Preparing for Union Budget 2025: Key Sectors to Watch

The Finance Minister is all set to present the Union Budget 2025 on Saturday, February 1, 2025, and the Indian stock market will remain operational like a normal trading day. The market and various sectors are anticipating significant announcements in the upcoming budget. Expectations include tax reforms, housing benefits, enhancements to the healthcare sector, and incentives for the automobile sector. Let’s now take a look at the key sectors ahead of FM Nirmala Sitharaman’s speech on the Union Budget 2025.

Defence Sector

The defence sector received an allocation of ₹6,21,940.85 crore in the Union Budget for FY25. This marks an increase of about ₹1,00,000 crore (18.43%) compared to the FY 2022-23 allocation and 4.79% more than the allocation for FY 2023-24.

The sector is expected to focus on initiatives that boost defence exports and accelerate domestic procurement, alongside capital allocations.

Defence companies like Hindustan Aeronautics Limited, Bharat Dynamics Limited, and Bharat Electronics Limited will be of particular interest to investors.

Railway Sector

The Finance Minister allocated a record ₹2,62,200 crore to the Railways in the Union Budget 2024. The gross budgetary support for the Railways is set at ₹2,52,200 crore, a significant rise from ₹2,40,200 crore in 2023-24.

Stocks of railway companies such as IRCTC, RVNL, and Railtel are likely to gain attention, given the continuous increase in budgetary allocations for the sector.

Telecom Sector

The telecom sector was allocated ₹1,11,915 crore in FY 2024-25, reflecting a 14% increase over the revised estimates for 2023-24. The telecom sector’s budget allocation was 2.3% of the total central government budget.

With ongoing AGR dues and rising debt levels of telecom companies, investors will closely watch companies like VI, Bharti Airtel, and Reliance.

Infrastructure Sector

India’s infrastructure sector is poised for significant growth, with planned investments of US$ 1.4 trillion by 2025. The government’s National Infrastructure Pipeline (NIP) is designed to direct substantial capital into critical sectors like energy, roads, railways, and urban development.

Given the strong growth outlook, infrastructure companies such as L&T, Afcons, and others will attract attention from investors.

Energy Sector

India’s energy demand is forecasted to grow faster than any other country over the next few decades due to its vast size and immense potential for development. In 2024, India added 24.5 GW of solar and 3.4 GW of wind capacity, maintaining momentum in the sector. However, to meet its 2030 targets, India will need to scale up renewable energy installations to 50–60 GW annually, while expanding energy storage capacity to at least 20 GWh per year.

Conclusion

As India awaits the Union Budget 2025, there are high expectations across various sectors for reforms and strategic investments. The Defence, Railway, Telecom, Infrastructure, and Energy sectors are all positioned for growth, with significant allocations and focus on modernisation, sustainability, and boosting exports.

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