
India’s Union Budget 2025 for the fiscal year 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, introduces several key measures aimed at stimulating economic growth, enhancing agricultural productivity, and providing tax relief to the middle class.
Income Tax Reforms:
- Increased Tax Exemption Limit: The budget raises the income tax exemption threshold to ₹1.28 million annually, up from the previous ₹700,000. This change is expected to boost household consumption, savings, and investment among the middle class. reuters.com
- Revised Tax Slabs: The highest tax rate of 30% now applies to incomes above ₹2.4 million, increased from the earlier threshold of ₹1.5 million. Taxpayers earning up to ₹1.2 million will save approximately ₹80,000 annually under the new structure. reuters.com
Agricultural Initiatives:
- Prime Minister Dhan-Dhaanya Krishi Yojana: A six-year program targeting 100 districts with low agricultural productivity aims to benefit 17 million farmers by enhancing crop yields and reducing import dependence. pib.gov.in
- Pulses and Cotton Production: The government has launched initiatives to boost the production of pulses like pigeon peas, black matpe, and red lentils, as well as cotton, to achieve self-reliance and reduce import costs. reuters.com
Fiscal Measures:
- Capital Expenditure: The budget allocates ₹11.21 trillion for capital expenditure in 2025-26, maintaining a focus on infrastructure development to support long-term economic growth. reuters.com
- Fiscal Deficit Target: The fiscal deficit is projected to decrease to 4.4% of GDP in 2025-26, down from a revised 4.8% in the current year, indicating a commitment to fiscal consolidation.
Additional Highlights:
- Support for Micro Enterprises: The government plans to launch a ‘Customized Credit Card’ with a ₹500,000 limit for micro enterprises registered on the Udyam portal, aiming to enhance credit access for small businesses. livemint.com
- Energy Sector Allocation: An 18% year-over-year increase in the energy sector budget, totaling ₹811.74 billion, underscores the government’s focus on energy development and sustainability. livemint.com
These measures reflect the government’s strategy to balance immediate economic relief with long-term growth initiatives, addressing key areas such as taxation, agriculture, infrastructure, and fiscal responsibility.
the key highlights of India’s Union Budget 2025-26 in terms of rupees (₹):
1. Income Tax Reforms
- Tax Exemption Limit Increased: ₹12,80,000 per year (₹1.28 million), up from ₹7,00,000 (₹700,000).
- Revised Tax Slabs:
- 0% Tax on income up to ₹7,00,000 (₹700,000).
- 10% Tax on ₹7,00,000 – ₹12,00,000 (₹1.2 million).
- 20% Tax on ₹12,00,000 – ₹24,00,000 (₹2.4 million).
- 30% Tax on income above ₹24,00,000.
- Savings: Middle-class taxpayers earning up to ₹12,00,000 will save approximately ₹80,000 annually.
2. Capital Expenditure (Infrastructure Development)
- Budget Allocation: ₹11.21 trillion (₹11,21,000 crore).
3. Fiscal Deficit Target
- Fiscal Deficit for FY 2025-26: 4.4% of GDP, down from 4.8% this year.
4. Agriculture & Rural Development
- PM Dhan-Dhaanya Krishi Yojana: A 6-year plan for 100 low-yield districts, benefiting 1.7 crore (17 million) farmers.
- Pulses & Cotton Production Boost: Focus on self-reliance to reduce import costs.
5. Small Business & MSMEs
- Customized Credit Card for Micro Enterprises: ₹5,00,000 (₹500,000) credit limit for small businesses registered under Udyam Portal.
6. Energy & Power Sector
- Budget Allocation: ₹81,174 crore (₹811.74 billion), an 18% increase from last year.
These budget reforms focus on tax relief for the middle class, boosting infrastructure, supporting farmers, and reducing fiscal deficit.
On February 1, 2025, Finance Minister Nirmala Sitharaman presented India’s Union Budget for the fiscal year 2025-2026. This budget, the first full financial plan of Prime Minister Narendra Modi’s third term, aims to accelerate economic growth, promote inclusive development, and enhance the spending power of India’s burgeoning middle class. The budget introduces significant tax reforms, substantial allocations for various sectors, and strategic initiatives to bolster the nation’s economic resilience.
Key Highlights
Taxation Reforms
- Income Tax Relief: The budget proposes a complete tax exemption for individuals earning up to ₹12 lakh annually, with a standard deduction of ₹75,000. Consequently, individuals with an income of up to ₹12.75 lakh will be exempt from income tax. This move is anticipated to increase disposable income, thereby stimulating consumption and savings among the middle class. indiabudget.gov.in
- Revised Tax Slabs: For incomes above ₹12.75 lakh, the new tax regime introduces updated slabs:
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹16 lakh: 15%
- ₹16 lakh to ₹20 lakh: 20%
- ₹20 lakh to ₹24 lakh: 25%
- Above ₹24 lakh: 30%
Fiscal Management
- Fiscal Deficit: The fiscal deficit is projected to be 4.4% of GDP, amounting to ₹15.68 lakh crore. This reflects the government’s commitment to fiscal prudence while accommodating necessary expenditures to fuel growth. livemint.com
- Capital Expenditure: The budget allocates ₹11.21 lakh crore for capital expenditure in FY2025-26, a slight increase from the previous year’s ₹11.11 lakh crore. This investment underscores the government’s focus on infrastructure development as a catalyst for economic expansion. livemint.com
Sectoral Allocations
- Agriculture: A six-year mission has been launched to boost the production of pulses, with a special focus on Tur, Urad, and Masoor. Additionally, the establishment of a Makhana Board in Bihar aims to promote this unique aquatic crop. indiabudget.gov.in
- Science and Innovation: The budget earmarks ₹20,000 crore to implement a private sector-driven Research, Development, and Innovation initiative. Furthermore, the Prime Minister’s Research Fellowship will provide 10,000 fellowships for technological research in IITs and IISc, fostering a culture of innovation. indiabudget.gov.in
- Energy: An 18% year-over-year increase in allocation brings the energy sector’s budget to ₹81,174 crore. This funding is directed towards supporting clean tech manufacturing, including solar PV cells, EV batteries, and wind turbines, aligning with global sustainability trends. livemint.com
Inclusive Development Initiatives
- Support for Farmers: The budget enhances the subsidized farm loan limit and sets up a new urea plant to ensure the availability of crop nutrients. These measures aim to support farmers facing low incomes and bolster agricultural productivity. reuters.com
- Women’s Empowerment: Various schemes have been introduced to uplift women, focusing on health, education, and entrepreneurship, thereby promoting gender equality and economic participation. indiabudget.gov.in
Economic Growth and Employment
- Manufacturing and Exports: The government plans to incentivize electronics and electric vehicles by exempting certain components from customs duties. This move is expected to boost domestic manufacturing and enhance export competitiveness. indiabudget.gov.in
- Micro, Small, and Medium Enterprises (MSMEs): Support measures for MSMEs include easier access to credit and simplified compliance requirements, aiming to invigorate this vital sector of the economy. indiabudget.gov.in
Conclusion
The Union Budget 2025-2026 reflects the Indian government’s strategic approach to fostering economic growth, ensuring fiscal discipline, and promoting inclusive development. Through significant tax reforms, targeted sectoral investments, and initiatives aimed at various demographics, the budget aspires to build a resilient and prosperous economy. As these proposals are implemented, their impact on India’s economic landscape will become more evident, shaping the nation’s trajectory in the years to come.