On February 1, 2025, Finance Minister Nirmala Sitharaman presented the much-anticipated Union Budget for the fiscal year 2025-26. With a vision of transforming India into a ‘Viksit Bharat’ (Developed India), the budget focused on inclusive development, economic growth, and structural reforms. “Our economy is the fastest-growing among all top economies of the world,” Sitharaman said. Over the past decade, our development achievements and structural reforms have received global attention and recognition.”
Budget Theme and Vision
Framed within a broader vision of national progress, which the budget aims to pursue in line with the government’s longer-term developmental goals, Sitharaman went on to identify eight aspects of the budget that would contribute towards this vision of a better future. She outlined key aspirations for ‘Viksit Bharat,’ including:
- Zero poverty
- Universal quality education
- High-quality, affordable healthcare
- 100% skilled labour with meaningful employment
- 70% participation of women in economic activities
- A globally competitive agricultural sector
FM stated, “This period has seen faith in India’s power and potential getting only stronger, she said. Accordingly, we perceive the upcoming five years as a distinctive chance to materialize ‘Sabka Vikas’ and give an impetus to equitable development among all the regions.”
Key Focus Areas
The budget covers ten broad sectors, including agriculture, rural development, MSMEs, employment, energy security, exports and innovation. The government’s four ‘powerful engines’ of growth were identified as:
- Agriculture: Strengthening farmer welfare and productivity
- MSMEs: Empowering small businesses with credit and infrastructure
- Investment: Enhancing public and private sector capital expenditure
- Exports: Improving trade policies and global competitiveness
With reforms as fuel and inclusivity as the guiding spirit, Sitharaman declared, “Our economy’s four engines will propel us toward our destination of a developed India.”
Major Announcements
1. Agriculture and Rural Development
‘Prime Minister Dhan-Dhaanya Krishi Yojana’, announced by Sitharaman aims to increase agricultural productivity and improve the availability of credit. The program focuses on 100 low-productivity districts with measures like:
- Crop diversity and sustainable agriculture.
- Access to long-term credit for farmers.
- Warehousing expansion: More controlled rooms for perishables.
- Enhanced irrigation facilities: Greater investment in water resources for agriculture.
She highlighted, “This program will benefit 1.7 crore farmers and significantly uplift rural prosperity.”
Additionally, the government launched the ‘Mission for Aatmanirbharta in Pulses’, focusing on self-sufficiency in key pulses such as Tur, Urad, and Masoor.
2. MSMEs and Manufacturing
Recognising MSMEs as the backbone of the economy, the Finance Minister announced enhancements in credit availability:
- Credit guarantee cover for Micro and Small Enterprises increased from ₹5 crore to ₹10 crore.
- Loan limits under the Modified Interest Subvention Scheme raised from ₹3 lack to ₹5 lacks for farmers
- Customized credit cards with a ₹5 lakh limit for micro-enterprises
For manufacturing, she introduced the ‘National Manufacturing Mission’ to strengthen the Make in India initiative, covering small, medium, and large industries.
“We will provide policy support and execution roadmaps to ensure Indian manufacturers compete at a global level,” she assured.
3. Investment and Infrastructure
Public and private investment was a major highlight, with a ₹1.5 lakh crore outlay for state infrastructure and reforms. Also, a ₹10 lakh crore Asset Monetisation Plan was announced to re-deploy capital into new projects.
Sitharaman announced:
- Extension of Jal Jeevan Mission till 2028 to provide every household with clean drinking water.
- Urban Challenge Fund of ₹1 lakh crore to redevelop the cities.
- Mission 100GW of Nuclear Power by 2047.
4. Education and Skill Development
The budget laid special emphasis on upskilling India’s youth:
- 50,000 Atal Tinkering Labs in government schools.
- Broadband connectivity to all rural secondary schools and primary health centres.
- 10,000 additional medical education seats in the next fiscal year.
- PM Research Fellowship: 10,000 fellowships for research in IITs and IISc.
- Deep Tech Fund of Funds: Support for next-gen startups.
- PM SVANidhi Scheme: Expansion to provide credit cards linked to UPI for street vendors.
- Urban livelihoods program: Focused on skill development for urban workers.
- Expansion of medical education: 10,000 additional medical seats to be added in 2025-26.
- National Centres of Excellence for Skilling: Focused on equipping youth with future-ready skills.
- Day Care Cancer Centres: 200 centres are to be established in district hospitals.
“By expanding medical education and digital literacy, we are investing in the future of our youth,” she remarked.
5. Financial Sector and Taxation Reforms
The Finance Minister introduced a series of structural reforms in the financial sector:
- The Foreign Direct Investment (FDI) limit in the insurance sector increased from 74% to 100%
- On September 27, 2021, RBI announced a special liquidity facility for the healthcare sector.
- Liberalizing KYC rules to widen access to banking.
On taxation, she said: “Our reforms will make tax compliance more straightforward and more equitable. We reaffirm our pledge of ‘trust first, scrutinize later.’”
The tax proposals included:
- New tax slabs were introduced, reducing the burden on middle-class taxpayers.
- A major highlight was the revision of personal income tax slabs:
| Total Income | Rate of Tax |
| Upto ` 4,00,000 | Nil |
| From ` 4,00,001 to ` 8,00,000 | 5 per cent |
| From ` 8,00,001 to ` 12,00,000 | 10 per cent |
| From ` 12,00,001 to ` 16,00,000 | 15 per cent |
| From ` 16,00,001 to ` 20,00,000 | 20 per cent |
| From ` 20,00,001 to ` 24,00,000 | 25 per cent |
| Above ` 24,00,000 | 30 per cent |
- Additionally, taxpayers earning up to ₹12 lakh will now pay zero income tax due to enhanced rebates. “This structure will substantially reduce the tax burden on the middle class, boosting household consumption, savings, and investment,” Sitharaman explained.
- TDS and TCS thresholds increased for improved ease of business
Also, FM Nirmala Sitharaman stated that the new Income Tax Bill will be introduced in the upcoming week.
6. Export and Trade Policies
The announcement of the Export Promotion Mission to help India increase its share in global trade. “We will help integrate global supply chains and support our manufacturing capacities,” said Sitharaman.
Key measures included:
- BharatTradeNet: Digital documentation platform for trade.
- Air cargo warehousing, especially for perishable exports
- Encouragement for toys, footwear and leather industry goods to raise exports
Fiscal Consolidation and Outlook
The finance minister reiterated the government’s commitment to fiscal discipline, projecting the fiscal deficit target at 4.4% of GDP in 2025-26. She concluded her speech by invoking Thirukkural:
“Just as living beings expect rains, citizens expect good governance.”
Fiscal Policy and Deficit Management
- Fiscal Deficit Target: 4.4% of GDP for FY 2025-26.
- Net tax receipts: Estimated at ₹28.37 lakh crore.
- Total expenditure: ₹50.65 lakh crore.
Market Borrowings:
- Net: ₹11.54 lakh crore
- Gross: ₹14.82 lakh crore
- Asset Monetisation Plan 2025-30: Seeking ₹10 lakh crore investment.
Conclusion
The 2025-26 budget reaffirms India’s pledge for inclusive growth, economic resilience and global competitiveness. The government is looking to build a sustainable and equitable economy through solid investments in agriculture, MSMEs, infrastructure, clean energy, and financial inclusion.
“Reforms, however, are not a destination. They are a means to achieve good governance for our people and economy,” Sitharaman concluded.
This budget lays a solid foundation for a ‘Viksit Bharat’, addressing the needs of all sections of society while maintaining fiscal prudence and long-term development goals.
