Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 in the Parliament. This was her 8th consecutive budget. The Budget proposes development measures focusing on poor (Garib), Youth, farmer (Annadata) and women (Nari). Union Budget highlights that Agriculture, MSME, Investment, and Exports are engines of development in the journey to Viksit Bharat using reforms as fuel, guided by the spirit of inclusivity.
What is a budget? What are the basics of a Budget Document?
Budget– As per Article 112 of the Constitution, the Budget is referred to as the Annual Financial Statement of the Government. The term ‘Budget’ is not explicitly mentioned in the Constitution. It presents the government’s estimated receipts and expenditures for a financial year.
The Union Budget is prepared by the Department of Economic Affairs (DEA) under the Ministry of Finance. It covers all aspects of government finances, including revenue generation, expenditure allocation, and policy announcements.
Government Receipts
Government Receipts
What are the macro-economic highlights of the Budget?
Budget Estimates 2025-26
a. Total Receipts for FY 2025-26
- The total receipts other than borrowings for the year 2025-26, is estimated to be at Rs. 34.96 lakh crore.
- The gross and net market borrowings through dated securities during 2025-26 are estimated at Rs.14.82 lakh crore and Rs.11.54 lakh crore crore respectively.
- The net tax receipts are estimated at Rs. 28.37 lakh crore.
b. Total Expenditure for FY 2025-26– The total expenditure is estimated at Rs. 50.65 lakh crore.
c. Fiscal Deficit– The fiscal deficit is estimated to be 4.4 percent of GDP.
What are the four engines driving the journey to Viksit Bharat in the Union Budget 2025-26?
1. Agriculture as the 1st Engine of development
Prime Minister’s Dhan-Dhaanya Krishi Yojana – Agri-District Development Program- This initiative, to be launched in collaboration with state governments, will cover 100 districts with low productivity, moderate crop intensity, and subpar credit parameters. It aims to benefit 1.7 crore farmers.
Building Rural Prosperity and Resilience- A holistic, multi-sectoral program will be rolled out with state cooperation to tackle underemployment in agriculture. This will include skilling, investment, technology, and efforts to stimulate the rural economy. The first phase will target 100 emerging agricultural districts.
Aatmanirbharta in Pulses- The government will initiate a 6-year “Mission for Aatmanirbharta in Pulses,” focusing on Tur, Urad, and Masoor. NAFED and NCCF will purchase these pulses from farmers over the next 4 years.
Makhana Board in Bihar- A dedicated Makhana Board will be established to boost the production, processing, value addition, and marketing of Makhana in Bihar.
National Mission on High Yielding Seeds- A National Mission will focus on strengthening the research ecosystem, developing and propagating high-yield seeds, and ensuring the availability of over 100 seed varieties for commercial use.
Fisheries- The government will establish a framework for the sustainable exploitation of fisheries within India’s Exclusive Economic Zone and the High Seas, with special emphasis on the Andaman & Nicobar and Lakshadweep Islands.
Mission for Cotton Productivity- A 5-year mission will be launched to enhance cotton farming productivity, sustainability, and promote the cultivation of extra-long staple cotton varieties.
Enhanced Credit through KCC- The loan limit under the Modified Interest Subvention Scheme will be raised from Rs. 3 lakh to Rs. 5 lakh for loans accessed through the Kisan Credit Card (KCC).
Urea Plant in Assam- A new urea plant with an annual production capacity of 12.7 lakh metric tons will be established at Namrup, Assam.
2. MSMEs as the 2nd Engine of development
Revised Classification Criteria for MSMEs- The investment and turnover limits for MSME classification will be increased by 2.5 times and 2 times, respectively.
Credit Cards for Micro Enterprises- Customized Credit Cards with a Rs. 5 lakh limit will be introduced for micro enterprises registered on the Udyam portal. A total of 10 lakh cards will be issued in the first year.
Fund of Funds for Startups- A new Fund of Funds with an expanded scope will be established, backed by a fresh Rs.10,000 crore contribution.
