Union Budget 2025 India

Union Budget 2025

The Union Budget of India for the fiscal year 2025-2026, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, outlines a comprehensive strategy aimed at stimulating economic growth, enhancing infrastructure, and promoting social welfare. The budget introduces significant reforms in taxation, agriculture, innovation, and various other sectors to address current economic challenges and set a foundation for sustainable development.

Taxation Reforms

A notable highlight of the budget is the substantial relief provided to the middle class through significant income tax cuts. The income tax exemption threshold has been raised from ₹7 lakh to ₹12 lakh, effectively exempting individuals earning up to ₹12.75 lakh annually, considering the standard deduction of ₹75,000. This move is expected to increase disposable income, thereby boosting household consumption and savings.

The budget also proposes the introduction of a new Income Tax Bill, aiming to simplify the tax structure and enhance compliance. Additionally, measures such as the rationalization of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) are included to streamline tax processes.

Agriculture and Rural Development

Recognizing the critical role of agriculture in India’s economy, the budget allocates substantial resources to this sector. The Prime Minister Dhan-Dhaanya Krishi Yojana is set to cover 100 districts, benefiting approximately 1.7 crore farmers. The initiative focuses on developing agricultural infrastructure and promoting sustainable farming practices.

To reduce dependence on imports, a six-year mission targeting the production of pulses such as Tur, Urad, and Masoor has been launched. This program includes state agencies purchasing these pulses at guaranteed prices to support farmers. Additionally, a Makhana Board is to be established in Bihar to promote the cultivation and marketing of makhana.

Innovation and Research

The budget places a strong emphasis on fostering innovation and research. An allocation of ₹20,000 crore has been made to implement a private sector-driven Research, Development, and Innovation initiative. The Prime Minister Research Fellowship program will provide 10,000 fellowships for technological research in premier institutions like IITs and IISc, aiming to cultivate a skilled workforce adept in advanced technologies.

In the field of agriculture, the establishment of a second Gene Bank with 10 lakh germplasm lines is planned to ensure future food and nutritional security. This initiative aims to preserve genetic diversity and support the development of high-yielding, resilient crop varieties.

Infrastructure and Industrial Development

The budget continues to prioritize infrastructure development with a capital outlay of ₹11.11 trillion, maintaining the momentum from previous years. This investment is directed towards enhancing transportation networks, urban development, and industrial infrastructure. The establishment of 100 plug-and-play industrial parks near urban areas under the town planning scheme is a significant move to boost manufacturing and create employment opportunities.

Support for MSMEs and Startups

Micro, Small, and Medium Enterprises (MSMEs) and startups receive considerable attention in the budget. A new scheme is introduced to facilitate term loans for MSMEs to purchase machinery and equipment without collateral, encouraging technological upgradation and competitiveness. Additionally, the abolition of the angel tax is expected to ease capital raising for early-stage startups, fostering innovation and entrepreneurship.

Social Welfare and Employment

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) continues to receive substantial funding, with an allocation of ₹860 billion to provide minimum wage jobs for 100 days annually to rural households. This initiative aims to support the rural economy and alleviate poverty.

To incentivize job creation in the manufacturing sector, an employment-linked incentive scheme is introduced, benefiting both employers and first-time employees with respect to their Employees’ Provident Fund Organization (EPFO) contributions in the first four years of employment. This scheme is expected to benefit 30 lakh youth entering the workforce.

Sectoral Impacts

The budget’s measures have elicited varied responses across different sectors. Consumer goods companies have experienced gains due to increased disposable incomes resulting from tax cuts. Automakers have also benefited, anticipating higher demand driven by enhanced consumer purchasing power. Conversely, infrastructure firms have faced declines, possibly due to perceptions of modest increases in capital spending. Insurers have seen declines as higher tax slabs reduce incentives for tax-saving products.

Conclusion

The Union Budget 2025-2026 presents a balanced approach, addressing immediate economic concerns while laying the groundwork for long-term prosperity. Through comprehensive reforms in taxation, agriculture, innovation, and infrastructure, the budget aims to stimulate growth, enhance competitiveness, and promote social welfare, steering India towards a resilient and inclusive economy.