The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, focuses on accelerating growth, securing inclusive development, invigorating private sector investments, uplifting household sentiments, and enhancing the spending power of India’s rising middle class. The budget emphasizes “Viksit Bharat”, aiming for zero poverty, quality education, affordable healthcare, skilled labour, women’s economic participation, and making India the food basket of the world. Key initiatives include agricultural productivity, rural prosperity, manufacturing boost, MSME support, employment-led development, energy security, exports, and innovation.
Key Announcements of Budget 2025
Prime Minister Dhan-Dhaanya Krishi Yojana
The Prime Minister Dhan-Dhaanya Krishi Yojana aims to enhance agricultural productivity in 100 districts with low yields. This scheme focuses on promoting modern farming techniques, high-yield seed varieties, and advanced machinery. It also encourages crop diversification and sustainable agricultural practices, such as organic farming and natural resource management. Additionally, the scheme aims to strengthen post-harvest storage infrastructure at the panchayat and block levels, improve irrigation facilities, and facilitate the availability of long-term and short-term credit. This initiative is expected to benefit approximately 1.7 crore farmers across the country.
Mission for Aatmanirbharta in Pulses
The Mission for Aatmanirbharta in Pulses is a six-year initiative aimed at achieving self-sufficiency in the production of key pulses such as Tur, Urad, and Masoor. This mission focuses on providing farmers with high-quality, climate-resilient seeds, modern storage facilities, and assured procurement at fair prices. The government will procure pulses through central agencies like NAFED and NCCF over the next four years, ensuring that farmers receive stable and fair prices for their produce. This initiative aims to reduce India’s dependency on pulse imports and improve the financial stability of pulse farmers.
Comprehensive Programme for Vegetables & Fruits
The Comprehensive Programme for Vegetables & Fruits aims to promote the production, efficient supply chains, processing, and remunerative prices for farmers. This programme will be implemented in partnership with state governments and will focus on establishing appropriate institutional mechanisms for the participation of farmer producer organizations and cooperatives. The initiative also aims to upgrade infrastructure and warehousing for air cargo, including high-value perishable horticulture produce, to ensure better market access and reduced post-harvest losses.
Mission for Cotton Productivity
The Mission for Cotton Productivity is a five-year plan to improve cotton yields and promote extra-long staple cotton varieties. This mission aims to enhance the quality of cotton and rejuvenate India’s traditional textile sector. The initiative focuses on providing farmers with advanced technology and scientific support to boost productivity and ensure raw material security for the Indian textile and apparel sector. The mission also aims to stabilize raw material availability, reduce import dependence, and enhance the global competitiveness of India’s textile industry.
Enhanced Credit through Kisan Credit Card (KCC)
The Enhanced Credit through Kisan Credit Card (KCC) scheme has increased the loan limit from ₹3 lakh to ₹5 lakh for farmers, fishermen, and dairy farmers. This enhancement aims to provide better access to formal credit and reduce reliance on high-interest informal borrowing. The scheme also includes a revised interest subvention scheme, which offers subsidized loans to farmers, ensuring timely credit availability and reducing financial stress. The KCC scheme covers a broad spectrum of farmers, including individual or joint borrowers, tenant farmers, oral lessees, and sharecroppers.
Medical College Expansion
The Union Budget 2025 announced by Finance Minister Nirmala Sitharaman includes a significant expansion plan for medical colleges. The government aims to add 10,000 additional seats in medical colleges next year, with a long-term goal of increasing the number of seats by 75,000 over the next five years. This expansion is expected to address the growing demand for healthcare professionals in the country and improve the availability of medical education.
Day Care Cancer Centres
The Budget 2025 also includes the establishment of day care cancer centres in every district across India. This initiative aims to enhance access to cancer treatment and support for patients, particularly in rural and underserved areas. By providing local access to essential medical services, the government hopes to reduce the burden on families affected by cancer and improve overall health outcomes
Social Security for Gig Workers
The government has recognized the need to provide social security benefits to gig workers, who often lack traditional employment benefits. This initiative aims to extend social security coverage to gig workers, ensuring they have access to healthcare, retirement benefits, and other essential services
Medical Tourism & “Heal in India”.
India is positioning itself as a global hub for medical tourism with the “Heal in India” initiative. This program aims to attract international patients seeking high-quality medical care at affordable prices. By promoting medical tourism, India hopes to boost its healthcare sector and generate revenue from foreign patients.
Broadband Connectivity for Schools
To improve digital accessibility in education, the government plans to extend broadband connectivity to all government secondary and primary schools. This initiative aims to ensure that students have access to online learning resources and digital tools, enhancing the quality of education in government institutions
50-Year Interest-Free Loan to States
The Budget 2025 includes a provision for a 50-year interest-free loan to states. This initiative aims to support state governments in funding infrastructure projects and other developmental activities without the burden of interest payments.
Jal Jeevan Mission Extension
The Jal Jeevan Mission, which aims to provide safe and adequate drinking water to every rural household in India, has been extended. This extension includes additional funding and resources to ensure that the mission’s goals are achieved, improving access to clean water for millions of people.