Scheme for First-Time Entrepreneurs- A new initiative will support 5 lakh first-time entrepreneurs from women, Scheduled Castes, and Scheduled Tribes. Term loans of up to Rs. 2 crore will be provided over the next five years.
Focus Product Scheme for Footwear & Leather Sectors- To boost productivity, quality, and competitiveness in India’s footwear and leather sector, a targeted scheme has been introduced. This initiative aims to generate employment for 22 lakh people, achieve a turnover of Rs. 4 lakh crore, and drive exports exceeding Rs. 1.1 lakh crore.
Support for the Toy Industry- A new scheme will promote the creation of high-quality, innovative, and sustainable toys, positioning India as a global hub for toy manufacturing.
Boost to Food Processing- A National Institute of Food Technology, Entrepreneurship, and Management will be established in Bihar to support food processing enterprises.
National Manufacturing Mission – Advancing “Make in India”- A National Manufacturing Mission will be launched to boost the “Make in India” initiative, covering small, medium, and large industries. It will also promote Clean Tech manufacturing and strengthen domestic production of solar PV cells, EV batteries, motors, controllers, electrolyzers, wind turbines, high-voltage transmission equipment, and grid-scale batteries.
3. Investment as the 3rd Engine of development
1. Investing in People
Saksham Anganwadi and Poshan 2.0- Nutritional support cost norms to be suitably enhanced.
Atal Tinkering Labs- 50,000 Atal Tinkering Labs to be established in government schools over the next five years.
Broadband Connectivity for Schools & Health Centers- Under the BharatNet project, all government secondary schools and primary health centers in rural areas will receive broadband connectivity.
Bharatiya Bhasha Pustak Scheme- A new scheme introduced to provide Indian language books in digital format for school and higher education.
National Centres of Excellence for Skilling- Five National Centres of Excellence for skilling to be set up in collaboration with global experts to equip youth for “Make for India, Make for the World” manufacturing.
Expansion of IIT Infrastructure- Additional infrastructure will be developed in the five IITs established after 2014, enabling education for 6,500 more students.
Centre of Excellence in AI for Education- A dedicated Centre of Excellence for Artificial Intelligence in education to be established with a total budget of Rs. 500 crore.
Expansion of Medical Education- An additional 10,000 medical seats will be created in medical colleges and hospitals next year, reaching a total of 75,000 seats over five years.
Day Care Cancer Centres- Day Care Cancer Centres to be set up in all district hospitals within three years, with 200 centers operational by 2025-26.
Strengthening Urban Livelihoods- A new scheme introduced to support the socio-economic upliftment of urban workers, improving their incomes and ensuring sustainable livelihoods.
PM SVANidhi- The scheme will be revamped with enhanced loan facilities, UPI-linked credit cards with a Rs. 30,000 limit, and capacity-building support.
Social Security for Gig Workers- Online platform workers to receive identity cards, registration on the e-Shram portal, and healthcare benefits under the PM Jan Arogya Yojana.
2. Investing in the Economy
Public-Private Partnership in Infrastructure- Infrastructure-related ministries to announce a three-year pipeline of PPP projects, encouraging state participation.
Support for State Infrastructure- A Rs. 1.5 lakh crore allocation proposed for 50-year interest-free loans to states for capital expenditure and reform incentives.
Asset Monetization Plan (2025-30)- A second Asset Monetization Plan, worth Rs. 10 lakh crore, announced to reinvest capital into new projects.
Jal Jeevan Mission- The mission extended until 2028 with an increased financial outlay.
Urban Challenge Fund- A Rs.1 lakh crore Urban Challenge Fund introduced to support initiatives for “Cities as Growth Hubs,” creative redevelopment, and water and sanitation projects. An allocation of Rs.10,000 crore is planned for 2025-26.
