The Union Budget of India for the fiscal year 2025-2026, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, marks a significant stride in the nation’s economic planning. budget, the first full financial year plan of Prime Minister Narendra Modi’s third term, aims to stimulate economic growth, support the middle class, and bolster various sectors through comprehensive reforms and strategic allocations.
taxation Reforms: Empowering the Middle Class*
A corrstone of the 2025 budget is the substantial reform in personal income taxation, designed to enhance disposable income and stimulate consumption. The gnment has raised the income tax exemption threshold to ₹1.2 million (approximately $14,800), up from the previous ₹700,000. Addition, tax rates for higher income brackets have been reduced, benefiting individuals earning up to ₹2.4 million. These cha are anticipated to boost household consumption, savings, and investment, providing a significant impetus to the economy.
To further simplihe tax regime and reduce the compliance burden, the government plans to introduce a new Inco Tax Bill. This inittive seeks to streamline tax processes and make the system more taxpayer-fendly.
Agricultural Initiatives: Strengthening the Backbone of the Economy
Recognizing agriculture as a vital sector, employing ny 45% of India’s workforce and contributing about 15% to the $3.5 trillion economy, the budget introduces several initiatives boost agricultural productivity and farmer welfare. A six-year mission has been launched to enhance the production of pulsnd cotton, aiming to reduce dependence on imports. State agencies will procure pulses such as pigeon peas, black matpe, and red lentils guaranteed price support farmers. Additionally, the government plans to establish a Makhana Board in Bihar to promote the cultiva and marketing of makhana (fox nuts)
To support farmers financially, the limit for subsidiz farm loans has been increased from ₹300,000 to ₹500,000. This move is expected to provide farmers, fishermen, and dairy farmers with enhanced credit access, facilitating investment idern farming techniques and equipment.
Capital Expenditure: Build infrastructure for the Future
The government has committed to a significant increase in capital expenditure, with locations rising t₹11.21 trillion in 2025-26 from a revised ₹10.18 trilln in the current year. This investment focuses on infrastructure projects, including roads, water ly systems, metro systems, railways, defense, digital infrastructure, and green technologies. The enhanced spending is expected toter long-term economic growth, create jobs, and encourage private investment.
Promoting Research, Development, and Innovation
The budget places a strong emphasis on research and development to drive innovation ac sectors. An allocation of ₹20,000 crore has been made to implement a private sector-driven research, development, and innovation initiative. Additionally, the Prime Mini Research Fellowship will provide ten thousand fellowships for technological research in IITs and IISc, aiming to nurture talent promote advanced research.
Export Promotion and Manufacturi Incentives
To boost manufacturing and exports, the government has introduced incentives for key sectors. Exemptions will be grd for open cells used in LED/LCD TVs, looms for textiles, and capital goods for lithium-ion batteries used in mobile phones and electric vehicles. A 10-year exemption will bevided on goods used for shipbuilding and ships meant for breaking, promoting the maritime industry. These measures aim to enhance domestic production capabilities anreduce reliance on ports.
Focus on Sustainability Green Energy
In alignment with global sustainability goals, the budget introduces initiatives to promote green energy and sustainable practices. The government plans to invest significantly in renewable energy projects, including solar and wind power, to reduce carbonssions and promote environmental sustainability. Additionally, incentives for electric vehicles and investments in EV charging infrastructure are expected to encourage the adoption of eaner transportatiooptions.
Social Welfare and Skill Development
The budget continues to priori social welfare schemes to support vulnerable populations. Enhanced allocations for programs like the Mahatma Gand National Rural Employment Guarantee t (MGNREGA), Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), and affordable housing initiatives aim to improve living standards and provide financial assistance to those in need. Furthermore, incre funding for the Skill India program seeks to equip the workforce with necessary skills, ensuring the industry is prepared for future challenges and opportunities.
Fiscal Prudence: Balancing Growth and Stability
While focusing on growth, the government remains committed to fiscal consolidation. The fiscal deficit is projected to be reduced to 4.4% of GDP in 2025-26, down from a revised 4.8% in the current year. This demonstrates the government’s dedication to maintaining fiscal discipline while supporting economic expansion.
Conclusion
The Union Budget 2025-2026 reflects a comprehensive approach to fostering economic growth, supporting the middle class, and strengthening various sectors through strategic initiatives and reforms. By focusing on taxation reforms, agricultural development, infrastructure investment, research and innovation, export promotion, sustainability, social welfare, and fiscal prudence, the government aims to build a resilient and prosperous economy for the future.