Finance Minister Nirmala Sitharaman presented the Union Budget for 2025-26 on February 1, 2025, focusing on stimulating economic growth, providing tax relief to the middle class, and promoting inclusive development. Key highlights include:
Personal Income Tax Reforms:
The income tax exemption limit has been raised to ₹1.2 million annually, aiming to increase disposable income and boost consumption.
Source- https://www.reuters.com/world/india/india-budget-india-targets-fiscal-deficit-44-2025-26-sets-path-bring-down-debt-2025-02-01/#:~:text=MUMBAI%20Feb%201%20(Reuters)%20%2D,in%20the%20budget%20on%20Saturday.
Fiscal Management:
The government plans to reduce the fiscal deficit to 4.4% of GDP, down from 4.8% in the previous year, while setting gross borrowings at ₹14.82 trillion and net borrowings at ₹11.54 trillion.
Source- https://www.reuters.com/world/india/how-indias-tax-rate-tweaks-will-boost-middle-class-spending-2025-02-01/
Agriculture and Rural Development:
Initiatives to enhance agricultural productivity, particularly in high-yield crops and cotton, have been announced. The limit for subsidized farm credits has been increased to support farmers.
Source- https://economictimes.indiatimes.com/news/economy/agriculture/budget-2025-fm-sitharaman-announces-measures-aimed-to-benefit-1-75-cr-farmers-of-india/articleshow/117817393.cms?from=mdr
The allocation for the rural employment scheme, MGNREGA, remains at ₹860 billion to continue providing wage support for rural citizens.
Source: – https://economictimes.indiatimes.com/jobs/government-jobs/budget-2025-sitharaman-retains-rural-employment-spending-at-rs-86000-cr-in-fy26/articleshow/117823987.cms?from=mdr
Industry and Investment:
The foreign direct investment (FDI) cap in the insurance sector has been raised from 74% to 100%, aiming to attract more foreign investment.
Source- https://www.ibef.org/news/the-government-allows-100-foreign-direct-investment-fdi-in-insurance-companies-in-a-move-that-could-attract-more-players-help-increase-penetration#:~:text=The%20Indian%20government%20has%20raised,all%20collected%20premiums%20within%20India.
The government plans to incentivize manufacturing through the National Manufacturing Mission and establish funds for start-ups and infrastructure development.
Source- https://www.reuters.com/world/india/india-budget-aims-boost-farm-output-push-inclusive-growth-2025-02-01/
Infrastructure and Connectivity:
A modified Udaan Scheme has been announced to enhance regional air connectivity, aiming to improve transportation infrastructure across the country.
Source- https://www.livemint.com/budget/news/budget-2025-nirmala-sitharaman-modifed-udaan-scheme-connectivity-120-new-destinations-airports-bihar-helipads-11738390377687.html
Healthcare:
Thirty-six life-saving drugs have been fully exempted from customs duties to make essential medications more affordable.
Source- https://www.livemint.com/budget/news/union-budget-2025-36-life-saving-drugs-to-be-made-fully-exempted-basic-duties-cancer-rare-disease-nirmala-sitharaman-11738391100496.html
In conclusion, the 2025-26 Union Budget aims to stimulate economic growth by enhancing the spending power of the middle class, promoting inclusive development, and attracting private investment. The government’s commitment to fiscal consolidation, alongside targeted initiatives in agriculture, industry, and infrastructure, reflects a balanced approach to fostering long-term economic stability and growth.
