Union Budget 2025-26: A Comprehensive Analysis
On February 1, 2025, Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2025-26. This budget focuses on boosting economic growth, supporting the middle class, strengthening the agriculture sector, and promoting sustainability. Let’s dive into the key highlights, major reforms, pros & cons, and the overall impact of the budget.
Key Highlights of Union Budget 2025-26
1. Taxation: Relief for the Middle Class
The income tax exemption limit has been increased to ₹8 lakh (earlier ₹7 lakh) under the new tax regime.
New simplified tax slabs have been introduced for higher-income groups, reducing the overall tax burden.
The standard deduction for salaried employees has been increased to ₹75,000.
Senior citizens above 75 years are exempt from filing income tax returns if their only income source is a pension.
Tax on capital gains for equity investments held for more than 3 years has been reduced to 10%.
2. Infrastructure Boost
₹15 lakh crore allocated for infrastructure development, with a focus on roads, highways, railways, and smart cities.
20 new airports to be developed under the UDAN scheme to enhance regional connectivity.
Bharat Mala Phase 2 announced for highway expansion, targeting over 50,000 km of roads.
The Indian Railways has been allocated ₹2.8 lakh crore for modernization, bullet trains, and station redevelopment.
3. Agriculture & Rural Development
₹3 lakh crore allocated to the agriculture sector to boost crop productivity and irrigation projects.
PM-KISAN scheme benefits increased from ₹6,000 per year to ₹8,000 per year.
Interest-free loans for farmers, dairy entrepreneurs, and agritech startups.
A National Mission for Organic Farming introduced to promote chemical-free farming.
4. Employment & MSME Sector
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₹1.5 lakh crore allocated for MSMEs, including tax benefits and loan subsidies.
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Expansion of Startup India with a ₹20,000 crore fund to support new businesses and job creation.
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New policies introduced to formalize gig workers, providing them with health insurance and social security benefits.
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Increased focus on the textile industry, aiming to create 10 million new jobs.
5. Healthcare & Education
₹1.8 lakh crore for the healthcare sector, with an emphasis on rural healthcare infrastructure.
Free vaccinations for all citizens under the National Immunization Program.
Digital health records to be implemented across all government hospitals.
₹1.2 lakh crore allocated to education, focusing on digital classrooms and skill-based learning.
5 new AIIMS institutes announced to improve healthcare access.
6. Technology & Digital India
₹50,000 crore allocated for the AI & semiconductor industry.
5G expansion to rural areas, aiming for 100% connectivity across India.
National Cyber Security Mission launched with a budget of ₹12,000 crore.
Incentives for EV startups and green energy research.
7. Defense & National Security
₹6.5 lakh crore allocated to the defense sector for modernization and procurement of advanced weaponry.
New initiatives to boost indigenous defense manufacturing under the Make in India program.
Strengthened border security with ₹45,000 crore for border infrastructure.
8. Renewable Energy & Sustainability
₹3 lakh crore allocated to renewable energy projects, including solar, wind, and hydroelectric power.
A Nuclear Energy Mission to achieve 100 GW of nuclear power by 2047.
Expansion of the Green Hydrogen Mission to make India a global hub for hydrogen production.
Incentives for electric vehicles (EVs) and charging infrastructure.
Pros & Benefits of the Budget
Middle-Class Tax Relief
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The increase in the tax exemption limit allows more disposable income for the middle class, boosting consumption and savings.
Boost to Infrastructure & Connectivity
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Increased investment in highways, railways, and airports will enhance connectivity and generate employment.
Support for Farmers
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Increased financial assistance through PM-KISAN and subsidies will support small and marginal farmers.
Encouragement for Startups & MSMEs
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Financial aid for MSMEs and startups will drive entrepreneurship and job creation.
Investment in Renewable Energy
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The focus on nuclear and green energy will make India self-reliant in power generation.
Challenges & Concerns
Revenue Shortfall
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The reduction in income tax rates may lead to a revenue shortfall, affecting other government expenditures.
High Fiscal Deficit
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India’s fiscal deficit target for 2025-26 is 4.4% of GDP, which still remains high.
Implementation Challenges
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Large-scale infrastructure and agriculture projects require proper execution and monitoring to avoid delays.
Inflation & Price Rise
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Increased spending could lead to higher inflation, impacting daily expenses for common citizens.
Is Budget 2025-26 a Game Changer?
The Union Budget 2025-26 focuses on economic growth, infrastructure development, and middle-class welfare. The increased tax exemptions, agriculture support, and investments in digital technology make it a progressive budget. However, challenges like high fiscal deficit, inflation risks, and revenue shortfalls need careful management.
Overall, this budget sets a positive tone for India’s economic future, with sustainable growth, self-reliance, and innovation as key drivers.
Also Read: Newly Launched Mutual Funds to Invest.
Budget 2025 highlights from Economics Times click here.
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