to benefit from such announcements. Stocks like Maruti Suzuki, HUL, DMart, HDFC Ltd, Godrej Properties, and Tata Motors stand to gain from potential policy measures aimed at driving consumption.
Manish Chowdhury, Head of Research, StoxBox
With the Indian economy showing some signs of slowdown, especially on the urban side, the government may tweak income tax structures and enhance tax incentives under various sections to ensure high disposable income in the hands of people. Also, we expect the government to prioritize growth, both urban and rural, to prop up the weakness in the economy. Some measure may include enhanced allocation to social schemes such as MNREGA and PM-KISAN along with improving the quality of expenditure which would help in creating jobs for the economy. We prefer FMCG as a sectoral play on the consumption side and HUL and Dabur are poised to benefit from a medium to long term perspective.
Trivesh D, COO Tradejini
India's middle class drives the economy. Their consumption power generates demand in the market. Consumption is likely to get a boost in this Budget compared to the last two years, driven by potential tax cuts, increased welfare initiatives, and a focus on rural development. These measures would provide more disposable income, especially in rural and lower-income groups, stimulating higher consumer spending across sectors. If tax rates for the middle class are restructured, it would accelerate economic growth and increase tax collection.
Puneet Singhania, Director at Master Trust Group
Consumption is expected to grow in 2025, led by government spending and domestic demand. India's economic growth slowed in 2024 and this slowdown is temporary, with deferred government spending in a General Election year a primary cause. Heavy monsoon rainfall also caused disruptions to business activity. Private consumption which contributes nearly 60% in country's GDP and rural consumption is expected rise in 2025. With urban consumption slowing, Finance Minister Nirmala Sitharaman is expected to introduce measures in the upcoming budget for FY 2026 to stimulate spending. Tax incentives could play a major role such as new deductions and exemptions in both the new and old tax regimes, which tax payers are eagerly waiting. The government is also likely to focus on encouraging private capital expenditure, offering tax benefits for affordable housing. If government meets these expectations than we can see positive momentum in consumption sector stocks.
Siddharth Oberoi, Founder and Chief Investment Officer at Prudent Equity
The government has taken several positive steps to revive consumption, such as changes in tax regimes and increased exemption limits. However, the impact of these measures has not been significantly visible on the ground in the past 12 months. To drive results, the administration will need to adopt more innovative approaches. In addition to direct reforms, focusing on incentivizing private-sector investments could also help boost consumption by stimulating economic activity.
Manish Bhandari, CEO and Portfolio Manager at Vallum Capital Advisors
I foresee some realignment of taxation slabs to spur consumption. We need changes in GST slabs as well as scrapping of auto policy in India to put the economy on fast track.