The Union Budget 2025-26 has introduced several changes in taxation, government spending, and sectoral allocations. While there are strong opportunities for investors, some risks must be navigated carefully.
📢 Did You Know? The fiscal deficit has been reduced to 4.4% of GDP, a step towards financial stability. Read more on how Budget 2025 impacts the Indian stock market.
In this post, we break down the risks posed by the budget and outline investment strategies to ensure your portfolio stays resilient and profitable in 2025.
🚨 Risks Emerging from Budget 2025-26
1️⃣ Inflation Risk Due to Increased Government Spending
- ₹10.18 lakh crore capital expenditure could push inflation higher.
- Rising commodity prices could impact consumer purchasing power.
- Real estate, FMCG, and metals may see price surges.
💡 Pro Tip: Inflation-hedging assets like gold and commodities can help protect your portfolio. Check out which funds are best for inflation protection.
2️⃣ Fiscal Deficit & Higher Borrowing Pressure
- Fiscal deficit at 4.4% of GDP (though improved from last year, still high).
- Government borrowing may increase interest rates, affecting home loans and corporate lending.
3️⃣ Taxation Structure – Limited Deductions
- New tax regime does not offer HRA, 80C (PF, ELSS), home loan interest deductions.
- Salaried professionals earning ₹8-12 lakh may end up paying higher taxes.
- Freelancers & consultants lose business-related deductions under the new structure.
📢 Did You Know? The new tax regime might actually benefit those without major deductions. See why the new tax regime might be more appealing.
4️⃣ Banking Sector Stress
- ₹1.5 lakh crore in loans to states could put pressure on public sector banks (PSBs).
- MSME lending risks may lead to rising NPAs.
5️⃣ No Short-Term Job Growth Measures
- PLI schemes & manufacturing incentives are long-term but lack immediate job creation impact.
- IT, EdTech, and gig economy sectors were largely ignored in policy support.
📊 Mutual Fund Comparison Table (Post-Budget 2025 Strategy)
| Fund Name | Category | 1-Year Return (%) | 5-Year Return (%) | Expense Ratio (%) | Risk Level |
|---|---|---|---|---|---|
| Mirae Asset Tax Saver Fund | ELSS (Tax Saving) | 18.5 | 21.2 | 1.6 | Moderate-High |
| Axis Long-Term Equity Fund | ELSS (Tax Saving) | 16.3 | 19.4 | 1.7 | Moderate-High |
| HDFC Balanced Advantage Fund | Balanced Advantage | 12.8 | 13.9 | 1.2 | Moderate |
| ICICI Prudential Asset Allocator Fund | Asset Allocation | 14.5 | 16.1 | 1.3 | Moderate |
| Motilal Oswal Nasdaq 100 ETF | International Equity | 23.1 | 25.4 | 0.5 | High |
| Franklin India Feeder US Opp Fund | International Equity | 21.8 | 24.3 | 0.7 | High |
| Nippon India Gold ETF | Gold ETF | 10.7 | 12.1 | 0.4 | Low |
| ICICI Prudential Commodities Fund | Commodity Fund | 15.2 | 17.8 | 0.9 | Moderate |
| Embassy REIT | Real Estate Investment Trust | 9.4 | 10.6 | 0.8 | Low |
| SBI Nifty Next 50 Index Fund | Index Fund | 17.6 | 18.9 | 0.3 | Moderate |
🔥 Final Thoughts – How Should You Invest in 2025?
✔ Protect your portfolio against inflation by investing in gold, REITs, and commodity funds.
✔ Maximize tax benefits using ELSS, NPS, and PPF.
✔ Diversify globally to hedge against rupee depreciation.
✔ Follow a balanced allocation strategy for consistent long-term growth.
📢 Next Steps: Ready to adjust your portfolio? Start by reviewing your tax-saving and growth investments today! More insights on Budget 2025 and investment strategies.