CII Proposes Key Measures to Boost India’s Growth for Union Budget 2025-26

As India prepares for its Union Budget 2025-26, the Confederation of Indian Industry (CII) has submitted a set of strategic recommendations to guide the government’s policy decisions and drive the country’s economic growth. The proposals cover critical areas such as green financing, tax reforms, digital infrastructure, and job creation, aiming to align India’s financial and developmental goals with emerging priorities.

A key focus of the CII’s recommendations is reforming the Priority Sector Lending (PSL) framework, which mandates that banks provide a certain percentage of loans to sectors crucial for socio-economic development. CII Director General Chandrajit Banerjee has called for a recalibration of the PSL framework to reflect India’s changing economic landscape. For instance, agriculture’s contribution to GDP has fallen from over 30% in the 1990s to just 14% today, yet it continues to receive a large share of PSL funding. CII has proposed redirecting funds towards emerging sectors such as green energy, digital infrastructure, healthcare, and advanced manufacturing, which are expected to drive future growth. “PSL allocations should reflect GDP contributions and sectoral growth potential,” Banerjee said. The inclusion of green projects, electric vehicles, and climate-resilient agriculture as priorities for PSL funding is part of CII’s push for sustainable development. With a growing focus on sustainability, CII has also recommended prioritising green financing for projects that promote clean energy and environmental resilience. Additionally, the need to develop digital infrastructure, including artificial intelligence and advanced data networks, has been emphasised. These technological advancements will not only help modernise India’s economy but will also be pivotal in maintaining global competitiveness.

Given the persistent inflationary pressures, CII is calling for targeted government interventions to boost disposable incomes and stimulate consumer spending. Key measures include reducing excise duties on fuel, which have been driving inflation, and lowering personal income tax rates, especially for those earning up to Rs 20 lakh annually. These tax reforms aim to address the disparity between the personal tax rate and corporate tax rates, thereby improving purchasing power. In addition, CII has suggested increasing wages under the MGNREGS scheme and enhancing PM-KISAN benefits to provide relief to rural and farming communities. Furthermore, the introduction of consumption vouchers for low-income groups would provide immediate support for specific goods and services, helping to revive demand in the economy.

CII also places a strong emphasis on employment generation, proposing a National Employment Policy to consolidate various employment schemes. Specific suggestions include the establishment of a Universal Labour Information Management System (ULIMS) to provide detailed insights into job opportunities, skills demand, and training programs. This system would be integrated with the National Career Service (NCS) to help connect job seekers with employers. Moreover, CII advocates for tax incentives for businesses that create new jobs and for targeted support for labour-intensive sectors such as construction, textiles, and tourism. In addition, CII is calling for measures to increase female workforce participation through gender-sensitive policies and support for the care economy.

With household savings declining in recent years, CII has recommended reforms to encourage greater savings in the economy. These include reducing the tax rate on interest income from bank deposits and lowering the lock-in period for fixed deposits with preferential tax treatment. These measures would help channel more savings into productive investments, supporting long-term economic growth. CII’s comprehensive proposals for the Union Budget 2025-26 outline a clear path for achieving India’s economic aspirations, with a focus on sustainable growth, digital transformation, and social welfare. By recalibrating financial frameworks like PSL, boosting domestic consumption, and supporting job creation, these recommendations aim to unlock India’s demographic dividend and propel it towards a more prosperous future. As the government considers these suggestions, the coming Budget will be a crucial turning point in shaping India’s next phase of growth.