Union Budget 2025-26

The Union Budget for the fiscal year 2025-26, presented by Finance Minister Nirmala Sitharaman, introduces several significant measures aimed at stimulating economic growth, supporting various sectors, and addressing fiscal challenges.

Income Tax Reforms

A notable highlight is the substantial relief provided to the middle class through personal income tax cuts. The government has raised the income tax exemption threshold to ₹1.28 million per annum, up from ₹700,000. Additionally, tax rates for higher income brackets have been reduced. This initiative is expected to enhance household consumption, savings, and investment. However, it will result in an estimated annual revenue loss of ₹1 trillion.

Agricultural Initiatives

The budget introduces a six-year program to boost the production of pulses and cotton, aiming to reduce dependence on imports. State agencies will procure pulses at guaranteed prices to support farmers. Given that India spent a record $5 billion on pulse imports in 2024, this move is significant. The government also plans to increase cotton production, especially extra-long staple cotton, through research and development initiatives.

Fiscal Discipline

The government has set a fiscal deficit target of 4.4% of GDP for 2025-26, down from a revised 4.8% in the current year. Despite the revenue loss from tax reforms, gross market borrowing is projected to increase to ₹14.82 trillion to fund the deficit. The aim is to reduce the debt-to-GDP ratio to 50% by March 2031 from the current 57.1%, aligning with global fiscal policy trends.

Support for Gig Workers

Recognizing the growing gig economy, the budget proposes extending healthcare benefits under the PM Jan Arogya Yojana to gig workers. Plans include creating identity cards and registering these workers on the e-Shram portal, aiming to provide them with better access to welfare initiatives.

Healthcare Investments

The budget allocates ₹99,858.56 crore to the Ministry of Health and Family Welfare, reflecting a 191% increase since 2014-15. This investment underscores the government's commitment to improving healthcare infrastructure and services. Initiatives include promoting medical tourism and establishing daycare cancer centres.

Critical Analysis

While the budget's focus on tax relief for the middle class and support for agriculture is commendable, the significant revenue loss from tax cuts raises concerns about funding for other essential sectors. The increased borrowing to manage the fiscal deficit could lead to higher debt servicing costs in the future. Additionally, the effectiveness of programs for gig workers and healthcare will depend on efficient implementation and monitoring.

In conclusion, the 2025-26 budget presents ambitious plans to stimulate growth and support various sectors. However, careful attention to fiscal discipline and effective execution of proposed initiatives will be crucial to achieving the desired outcomes.

India’s Budget 2025: A Vision for Growth and Transformation

Introduction: The Journey of India’s Economy

As we present India’s Budget 2025, it is essential to reflect on our economic journey—from independence to liberalization and beyond. Born just four years after independence, I have seen India evolve from a struggling economy to an emerging global power. While we have achieved remarkable progress, our aspirations remain high, and this budget aims to address the challenges that stand between India and its goal of becoming a developed nation.

This budget is built on the foundation of economic resilience, fiscal prudence, and a strong vision for the future. It aligns with our aspiration to accelerate growth, enhance productivity, and improve the quality of life for all citizens.

Economic Performance and Key Indicators

1. GDP Growth and Fiscal Targets

India’s GDP growth is projected at 6.8% for FY 2024-25, driven by robust consumption, investment, and industrial expansion.

Fiscal deficit is targeted at 5.3% of GDP, continuing the path of consolidation while ensuring necessary public investments.

The government remains committed to maintaining a balance between fiscal discipline and growth-enhancing measures.

2. Per Capita Income and Economic Progress

India's per capita GDP stands at $2,900, reflecting steady improvements but still behind high-income economies.

While post-liberalization reforms have accelerated growth, there is a strong need for structural reforms to boost productivity and income levels.

Lessons from China and post-war Japan indicate that sustained double-digit growth is needed to propel India towards a high-income economy.

Key Budget Priorities for a Developed India

1. Investing in Human Capital: Education & Skill Development

₹1.5 lakh crore allocated for education with a focus on vocational training, AI-driven learning, and STEM education.

Strengthening higher education and research institutes to enhance India’s global competitiveness.

New skill development initiatives aimed at equipping youth for the demands of Industry 4.0.

2. Boosting Infrastructure & Urban Development

₹10 lakh crore for infrastructure projects, including roads, railways, and smart cities.

Expansion of mass rapid transport systems and urban planning initiatives to support rapid urbanization.

Incentives for green buildings, sustainable energy, and affordable housing projects.

3. Enhancing Ease of Doing Business & Economic Reforms

Reduction in corporate tax rates for MSMEs, enabling easier access to credit.

Simplification of GST and tax compliance frameworks to encourage entrepreneurship.

Push for greater digital governance and transparency to reduce bureaucratic inefficiencies.

4. Strengthening the Manufacturing Sector & ‘Make in India’

₹5 lakh crore dedicated to ‘Make in India’ and PLI (Production Linked Incentive) schemes.

Special emphasis on electronics, semiconductor manufacturing, and defense production.

Reforms in labor laws and land acquisition to promote industrial growth.

5. Financial Inclusion & Digital Economy

Expansion of UPI-based transactions and fintech infrastructure to drive financial inclusion.

Increased access to credit for MSMEs and self-help groups, with priority lending in rural areas.

Strengthening of digital public infrastructure to ensure economic participation from all sectors.

6. Governance, Institutions, & Transparency

New policy measures to improve judicial efficiency and accelerate contract enforcement.

Expansion of e-governance initiatives to ensure transparency in public services.

Strengthening of anti-corruption mechanisms and tax compliance frameworks.

7. Social Security, Healthcare & Equitable Growth

₹2.8 lakh crore allocated to healthcare, focusing on universal health coverage and telemedicine.

Expansion of PM Garib Kalyan Yojana, ensuring food and income security for vulnerable groups.

Affordable housing, rural employment schemes, and pension reforms to address income inequality.

Vision 2047: India as a Developed Nation

The essence of progress lies in aspiration and dissatisfaction. While we have achieved significant milestones, we cannot afford to be complacent. The path to becoming a $10 trillion economy requires sustained reforms, strategic investments, and a relentless focus on innovation and governance.

This budget is a step towards that vision—a budget that not only promotes growth but ensures prosperity for every Indian, bridging the divide between India and Bharat.

We move forward with the belief that India’s best days are yet to come.