Union Budget 2025-26

Union Budget 2025-26: Key Highlights and Strategic Reforms for Economic Growth
On February 1, 2025, Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2025-26, outlining a comprehensive strategy to bolster economic growth, enhance the welfare of the middle class, and promote inclusive development across various sectors. This budget reflects the government’s commitment to fiscal prudence while addressing the aspirations of diverse stakeholders.
Budget Estimates and Fiscal Management
The budget projects total receipts (excluding borrowings) at ₹34.96 lakh crore and total expenditure at ₹50.65 lakh crore, resulting in a fiscal deficit of 4.4% of GDP. To finance this deficit, the government plans gross market borrowings of ₹14.82 lakh crore. A significant emphasis is placed on capital expenditure, with an allocation of ₹11.21 lakh crore, accounting for 3.1% of GDP, to stimulate infrastructure development and long-term economic growth.
Personal Income Tax Reforms
In a move to increase disposable income and stimulate domestic consumption, the government has revised personal income tax slabs under the new tax regime:
- Tax Exemption Threshold: Raised to ₹12,80,000 annually.
- Tax Rates:
- Income up to ₹12,80,000: Nil
- Income from ₹12,80,001 to ₹24,00,000: 10%
- Income from ₹24,00,001 to ₹36,00,000: 20%
- Income above ₹36,00,000: 30%
These adjustments aim to boost middle-class consumption, savings, and investment, despite an anticipated revenue loss of approximately ₹1 trillion annually.
Agriculture and Allied Sectors
Recognizing agriculture as a pivotal engine of development, the budget allocates ₹1.52 lakh crore to the agriculture and allied sectors. Key initiatives include:
- High-Yield Crop Program: A national mission targeting 17 million farmers to enhance crop productivity.
- Subsidized Credit: Increased credit limits for farmers to support agricultural activities.
- Natural Farming: Plans to initiate 1 crore farmers into natural farming practices over the next two years.
These measures aim to increase farm output and support the livelihoods of farmers.
Support for the Gig Economy
Acknowledging the growing gig workforce, the government plans to formalize gig workers by improving their access to healthcare and welfare initiatives. This initiative seeks to provide social security and benefits to gig workers.
Infrastructure and Energy Development
The budget allocates significant funds for infrastructure and energy:
- Infrastructure Development: Increased spending on infrastructure projects to stimulate economic growth.
- Nuclear Energy Mission: Aiming to achieve 100 GW of nuclear power by 2047.
These investments are expected to enhance connectivity and energy security.
Support for Startups and Innovation
To foster innovation and entrepreneurship, the budget introduces incentives and funds to support startups and small firms. This aims to encourage innovation and job creation in the economy.
Social Welfare and Healthcare
The budget includes measures to improve social welfare and healthcare:
- Day Care Cancer Centres: Introduction of centers to provide accessible cancer treatment.
- Customs Duty Exemption: Exemption for cancer drugs to reduce treatment costs.
These initiatives aim to enhance healthcare accessibility and affordability.
Industry Reactions
The budget has elicited varied responses from industry leaders:
- Positive Outlook: Many appreciate the tax reforms and increased infrastructure spending.
- Concerns: Some express apprehension about revenue constraints and the effectiveness of certain measures.
Overall, the budget is viewed as a strategic effort to elevate economic growth by improving disposable incomes and spearheading development across various sectors.
The Union Budget 2025-26 reflects the government’s commitment to stimulating economic growth, supporting the middle class, and promoting inclusive development. Through tax reforms, agricultural initiatives, infrastructure investments, and support for innovation, the budget aims to navigate the economy towards sustained prosperity amidst global uncertainties.