Summary of the Union Budget 2025-26

✍️Anil Mishra
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Union Budget 2025-26
Union Budget 2025-26


Union Budget 2025-26: A Comprehensive Overview of Key Highlights and Reforms

The Union Budget 2025-26, presented by Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman, is a visionary roadmap for India’s journey toward becoming a Viksit Bharat (Developed India). With the theme “Sabka Vikas” (Development for All), the budget focuses on inclusive growth, economic resilience, and transformative reforms across sectors. This article delves into the key highlights, reforms, and implications of the Union Budget 2025-26, covering every aspect from agriculture to taxation, MSMEs, investments, and exports.

 

Key Themes and Principles of Viksit Bharat

The budget is guided by the principles of Viksit Bharat, aiming to achieve:

  1. Zero Poverty
  2. 100% Quality School Education
  3. Affordable and Comprehensive Healthcare
  4. 100% Skilled Labor with Meaningful Employment
  5. 70% Women in Economic Activities
  6. Farmers as the Backbone of India’s Food Security

These principles underscore the government’s commitment to balanced growth, inclusivity, and empowerment of all sections of society.

 

Four Engines of Growth: Agriculture, MSMEs, Investment, and Exports

1. Agriculture: Prime Minister Dhan-Dhaanya Krishi Yojana

  • Objective: Boost productivity, crop diversification, and rural prosperity.
  • Key Initiatives:
    • Mission for Aatmanirbharta in Pulses: A 6-year mission focusing on Tur, Urad, and Masoor pulses.
    • Kisan Credit Card Loan Limit Increased: From ₹3 lakh to ₹5 lakh.
    • Rural Prosperity Programme: Skilling, investment, and technology adoption to address underemployment.
    • National Mission on High-Yielding Seeds and Cotton Productivity: To enhance agricultural output.

2. MSMEs: Powering India’s Growth

  • Enhanced Classification Limits: Investment and turnover limits for MSMEs increased to 2.5x and 2x, respectively.
  • New Scheme for Women and Marginalized Groups: Term loans up to ₹2 crore for 5 lakh first-time entrepreneurs.
  • Global Hub for Toys: Promoting the ‘Made in India’ brand.
  • National Manufacturing Mission: Strengthening small, medium, and large industries.

3. Investment: Fueling Innovation and Infrastructure

  • Atal Tinkering Labs: 50,000 labs to be set up in government schools.
  • BharatNet Expansion: Broadband connectivity for rural schools and health centers.
  • Artificial Intelligence Centre of Excellence: ₹500 crore outlay for AI in education.
  • Asset Monetization Plan 2025-30: ₹10 lakh crore to be reinvested in new projects.
  • Urban Challenge Fund: ₹1 lakh crore for city redevelopment and water sanitation.

4. Exports: Driving Global Competitiveness

  • BharatTradeNet (BTN): A unified digital platform for trade documentation and financing.
  • Support for Domestic Manufacturing: Integration with global supply chains and Industry 4.0.
  • Infrastructure Upgradation: Enhanced warehousing and air cargo facilities for perishable goods.

 

Union Budget 2025-26: Trend in Deficit
Trend Deficit

Reforms as the Fuel for Growth

The budget emphasizes reforms as the driving force behind India’s growth trajectory. Key reforms include:

Financial Sector Reforms

  • FDI Limit in Insurance Increased: From 74% to 100%.
  • Jan Vishwas Bill 2.0: Decriminalization of over 100 legal provisions to ease compliance.
  • Investment Friendliness Index: Ranking states to promote competitive federalism.

Taxation Reforms

  • New Income Tax Slabs:
    • 0–4 Lakh: Nil
    • 4–8 Lakh: 5%
    • 8–12 Lakh: 10%
    • 12–16 Lakh: 15%
    • 16–20 Lakh: 20%
    • 20–24 Lakh: 25%
    • Above 24 Lakh: 30%
  • TDS/TCS Rationalization: Increased thresholds for senior citizens and rent payments.
  • Vivad Se Vishwas Scheme: Over 33,000 taxpayers have settled disputes.

