Feb 3, 2025
Presented by Finance Minister Nirmala Sitharaman on February 1, 2025, the Union Budget 2025-2026 is themed around “Sabka Vikas” (Development for All), focusing on inclusive growth, fiscal discipline, and innovation. Below is a comprehensive breakdown of its key pillars, sectoral allocations, and strategic reforms:
Fiscal Strategy: Growth with Prudence
Fiscal Deficit:
FY2024-25 Revised Estimate: 4.8% of GDP.
FY2025-26 Budget Estimate: 4.4% of GDP, with a target to reduce Central Government debt as a percentage of GDP over the next six years .
Expenditure and Receipts:
Total Receipts (excluding borrowings): ₹34.96 trillion (up from ₹31.47 trillion in FY2024-25) .
Total Expenditure: ₹50.65 trillion (up from ₹47.16 trillion in FY2024-25) .
Net Tax Receipts: ₹28.37 trillion (65% of total receipts) .
Capital Expenditure: ₹11.2 trillion (up from ₹10.18 trillion in FY2024-25) .
Gross Market Borrowings: Increased to ₹14.82 trillion (from ₹12.44 trillion in FY2024-25) .
Tax Reforms: Boosting Middle-Class Disposable Income
Key Tax Relief Measures:
No income tax for individuals earning up to ₹12 lakh annually (₹1 lakh/month average income) .
Salaried individuals earning up to ₹12.75 lakh will pay no tax due to a standard deduction of ₹75,000 .
Senior Citizens: Deduction limit on interest income doubled to ₹1 lakh .
TDS on Rent: Threshold increased to ₹6 lakh (from ₹2.4 lakh) .
Removal of TCS on Education Remittances: Aids families sending students abroad .
Extended Tax Filing Window: Deadline for updated returns extended from 2 to 4 years.
Decriminalization: Delays in TCS payments decriminalized (following earlier decriminalization of TDS delays) .
Agriculture and Rural Development: Empowering Farmers
Prime Minister Dhan-Dhaanya Krishi Yojana: A 100-district program to enhance productivity, crop diversification, post-harvest storage, and irrigation infrastructure .
Mission for Aatmanirbharta in Pulses: Six-year mission focusing on Tur, Urad, and Masoor pulses, with central procurement support via agencies like NAFED .
Kisan Credit Cards (KCC): Loan limits increased to ₹5 lakh (from ₹3 lakh) under the modified interest subvention scheme .
Rural Prosperity & Resilience Programme: Addresses underemployment through skilling, investment, and technology, with a focus on rural women, young farmers, and marginalized groups .
Jal Jeevan Mission Extension: Extended to 2028, with enhanced funding for rural piped water supply schemes .
MSMEs and Startups: Catalyzing Entrepreneurship
Enhanced Credit Support:
Credit Guarantee Cover: Increased for micro and small enterprises from ₹5 crore to ₹10 crore, leading to an additional credit of ₹1.5 lakh crore over the next five years .
Startups: Credit guarantee cover raised from ₹10 crore to ₹20 crore, with the guarantee fee moderated to 1% for loans in 27 focus sectors important for Atmanirbhar Bharat .
Exporter MSMEs: Term loans up to ₹20 crore for well-run exporter MSMEs .
Customized Credit Cards: Introduced for micro enterprises registered on the Udyam portal, with a limit of ₹5 lakh. In the first year, 10 lakh such cards will be issued .
New Scheme for First-Time Entrepreneurs: A scheme providing term loans up to ₹2 crore for 5 lakh women, Scheduled Castes (SC), and Scheduled Tribes (ST) first-time entrepreneurs over the next five years .
Revised Classification Criteria: Investment and turnover limits for MSMEs enhanced to 2.5 and 2 times, respectively:
Micro Enterprises: Investment limit increased from ₹1 crore to ₹2.5 crore; turnover limit from ₹5 crore to ₹10 crore .
Small Enterprises: Investment limit increased from ₹10 crore to ₹25 crore; turnover limit from ₹50 crore to ₹100 crore .