Nuclear Energy Expansion
India plans to expand its nuclear energy capacity to meet the growing demand for electricity. This initiative includes the construction of new nuclear power plants and the modernization of existing facilities, aiming to increase the share of nuclear energy in the country’s energy mix.
Gyan Bharatam Mission
The Gyan Bharatam Mission focuses on improving the quality of education in India. This initiative includes measures to enhance teacher training, curriculum development, and the use of technology in classrooms, aiming to provide students with a world-class education.
Urban Challenge Fund
The Urban Challenge Fund aims to support urban development projects across the country. This initiative includes funding for infrastructure improvements, smart city projects, and other initiatives to enhance the quality of life in urban areas.
Tax Reforms
The Union Budget 2025 introduced several tax reforms aimed at simplifying the tax system and providing relief to taxpayers. Key highlights include:
- New Income Tax Slabs: The basic exemption limit has been increased to ₹4 lakh, and a new 25% tax slab has been introduced for incomes between ₹20 lakh and ₹24 lakh. This means that individuals earning up to ₹12 lakh (₹12.75 lakh for salaried individuals) will not have to pay any income tax.
- Increased Rebate Limit: The tax rebate under Section 87A has been increased from ₹7 lakh to ₹12 lakh, effectively reducing the tax liability to zero for many taxpayers.
- Simplification of Tax Laws: A new income tax bill is proposed to replace the existing law, aiming to reduce complexity and litigation.
Income Tax Slab Changes
Exemptions from Basic Customs Duty (BCD)
The Budget 2025 has introduced several exemptions from Basic Customs Duty to promote local manufacturing and reduce import dependence. Key exemptions include:
- Reduced Import Tariffs: Import tariffs on various goods have been reduced to encourage local production.
- Incentives for EVs: Electric vehicles (EVs) and related components have been given significant tax relief to boost the adoption of green mobility.
- Support for MSMEs: Small and medium-sized enterprises (MSMEs) have received tax incentives to strengthen local manufacturing.
Income Tax Slab Changes
Income Tax Slabs | Tax Rates |
Up-to Rs. 4,00,000 | NIL |
Rs. 4,00,001 – Rs. 8,00,000 | 5% |
Rs. 8,00,001 – Rs. 12,00,000 | 10% |
Rs. 12,00,001 – Rs. 16,00,000 | 15% |
Rs. 16,00,001 – Rs. 20,00,000 | 20% |
Rs. 20,00,001 – Rs. 24,00,000 | 25% |
Above Rs. 24,00,000 | 30% |
The Basic Exemption Limit is extended to Rs.4,00,000. The rebate allowed under section 87A has now been increased to Rs.60,000 for new regime. This was Rs.25,000 before the change. Since the rebate allowed has been increased, tax incidence for income up-to Rs.12,00,000 will be zero.
Exempted Capital Goods
Certain capital goods have been exempted from customs duty to support industrial growth and technological advancement. These exemptions are aimed at reducing the cost of production and encouraging investment in advanced technologies.
Economic Projections
India’s economy is projected to grow by 6.4% in FY25, driven by strong private consumption and investment. The GDP growth forecast for FY26 is expected to be between 6.3% and 6.8%.
Fiscal Deficit
The fiscal deficit target for FY26 has been set at 4.4% of GDP, down from 4.8% in FY25. The government aims to achieve fiscal consolidation and reduce the debt-to-GDP ratio
Gross Market Borrowings
The gross market borrowings for FY26 are estimated at ₹14.82 trillion, up from ₹14.01 trillion in FY25. This increase is part of the government’s strategy to finance the fiscal deficit.
Infrastructure
- Increased Allocation: The budget allocates ₹11.21 lakh crore for infrastructure development, a significant increase from previous years.
- Urban Infrastructure: The Urban Challenge Fund of ₹1 lakh crore is set up to support urban development projects, including the redevelopment of cities, water and sanitation, and metro rail development.
- State Support: The government provides 50-year interest-free loans amounting to ₹1.5 lakh crore to states for infrastructure projects.
- Asset Monetisation: A ₹10 lakh crore asset monetisation plan is introduced to boost infrastructure growth.
- Public-Private Partnerships (PPP): Encouraging PPP projects across various infrastructure ministries to promote private sector participation.
Housing
- Pradhan Mantri Awas Yojana (Urban): An allocation of ₹3,500 crore for the second phase of this flagship program to provide affordable housing.
- SWAMIH Fund 2: Establishment of a new fund with a corpus of ₹15,000 crore to expedite the completion of another one lakh housing units.
- Urban Rejuvenation Mission: An allocation of ₹10,000 crore for urban rejuvenation projects in 500 cities.
- Tax Benefits: Taxpayers can now claim the annual value of two self-occupied properties as nil without any conditions
Conclusion
The Union Budget 2025 focuses on stimulating economic growth, providing tax relief to the middle class, and bolstering key sectors like agriculture and manufacturing. Key highlights include increased income tax exemption limits, support for gig workers, and significant investments in infrastructure and digital economy. The budget aims to achieve inclusive development and enhance India’s global competitiveness