Fiscal Consolidation

  • Fiscal Deficit Targets:
    • 2024-25 (Revised Estimate): 4.8% of GDP
    • 2025-26 (Budget Estimate): 4.4% of GDP
  • Capital Expenditure: ₹10.18 lakh crore in 2024-25, with a focus on infrastructure development.

 

Key Highlights of Part B: Direct Tax Proposals

  • Tax Relief for Middle Class: No tax for income up to ₹12 lakh annually.
  • Standard Deduction: Increased to ₹75,000 for salaried individuals.
  • Senior Citizen Benefits: Higher TDS thresholds and exemptions for NPS withdrawals.
  • Ease of Doing Business: Simplified international taxation and presumptive taxation for non-residents.

 

Sector-Specific Initiatives

Healthcare and Lifesaving Drugs

  • Customs Duty Exemptions: 36 lifesaving drugs and 37 medicines for cancer, rare diseases, and chronic conditions.

Domestic Manufacturing and Value Addition

  • Critical Minerals: Exemptions on cobalt powder, lithium-ion battery waste, and 12 other minerals.
  • Textile Industry: Reduced duties on shuttle-less looms and knitted fabrics.
  • Electronics Manufacturing: Incentives for EV and mobile phone battery production.

Export Promotion

  • Handicrafts and Leather: Duty exemptions on wet blue leather and reduced duties on fish products.

 

Conclusion: A Budget for Viksit Bharat

The Union Budget 2025-26 is a bold and transformative blueprint for India’s future. By focusing on inclusive growtheconomic resilience, and global competitiveness, the budget aims to empower every citizen, from farmers and women to the middle class and entrepreneurs. With its emphasis on reformsinnovation, and sustainability, the budget paves the way for India to achieve its vision of becoming a Viksit Bharat by 2047.

This budget not only addresses immediate economic challenges but also lays the foundation for long-term growth, ensuring that India remains a global leader in the 21st century.


UPSC PYQs on Union Budget:

1. With reference to Union Budget, consider the following statements: (UPSC 2024)

  1. The Union Finance Minister on behalf of the Prime Minister lays the Annual Financial Statement before both the Houses of Parliament.
  2. At the Union level, no demand for a grant be made except on the recommendation of the President of India.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2


Source: PIB

Background:

The Indian Constitution does not explicitly mention the term "budget," but it outlines the framework for financial governance through several provisions.

1.      Article 112: Annual Financial Statement (AFS)

o    The Constitution requires the government to present an Annual Financial Statement (the budget) to Parliament every year.

o    It’s like a detailed report card of the government’s income (revenue) and expenses (expenditure) for the upcoming year.

o    This ensures transparency and accountability to the people.

2.      Article 113 and 114: Approval by Parliament

o    The budget must be approved by the Lok Sabha (House of the People).

o    It’s like getting a family’s approval before spending money—Parliament ensures the government’s plans align with the nation’s needs.

3.      Article 265: No Tax Without Law

o    Taxes can only be levied if Parliament passes a law for it.

o    This protects citizens from arbitrary taxation and ensures fairness.

4.      Article 266: Consolidated and Contingency Funds

o    All government money is kept in the Consolidated Fund of India, which can only be accessed with Parliament’s approval.

o    The Contingency Fund is like an emergency savings account for unexpected expenses.

5.      Article 360: Financial Emergency

o    In extreme situations, the President can declare a financial emergency to manage the country’s finances.

o    This is a rare provision, emphasizing the importance of fiscal responsibility.

In essence, the Constitution ensures the budget process is democratic, transparent, and accountable, reflecting the government’s duty to manage public funds wisely for the welfare of the people. It’s a system designed to balance aspirations with fiscal discipline.

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