Medium Enterprises: Investment limit increased from ₹50 crore to ₹125 crore; turnover limit from ₹250 crore to ₹500 crore .
Export Promotion Mission: A joint initiative by the Ministries of Commerce, MSME, and Finance to facilitate easy access to export credit, cross-border factoring support, and help MSMEs tackle non-tariff measures in overseas markets.
National Manufacturing Mission: Aims to generate 2.2–3 million jobs in labor-intensive sectors (textiles, leather, electronics)
Infrastructure and Urban Development: Modernizing Cities
Urban Challenge Fund: ₹1 lakh crore allocated for city redevelopment, water management, and creative urban renewal .
5G Infrastructure: Reduced customs duty on telecom equipment to accelerate 5G rollout .
UDAN Scheme: Aims to add 120 new destinations by 2035, with ₹540 crore allocated for 2025-26 .
Maritime Development Fund: ₹25,000 crore fund for shipbuilding and repair industry financing .
SWAMIH Fund: ₹15,000 crore to complete 1 lakh stalled housing units .
Technology and Education: Fostering Innovation
Atal Tinkering Labs: 50,000 labs to be established in government schools over five years to promote STEM education .
AI Centre of Excellence: ₹500 crore allocated for AI research and development .
Bharatnet Project: Broadband connectivity to all government secondary schools and primary healthcare centers in rural areas .
Bharatiya Bhasha Pustak Scheme: Digital books in regional languages for school and higher education .
National Geospatial Mission: Develop foundational geospatial infrastructure for urban planning .
Healthcare and Social Welfare: Equity and Accessibility
Daycare Cancer Centers: 200 centers to be set up in district hospitals for early diagnosis and treatment .
Medical Tourism: “Heal in India” initiative to position India as a global healthcare destination .
Rural Healthcare: Enhanced allocations for primary healthcare infrastructure .
Gig Workers: Identity cards, e-Shram portal registration, and healthcare under PM Jan Arogya Yojana .
Medical Seats: 10,000 additional seats in hospitals and medical schools in 2025-26, with a target of 75,000 seats over five years .
Financial Sector Reforms: Enhancing Inclusion
FDI in Insurance: Limit increased to 100% (from 74%), attracting foreign capital .
Grameen Credit Score: Introduced to improve rural credit access .
Jan Vishwas Bill 2.0: Decriminalizes over 100 provisions in various laws to ease compliance .
Light-Touch Regulatory Framework: Four measures to modernize regulations:
High-Level Committee for Regulatory Reforms.
Investment Friendliness Index for States.
Financial Stability Council mechanism to evaluate regulations.
Simplified tax compliance for startups and non-residents .
Exports and Global Integration: Promoting Trade
Export Promotion Mission: Joint initiative by Commerce, MSME, and Finance Ministries to help MSMEs tap export markets .
BharatTradeNet (BTN): A unified digital platform for trade documentation and financing solutions .
Global Capability Centres: National framework to promote centers in tier-2 cities .
Infrastructure for Air Cargo: Upgraded facilities for high-value perishable goods (horticulture, seafood) .
Energy and Sustainability: Green Initiatives
Renewable Energy: Allocations for solar and wind projects to boost clean energy capacity .
EV Infrastructure: Incentives for electric vehicle adoption and battery manufacturing .
Nuclear Energy Mission: ₹20,000 crore for R&D of small modular reactors .
Social Welfare and Inclusion
Gig Workers: Identity cards, e-Shram portal registration, and healthcare benefits .
Women Entrepreneurs: Term loans up to ₹2 crore for 5 lakh women, SC/ST first-time entrepreneurs .
Gyan Bharatam Mission: Survey and conserve over 1 crore manuscripts; establish a National Digital Repository for Indian knowledge systems .
Conclusion
The Union Budget 2025-2026 lays a roadmap for India’s economic transformation, prioritizing inclusive growth, fiscal discipline, and technological innovation. By addressing the needs of farmers, MSMEs, youth, and women through targeted schemes, the budget aims to accelerate India’s journey toward becoming a $5 trillion economy by 2027. Its focus on sustainability, job creation, and digital literacy positions India as a global leader in responsible growth.