Union Budget 2025-26: A Vision for Inclusive Growth, Economic Transformation and Innovation

The eighth budget presentation by Finance Minister Nirmala Sitharaman took place on February 1, 2025, to establish the financial plan for the fiscal year 2025-26 thus becoming a milestone in Indian economic governance. This budget addresses India’s rise as a global player through sector empowerment and economic development together with inclusive growth and expanded infrastructure and innovation.

Key Highlights of Budget 2025-26

This year’s budget focuses on growth, inclusion, and innovation, driving key sectors like agriculture, MSMEs, infrastructure, and exports while ensuring fiscal stability.

1. Taxation & Fiscal Policies

• New Income Tax Slabs for FY 2025-26:
  • Up to ₹4,00,000 – No Tax
  • ₹4,00,001 to ₹8,00,000 – 5%
  • ₹8,00,001 to ₹12,00,000 – 10%
  • ₹12,00,001 to ₹16,00,000 – 15%
  • ₹16,00,001 to ₹20,00,000 – 20%
  • ₹20,00,001 to ₹24,00,000 – 25%
  • Above ₹24,00,000 – 30%
• Standard Deduction Increased: Raised under the new tax regime to ₹75,000.
• TDS Exemption on Rent: Increased from ₹2.4 lakh to ₹6 lakh annually.
• TDS Exemption for Senior Citizens: Interest deduction limit doubled from ₹50,000 to ₹1,00,000.
• Withdrawal from National Savings Scheme (NSS) Post August 29, 2024: Made tax-free.
• New Income Tax Bill: To be introduced for a clearer, more simplified tax framework.

2. Financial Sector & Foreign Investment

• Insurance FDI Hiked from 74% to 100%: To attract more global investment in India’s insurance sector.
• Removal of 7 Additional Tariff Rates: Streamlining of tariff structures, leaving only 8 key tax slabs to simplify trade regulations.

3. Support for MSMEs and Small Businesses

• MSMEs: The 2nd Engine of Growth: MSMEs contribute to 45% of exports; classification limits are enhanced to facilitate growth.
• Customised MSME Credit Cards: Credit cards with a ₹5 lakh limit for micro and small enterprises to ease financing.
• Jan Vishwas 2.0 Bill: Decriminalises over 100 provisions in existing laws to reduce compliance burdens.

4. Boosting the Startup Ecosystem

• ₹10,000 Crore Fund of Funds: A new fund of funds to support startups, innovation, and digital transformation.

5. Infrastructure and Urban Development

• ₹1 Lakh Crore Urban Challenge Fund: Aims to transform cities into growth hubs, enhance water and sanitation infrastructure, and support redevelopment.
• PM Gati Shakti Data for Private Sector: Private sector access to logistics data to enhance supply chain efficiency.
• Expansion of IITs: Five IITs, starting with IIT Patna, will expand to accommodate an additional 6,500 students.

6. Education & Skilling

• 50,000 Atal Tinkering Labs: To be established in government schools to encourage innovation and scientific temperament.
• Broadband Expansion in Schools: Broadband connectivity to all government secondary and primary schools for digital learning.
• Centre of Excellence for AI in Education: With an outlay of ₹500 crore to integrate AI-driven education systems.
• Five National Centres of Excellence for Skilling: To equip the youth with industry-relevant skills and facilitate global employment opportunities.

7. Energy and Sustainability

• Nuclear Power Expansion: India plans to develop 100 gigawatts of nuclear power capacity by 2047.
• Amendments to the Atomic Energy Act & Civil Liability for Nuclear Damage Act: Encouraging private sector participation in nuclear energy.

8. Tourism and Export Promotion

• Top 50 Tourist Destinations: Developed in collaboration with states to boost domestic and international tourism.
• Export Promotion Mission: A new initiative to ease credit access and streamline export documentation through “Bharat Trade Net.”

9. Social Security and Digital Economy

• Gig Worker Recognition: Social security scheme for 1 crore gig workers, with identity cards issued for better employment security.
• Saksham Anganwadi & Poshan 2.0: Strengthening child nutrition and women’s empowerment programs.
• PM SVANidhi Yojana Expansion: Enhanced support for street vendors with improved credit facilities.
• Gramin Credit Score: A new initiative to improve credit access for rural entrepreneurs and small businesses.

10. Agriculture and Farmers (Annadata)

• Self-Reliance in Pulses: A six-year plan to become self-sufficient in pulses, mainly focussing on tur, urad, and masoor dals.
• Expansion of Kisan Credit Card (KCC): The loan cap for the KCC scheme has gone up from ₹3 lakh to ₹5 lakh, helping 7.7 crore farmers, fishermen, and dairy farmers.
• PM Dhan Dhanya Krishi Yojana: This program focuses on 100 districts with low agricultural production. Its goal is to boost farming output and improve storage facilities after harvest.
• Makhana Board in Bihar: A new organisation to improve processing, add value, and create more export possibilities for Makhana.
• The National Mission for Edible Oil & Seeds: It aims to make the country self-sufficient in producing edible oil.
• Crop Diversification & Irrigation Expansion: Supports 1.7 crore farmers through better loan access, irrigation, and post-harvest infrastructure.

11. Healthcare and Affordable Medicine

• Reduction in Cost of Medicines & Life-Saving Drugs: Price reductions on essential medicines, including cancer drugs and chronic disease treatments.
• Establishment of New Cancer Centers: Strengthening the fight against cancer with new specialized centres across the country.

12. Fiscal Outlook and Economic Growth

• Fiscal Deficit Target:
  • FY25: 4.8% of GDP
  • FY26 Projection: 4.4% of GDP
• Debt Reduction Strategy: The FRBM statement provides a plan to keep government debt decreasing over time.

Final Thoughts: A Budget for Growth, Innovation, and Inclusion

The Union Budget 2025-26 focuses on improving the economy, adopting digital changes, and maintaining financial security. It aims to support farmers, small businesses, entrepreneurs, and the middle class. Through increased private engagement better domestic production and upgraded infrastructure this budget demonstrates India’s ongoing dedication to maintaining economic sustainability with worldwide competencies. The government’s push for an inclusive, technologically driven economy fits its goal of a developed India by 2047.