Business
Budget 2025-26 Prioritizes High Capital Expenditure While Upholding Fiscal Prudence: BoB Analysis
Additionally, spending growth will be significantly driven by rural development and agriculture. The Centre’s total expenditure is projected to rise from Rs 47.2 lakh crore in FY25 (Revised Estimates, RE) to Rs 50.7 lakh crore in FY26 (Budget Estimates, BE). This growth will be supported by both revenue and capital expenditures, as stated in the report.
Capex is anticipated to see a notable increase to Rs 11.2 lakh crore—up from Rs 10.2 lakh crore in FY25 RE. The ratio of Capex to GDP is set to remain steady at 3.1 percent, according to the report.
The government projects a nominal GDP growth of 10.1 percent in FY26, up from a revised estimate of 9.7 percent for FY25. The overall tax revenue as a percentage of GDP is expected to hold steady at 12 percent in FY26 BE compared to 11.9 percent in FY25 RE.
The direct tax-GDP ratio is forecasted to rise to 7.1 percent from 6.9 percent, while the indirect tax-GDP ratio is anticipated to remain constant at 4.9 percent in FY26 BE, unchanged from FY25 RE.
Following the fiscal glide path laid out in the Budget for 2021-22, the fiscal deficit (as a percentage of GDP) has decreased in FY25 and is projected to decrease by another 0.40 percent in FY26.
The government has also reduced its debt-to-GDP ratio from 58.1 percent in FY24 RE to 57.1 percent in FY25 RE, with further expectations of a decline to 56.1 percent in FY26 BE. By 2031, the government aims to bring this ratio down below 50 percent, in line with recommendations from the 16th Finance Commission.
The report notes a consistent increase in the size of the budget over recent years, averaging a growth rate of approximately 7.6 percent over the last five years, against an average nominal GDP growth of 12.5 percent. This budgetary increase is focused on enhancing the quality of spending.
The Centre’s net revenue collections are projected to align with the growth in nominal GDP, with an increase of Rs 3.3 lakh crore expected this year. Gross tax collections are also anticipated to show significant growth in FY26 BE (Rs 4.2 lakh crore) compared to the previous year’s figure of Rs 3.9 lakh crore, driven by higher corporate tax receipts and indirect tax collections.
However, the report highlights that the incremental rise in income tax collections will be less substantial as the government has opted to forgo Rs 1 lakh crore in tax rebates.
Indirect tax collections are expected to grow at a slightly slower rate than direct taxes, with an overall expected increase of Rs 1.33 lakh crore. Of this, Rs 1.16 lakh crore will come solely from GST collections. Improving compliance and the potential for higher domestic consumption will be key factors in this growth.
Specific areas within excise, such as agriculture infrastructure and development cess, as well as duties on petrol, diesel, and basic excise taxes, are anticipated to gain traction, according to the report.
The Union Budget for FY26 emphasizes employment, skill development, agriculture, MSMEs, women’s initiatives, infrastructure, and space technology as primary focus areas for government efforts over the next five years.
Business
Adani Group Achieves EBITDA of ₹89,806 Crore Boosted by Growth in Core Infrastructure Sectors
EBITDA saw an increase of 8.2% compared to the ₹82,976 crore reported by the group’s listed companies in FY24, according to Adani’s statement.
Notably, Adani’s core infrastructure businesses accounted for 82% of total EBITDA. Within the utility segment, Adani Green Energy enhanced its operational capacity by 30% year-on-year, while Adani Power experienced a 20% boost in electricity generation.
The conglomerate reached a capital expenditure peak of ₹1.26 trillion and plans to invest $100 billion over the next six years. “These investments will underscore the group’s commitment to developing long-term infrastructure assets, including renewable energy projects, transmission networks, ports, and a new copper smelter facility,” the company stated.
Jugeshinder ‘Robbie’ Singh, CFO of Adani Group, remarked, “A significant highlight of FY25 is our continued industry-leading Return on Assets of 16.5%, one of the highest in the global infrastructure sector. This demonstrates our strong asset base and the execution capabilities of the Adani portfolio in delivering high-quality assets across various subsectors.”
He also noted, “We have implemented various governance and ESG initiatives, including a Tax Transparency report released by all portfolio companies, alongside other measures taken over recent years, resulting in industry-leading ESG scores as recognized by international rating agencies.”
Adani’s net debt-to-EBITDA ratio improved to 2.6x, down from 3.8x in FY19. The group maintains healthy liquidity, with a reported cash balance of ₹53,843 crore ($6.3 billion), equating to approximately 18.5% of gross debt.
The RBI’s May 2025 monthly bulletin noted, “The decline in FY25 indicates a mature market where foreign investors can easily enter and exit, positively reflecting on the Indian economy.”
Despite the drop in net FDI, gross FDI showed resilience, growing 13.7% year-over-year to reach $81 billion in FY25, compared to $71.3 billion in FY24 and $71.4 billion in FY23, as per RBI data.
The report highlighted India’s emerging role as a “connector country,” positioned to be a vital intermediary in sectors like technology, digital services, and pharmaceuticals. “Amid global trade reconfigurations and shifts in industrial policy, India is increasingly set to play a significant role,” it stated.
“Looking ahead, despite the formidable challenges on the horizon, India is well-prepared to navigate ongoing global headwinds, ready to seize emerging opportunities and strengthen its position as a key driver of global growth,” the report concluded. It also mentioned ongoing trade tensions, increased policy uncertainty, and subdued consumer sentiment as persistent challenges to global growth.
However, in the January–March quarter (Q4 FY25), IndiGo saw a remarkable 61.89% year-on-year increase in consolidated net profit, reaching ₹3,067.5 crore, up from ₹1,894.8 crore in Q4 FY24. Excluding foreign exchange effects, net profit grew by 44.7% to ₹2,981.1 crore compared to ₹2,060 crore in the same quarter last year.
In Q4, revenue from operations climbed by 24.3% to ₹22,151.9 crore, compared to ₹17,825.3 crore in the previous year. The airline’s EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent) surged by 57.5% to ₹6,948.2 crore during this period, with an EBITDAR margin improving to 31.4% from 24.8% in the same quarter last year.
IndiGo also experienced a 21% increase in capacity and a 19.6% rise in passenger numbers, serving 3.19 crore travelers. The load factor inched up to 87.4%, compared to 86.3% in Q4 FY24.
CEO Pieter Elbers commented on the airline’s performance, stating it was a “healthy financial result” for both the fourth quarter and the full year, driven by record passenger volumes, operational efficiencies, and the dedicated efforts of IndiGo’s employees. However, he acknowledged challenges, particularly the impact of Pakistan’s airspace closure and the shutdown of 32 airports in May, affecting around 170 daily flights, 11 of which were operated by IndiGo.
While April started on a positive note, Elbers noted that May might be weaker, but there are expectations of traffic recovery beginning in June. He also announced a recommended dividend of ₹10 per share for IndiGo’s shareholders. Furthermore, a prominent international credit rating agency has assigned IndiGo an investment-grade rating, reflecting its robust balance sheet and consistent performance.
Looking forward, the airline intends to maintain its focus on cost leadership and expand its international operations, including launching services in Europe.
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