India’s Union Budget 2025-26: Driving Growth and Inclusive Development
On 1st February 2025, Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presented the Union Budget 2025-26 in Parliament with the resounding theme “Sabka Vikas”. The budget lays out a visionary roadmap for a balanced and inclusive development model—Viksit Bharat—built on four key engines: Agriculture, MSMEs, Investment, and Exports. Here, we break down the key highlights and reforms from the budget that will shape India’s economic future.
1. The Four Engines of Development
Agriculture: Boosting Rural Prosperity
- Prime Minister Dhan-Dhaanya Krishi Yojana:
This initiative, in partnership with states, targets 100 low-productivity agricultural districts. It aims to enhance productivity through crop diversification, improved post-harvest storage, upgraded irrigation facilities, and better access to both long-term and short-term credit.
- Mission for Aatmanirbharta in Pulses:
With a special focus on Tur, Urad, and Masoor, a six-year mission will be launched to boost domestic production. Central agencies will procure pulses over the next four years, ensuring better income for the nation’s 1.7 crore farmers.
- Enhanced Kisan Credit Cards (KCC):
Loan limits under the modified interest subvention scheme have been raised from Rs. 3 lakh to Rs. 5 lakh, providing much-needed liquidity to farmers.
MSMEs: Catalyzing Industrial Growth
- Empowering MSMEs:
Recognized as a critical engine of growth contributing to 45% of exports, the budget has enhanced the classification limits—investment and turnover limits are increased to support scaling up operations. Additionally, credit guarantee cover for MSMEs has been raised from Rs. 5 crore to Rs. 10 crore.
- Entrepreneurship for Underrepresented Groups:
A special scheme has been launched to support 5 lakh first-time women, SC, and ST entrepreneurs with term loans up to Rs. 2 crore over the next five years.
- National Manufacturing Mission:
This mission aims to promote “Make in India” by uniting small, medium, and large industries under one umbrella, thereby fostering domestic production and innovation.
Investment: Building the Infrastructure of Tomorrow
- Atal Tinkering Labs:
The government will establish 50,000 Atal Tinkering Labs in government schools over the next five years to spark creativity and innovation among students.
- Digital and Educational Initiatives:
Investments include a Centre of Excellence in Artificial Intelligence for education with an outlay of Rs. 500 crore, and expanding broadband connectivity to all government secondary schools and primary health centres.
- Gig Workers and Healthcare:
Provisions for gig workers include issuing identity cards, registering them on the e-Shram portal, and ensuring healthcare coverage under PM Jan Arogya Yojana.
- Urban Challenge Fund:
A Rs. 1 lakh crore fund has been set up to transform cities into growth hubs through innovative urban development projects.
Exports: Opening Global Markets
- BharatTradeNet (BTN):
The government has proposed a digital public infrastructure that will serve as a unified platform for trade documentation and financing solutions, aimed at boosting exports.
- Support for Domestic Manufacturing:
Incentives are in place to enhance domestic manufacturing capacities, particularly in electronics and industrial goods, thus integrating India’s economy into global supply chains.
2. Transformative Tax Reforms
New Tax Regime for a Thriving Middle Class
- Zero Income Tax on Average Monthly Income Up to Rs. 1 Lakh:
The budget introduces a relief where individuals earning an average monthly income of up to Rs. 1 lakh will not have to pay any income tax.
- Revised Tax Slab for Salaried Individuals:
Under the new regime, salaried individuals with an annual income up to Rs. 12.75 lakh will pay NIL tax, thanks to a standard deduction of Rs. 75,000. This move is aimed at boosting household savings and consumption among the middle class.
- Simplified Compliance:
Several measures have been introduced to rationalize TDS/TCS thresholds. Notably, TDS on rent has been raised from Rs. 2.4 lakh to Rs. 6 lakh per annum, and the time limit for filing updated income tax returns has been extended from two to four years.
- Enhanced Deductions and Reforms:
The government is also streamlining procedures, including decriminalizing delays in TDS/TCS payments and introducing a mechanism to ease the compliance burden on taxpayers.
3. Additional Reforms and Sectoral Boosts
Reforms as the Fuel to Growth
- Financial Sector and Regulatory Reforms:
A light-touch regulatory framework is being promoted to foster ease of doing business, including the setting up of a high-level committee for regulatory reforms and an Investment Friendliness Index of States.
- Customs and Import Duties:
To support domestic manufacturing, the budget revises Basic Customs Duty (BCD) structures on critical inputs such as raw materials, components for shipbuilding, and capital goods for EV battery and mobile phone battery manufacturing. Additionally, lifesaving drugs and certain medical supplies have received full or enhanced exemptions.
- Investment in R&D:
A significant allocation of Rs. 20,000 crore has been earmarked for private sector-driven research, development, and innovation initiatives, highlighting the government's commitment to a knowledge-based economy.
4. Implications for Growth and the Future
The Union Budget 2025-26 is a transformative fiscal roadmap aimed at catalyzing inclusive growth and laying the foundation for a globally competitive economy. Its comprehensive focus on agriculture, MSMEs, infrastructure investment, and exports—coupled with meaningful tax reforms—ensures that both the rural and urban sectors of India will benefit from a renewed economic momentum.
How DreamTyari Aligns with the New Economic Vision
At DreamTyari, we are committed to keeping our audience informed and prepared for the dynamic changes introduced by the Union Budget 2025-26. Our platform will continue to offer:
- Updated Educational Content:
Reflecting the new policies, we update our study materials and exam preparation tools, ensuring that students have access to the latest information.
- Guidance on Financial Planning:
With the revised tax slabs and deductions, our expert content will help you navigate the new tax regime and optimize your savings.
- Interactive Learning Modules:
Leveraging digital advancements, our interactive modules and mock tests are designed to prepare you for competitive exams and the evolving job market.
Final Thoughts
India’s Union Budget 2025-26 sets a bold vision for a future marked by inclusive development, robust growth, and a commitment to the welfare of its citizens. With targeted initiatives across agriculture, MSMEs, investment, and exports, and groundbreaking tax reforms, the budget promises to empower every segment of society.
Stay tuned to DreamTyari for further updates, detailed analyses, and expert guidance as we journey through this transformative era of economic reform.