Union Budget 2025: Key Highlights & Economic Roadmap

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, is centered around the theme of "Sabka Vikas" (Inclusive Growth) and the long-term vision of Viksit Bharat (Developed India) by 2047. With a focus on economic expansion, employment generation, and fiscal consolidation, this budget is being termed a “dream budget” for the middle class.

Key Themes & Objectives

• Sabka Vikas—Balanced growth across all regions.

• Viksit Bharat Goals – Zero poverty, quality education, affordable healthcare, skilled workforce, and women’s economic participation.

• Key Focus Areas—Poor (Garib), Youth, Farmers (Annadata), and Women (Nari).

• Four Growth Engines—Agriculture, MSMEs, Investment, and Exports.

Key Focus Areas & Growth Engines

The Budget revolves around four major economic engines:

1. Agriculture

2. MSMEs

3. Investment

4. Exports

Additionally, Reforms act as the fuel to drive these engines forward.

1st Engine: Agriculture

• Launch of ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ covering 100 districts.

• ‘Mission for Aatmanirbharta in Pulses’ (6 years) with procurement of Tur, Urad, and Masoor.

• Kisan Credit Card (KCC) Loan Limit Increased from ₹3 lakh to ₹5 lakh.

• Cotton Productivity Mission (5 years) and Comprehensive Programme for Fruits & Vegetables.

Impact on Agriculture Sector

• Improved farm productivity and income.

• Better storage, irrigation, and crop diversification.

• Encouragement for small and marginal farmers.

2nd Engine: MSMEs

• Investment & Turnover Limits for MSMEs Increased by 2.5 times & 2 times respectively.

• Credit Enhancement: Increased guarantee cover for MSMEs.

• New Scheme for 5 lakh Women, SC/ST Entrepreneurs (₹2 crore term loans in 5 years).

• National Manufacturing Mission for “Make in India”.

• Toy Industry Boost: Government to develop India as a global hub for toys.

Impact on MSMEs

• Enhanced credit access and ease of doing business.

• More women and marginalized communities in entrepreneurship.

• Strengthened domestic manufacturing & exports.

3rd Engine: Investment

Investment in People

• 50,000 Atal Tinkering Labs in Government Schools.

• Broadband in All Govt. Schools & Primary Health Centres (BharatNet).

• National AI Centre of Excellence for Education (₹500 Cr).

Investment in Economy

• ₹1.5 Lakh Cr Interest-Free Loan to states for capital expenditure.

• Asset Monetization Plan 2025-30 (₹10 Lakh Cr).

• Jal Jeevan Mission Extended Till 2028.

• ₹1 Lakh Cr Urban Challenge Fund for “Cities as Growth Hubs”.

Investment in Innovation

• ₹20,000 Cr Fund for Private Sector R&D & Innovation.

• Gyan Bharatam Mission: Survey & Digital Repository of 1 Crore Manuscripts.

• National Geospatial Mission to improve urban planning.

Impact on Investment & Infrastructure

• Boost to Digital & AI Education.

• Higher capital investment for urban & rural infrastructure.

• Strengthened research & innovation ecosystem.

4th Engine: Exports

• Export Promotion Mission (focus on MSMEs & Global Supply Chains).

• ‘BharatTradeNet’ (BTN): Unified Digital Trade Documentation & Finance Platform.

• Support for Domestic Manufacturing (Industry 4.0, Electronics, Warehousing).

• Air Cargo & Horticulture Infrastructure Upgrades.

Impact on Exports

• Strengthened India’s role in global trade & supply chains.

• Easier export financing & digital trade solutions.

• Growth in manufacturing, logistics & agri-exports.

  
  

Taxation & Financial Reforms

• Zero Income Tax for Individuals Earning up to ₹12 Lakh under the new tax regime.

• Section 87A rebate limit increased from ₹7 lakh to ₹12 lakh (Maximum rebate: ₹60,000).

• Revenue Loss: ₹1 Lakh Crore due to tax reductions.

• 100% FDI Limit for Insurance (from 74%) (Only if entire premium is invested in India).

• Investment Friendliness Index for States (2025).

• Jan Vishwas Bill 2.0 (Decriminalization of 100+ Laws).

New Income Tax Slabs:

Other Tax Reforms

• Senior Citizen TDS Limit on Interest Doubled (₹50,000 → ₹1 Lakh).

• TDS on Rent Increased to ₹6 Lakh (from ₹2.4 Lakh).

• 4-Year Time Limit for Filing Updated Returns (Earlier: 2 Years).

Impact on Economy & Business

• Easier business regulations & FDI growth.

• Greater state competition for investments.

• More efficient financial regulation for sustained economic growth.

