The Union Budget for 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, centers on the theme "Sabka Vikas" (Balanced Growth), aligning with the vision of "Viksit Bharat" (Developed India). The budget aims to eliminate poverty, ensure quality education, universal healthcare, skill development, women’s economic empowerment, and position India as the World Granary. Below are the key highlights:

1. Overall Fiscal Framework

● Total Expenditure: ₹50.65 trillion  (≈US$610 billion), a 10% increase year-on-year.

● Fiscal Deficit: Target set at 4.4% of GDP, down from 4.8% in 2024, reflecting commitment to fiscal discipline.

● Capital Expenditure: ₹11.21 trillion (3.1% of GDP), prioritizing infrastructure, nuclear energy, and digital technology.

2. Key Sector Investments

● Defense Budget: ₹6.81 trillion (≈US$78.7 billion), an~10% increase, but constrained by 23.6% (₹1.6 trillion) allocated to pensions, limiting funds for equipment modernization.

● Nuclear Energy: ₹200 billion (US$2.3 billion) earmarked to achieve 100 GW nuclear capacity by 2047, promoting modular reactors and private sector participation.

● Rural & Agricultural Development: Launched "Prime Minister’s Food and Agriculture Development Plan" to boost high-yield crops, modernize fisheries, and enhance rural infrastructure.

● Technology & Innovation: ₹50 billion AI Excellence Fund established, expanding Atal Innovation Labs to drive digital adoption.

3. Tax Reforms

● Personal Income Tax: Revised slab rates with the highest bracket threshold raised from ₹1.5 million to ₹2.4 million, reducing burdens on middle- and low-income earners.

● Corporate Tax: Tax holiday for startups extended to 2030; simplified tax incentives for IFSCs; effective tax rate of 10% introduced for non-resident enterprises.

● Compliance Simplification: Withdrawal of TCS on goods sales, higher exemptions for rent/interest income, and streamlined transfer pricing dispute mechanisms.

4. Economic Growth Drivers

● Manufacturing & Exports: Tariff adjustments to support electronics, semiconductors, and clean energy sectors under the "Make in India" initiative.

● MSMEs: Revised classification criteria, expanded credit access, and ₹1 trillion startup fund to foster job creation and innovation.

● Green Economy: Extended tax incentives for electric vehicles and renewables to accelerate low-carbon technologies.

5. Social Welfare & Employment

● Healthcare & Education: Expanded rural healthcare, increased cancer treatment facilities, and target to raise female labor participation to 70%.

● Skill Development: 50,000 new Atal Innovation Labs and broadband connectivity for government schools to strengthen vocational training.

Conclusion

The 2025 budget balances fiscal prudence with strategic investments to foster inclusive growth, prioritizing middle-class relief, technological advancement, and sustainability. While defense spending rises, pension pressures and moderating capital expenditure may challenge long-term modernization. The framework reflects India’s commitment to bridging short-term stimulus with long-term economic resilience.

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