Nuclear Energy Mission for Viksit Bharat- Amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to be proposed. A Nuclear Energy Mission for Small Modular Reactor (SMR) research and development will be established with a Rs. 20,000 crore budget, aiming to have five indigenously developed SMRs operational by 2033.
Shipbuilding Industry Boost- The Shipbuilding Financial Assistance Policy to be revised, with large ships above a specified size included in the Infrastructure Harmonized Master List (HML).
Maritime Development Fund- A Rs. 25,000 crore Maritime Development Fund to be set up, with up to 49% government contribution, supplemented by ports and private sector investments.
UDAN – Enhancing Regional Connectivity- A revamped UDAN scheme will expand regional connectivity to 120 new destinations, targeting 4 crore passengers over the next decade.
Support will be provided for helipads and smaller airports in hilly, aspirational, and Northeastern districts.
Greenfield Airport in Bihar- A new Greenfield airport in Bihar, alongside the expansion of Patna Airport and the development of a brownfield airport at Bihta.
Western Koshi Canal Project- Financial support allocated for the Western Koshi Canal ERM Project in Bihar.
Mining Sector Reforms- A policy for the extraction of critical minerals from tailings to be introduced.
SWAMIH Fund 2- A Rs. 15,000 crore fund announced for the swift completion of an additional 1 lakh housing units, with contributions from the government, banks, and private investors.
Tourism for Employment-Led Growth- The top 50 tourist destinations to be developed in partnership with states through a competitive challenge model.
4. Exports as the 4th engine of development
Export Promotion Mission- An Export Promotion Mission will be established with sector-specific and ministerial targets, jointly led by the Ministries of Commerce, MSME, and Finance.
BharatTradeNet (BTN)- A unified platform, ‘BharatTradeNet’ (BTN), will be developed to streamline international trade, offering seamless trade documentation and financing solutions.
National Framework for Global Capability Centres (GCCs)- A national framework will be introduced to guide states in fostering Global Capability Centres, particularly in emerging tier-2 cities.
Reforms as fuel: financial sector reforms and development
FDI in Insurance Sector- The FDI limit in the insurance sector will be increased from 74% to 100% for companies that reinvest the entire premium within India.
Grameen Credit Score- Public Sector Banks will develop a ‘Grameen Credit Score’ framework to address the credit needs of Self-Help Group (SHG) members and rural populations.
Pension Sector Reforms- A dedicated forum will be set up for regulatory coordination and the development of innovative pension products.
Investment Friendliness Index of States- An Investment Friendliness Index will be introduced in 2025 to promote competitive cooperative federalism.
Jan Vishwas Bill 2.0- The Jan Vishwas Bill 2.0 will decriminalize over 100 provisions across various laws to enhance ease of doing business.
What are the Tax related Proposals in the Budget 2025-26?
The tax related proposals are explained through the following infographs-
1. Direct Tax
No Personal Income Tax for Income up to Rs 12 Lakh: Taxpayers with income up to Rs 12 lakh (or Rs 12.75 lakh for salaried taxpayers due to a standard deduction of Rs 75,000) will not be required to pay personal income tax.
Revised Tax Rate Structure:
- Income up to Rs 4 lakh: Nil (no tax)
- Income between Rs 4 lakh to Rs 8 lakh: 5%
- Income between Rs 8 lakh to Rs 12 lakh: 10%
- Income between Rs 12 lakh to Rs 16 lakh: 15%
- Income between Rs 16 lakh to Rs 20 lakh: 20%
- Income between Rs 20 lakh to Rs 24 lakh: 25%
- Income above Rs 24 lakh: 30%
TDS/TCS rationalization for easing difficulties
- The limit for tax deduction on interest for senior citizens doubled from the present Rs 50,000 to Rs 1 lakh.
- The annual limit of Rs 2.40 lakh for TDS on rent increased to Rs 6 lakh.
Reducing Compliance Burden– Reduction of compliance burden for small charitable trusts/institutions by increasing their period of registration from 5 years to 10 years.
2. Indirect Tax
What are the Major Allocations in the Budget?
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