Impact on Middle Class & Business

• More disposable income → Increased Consumption & Savings.

• Lower compliance burden for businesses & individuals.

• Boost to real estate & investment in financial products.

Capital Expenditure & Fiscal Deficit

• Capital Expenditure (Capex) increased to ₹11.21 lakh crore (up from ₹11.11 lakh crore in FY2024-25).

• Fiscal deficit pegged at 4.4% of GDP, down from 4.8% last year.

• Market Borrowings estimated at ₹11.53 lakh crore, reduced from ₹14.01 lakh crore in FY2024-25.

Infrastructure & Economic Growth

• Modified UDAN scheme to connect 120 new destinations, targeting 4 crore passengers in 10 years.

• Real Estate Boost—Swamih Fund 2 launched with ₹15,000 crore for housing sector revival.

• Manufacturing Push—Incentives for clean tech industries, EV batteries, solar PV cells, and wind turbines.

• Tourism Promotion—Development of 50 top tourist sites, MUDRA loans for homestays, and e-visa expansion.

Import Duty Exemptions & Reductions

• 36 Life-Saving Cancer & Rare Disease Drugs → No Basic Customs Duty (BCD).

• Critical Minerals (Cobalt, Lithium, Zinc) for Battery Manufacturing → BCD Exempted.

• Textile Machinery & Shuttle-less Looms → BCD Exempted.

Incentives for “Make in India”

• EV & Mobile Phone Battery Manufacturing: 35 Capital Goods Exempted.

• Shipbuilding Components → BCD Exemption Extended for 10 Years.

• Knitted Fabrics Tariff Increased (10% to 20% or ₹115/kg, whichever is higher).

Impact on Industry

Boost to healthcare affordability & pharma industry.

Strengthened EV & electronics manufacturing

Increased domestic textile & handicraft production.

Bihar-Focused Development

• The Makhana Board announced it would improve production & marketing.

• Greenfield airports are planned in Bihar to boost connectivity.

Employment & Industry Initiatives

• 22 lakh new jobs are to be generated, with a focus on the footwear & leather sector.

• MSMEs, Startups, and Gig workers get special policy support.

• The FDI limit in insurance increased from 74% to 100%.

Nuclear & Energy Investments

• ₹20,000 crore allocated for the Nuclear Energy Mission to develop 5 Small Modular Reactors (SMRs) by 2033.

• Energy sector allocation increased by 18% YoY to ₹81,174 crore.

Defence & IT Sector Allocations

• Defence Budget set at ₹4.91 lakh crore (up from ₹4.56 lakh crore).

• IT & Telecom Allocation reduced to ₹95,298 crore from ₹1.16 lakh crore.

Relief for Consumers – Cheaper Goods

• Reduced prices on:

  • Cancer & lifesaving drugs.

  • Solar PV cells & lithium-ion batteries.

  • Telecom & semiconductor equipment.

MSMEs & Startup Support

• Credit Guarantee Cover increased from ₹5 crore to ₹10 crore.

• New Entrepreneurs’ Scheme – ₹2 crore term loans for 5 lakh women and SC, ST entrepreneurs.

• BharatTradeNet (BTN) – Digital trade documentation & financing for exporters.

Social Welfare & Policy Reforms

• Tax Exemptions on 36 lifesaving drugs.

• New Urea Plant in Assam—12.7 lakh metric tonne capacity.

• 22 Lakh Jobs Creation – Focus on the footwear & leather industry.

• ‘Mission for Aatmanirbharta in Pulses’ – Six-year plan for domestic production.

Additional Reforms & Governance

• Self-Occupied Property Rule Removed—Taxpayers can claim two properties as self-occupied.

• New Income Tax Bill to simplify tax laws by reducing tax by 50%.

A budget that supports middle-class savings, employment, and economic growth.

Overall Impact of Budget 2025-26

• Middle Class: Higher savings, consumption boost.

• Farmers: Higher credit, better procurement, rural employment.

• MSMEs: Enhanced credit access, better global trade opportunities.

• Startups & Entrepreneurs: Investment-friendly reforms, regulatory ease.

• Investors & Businesses: Lower taxation, infrastructure push.

• Infrastructure and Exports: Increased manufacturing & global trade integration.

A Transformative Budget for Growth & Stability

The Union Budget 2025-26 lays the foundation for a self-reliant and developed India by:

• Providing tax relief to the middle class.

• Boosting infrastructure & manufacturing.

• Encouraging entrepreneurship & employment.

• Strengthening agriculture & rural economies.

• Maintaining fiscal discipline.

With a balanced approach of tax relief, economic expansion, and social welfare, this budget reflects the government’s vision for a prosperous, self-reliant India while ensuring sustainable growth and fiscal responsibility.