The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, aims to drive transformative reforms across six key sectors: taxation, financial services, power, urban development, mining, and regulatory frameworks. These strategic initiatives are designed to propel economic growth, enhance infrastructure, improve governance, and ensure sustainable development.
Together, we aim to unlock India’s potential under the visionary leadership of Prime Minister Modi,” Sitharaman stated. She emphasized that the budget focuses on accelerating growth while prioritizing inclusive development, uplifting household sentiment, and strengthening the middle class. Many economic experts have described it as the best budget India has seen in the last 20 years—a significant compliment to the Finance Minister. Notably, she is also the only one to have presented Union Budgets consecutively for eight years since independence.
In my view, the key takeaway from this Union Budget are its comprehensive approach across all sectors, with a notable focus on the long-neglected middle class. The record tax relief of ₹12 lakh should significantly boost spending in this segment.
Tax Reforms: Simplification and Relief
The government continues to push for tax reforms aimed at ease of compliance and transparency. Key announcements include:
- Senior Citizens: Tax exemption on interest income raised to ₹1 lakh.
- TDS Adjustments: Rent threshold increased from ₹2.4 lakh to ₹6 lakh.
- Education Remittances: TCS exemption for loans taken from recognized financial institutions.
- Liberalized Remittance Scheme (LRS): TCS threshold increased from ₹7 lakh to ₹10 lakh.
- Tariff Rationalization: Elimination of seven tariff rates, reduction in duties on select imports, and exemption of social welfare surcharge on 82 tariff lines.
- Sector-Specific Exemptions: Custom duty relief on cobalt powder, lithium-ion battery waste, and key medical supplies.
Financial Sector Overhaul
The government is committed to fostering a robust and competitive financial environment:
- FDI in Insurance: Investment cap raised from 74% to 100% for firms investing their premium in India.
- Central KYC Registry: Revamped to align with global financial standards.
- Regulatory Reforms: Faster approvals for company mergers and enhanced ease of doing business.
- Investment Friendliness Index: To be introduced in 2025 for competitive federalism.
- Financial Stability Measures: Review mechanism under FSDC to enhance financial sector responsiveness.
Infrastructure Push: Urban Development and Capex Boost
Infrastructure development remains a focal point of the budget:
- Urban Challenge Fund: ₹1 lakh crore allocated to transform cities into growth hubs, focusing on redevelopment and sanitation.
- Public-Private Partnerships (PPP): Ministries to propose at least three PPP projects.
- Capital Expenditure (Capex): ₹1.5 lakh crore in interest-free loans to boost state-level capital projects.
- Affordable Housing: Additional 40,000 units to be completed in FY26 with ₹15,000 crore allocated for SWAMI Fund 2.
Energy and Sustainability: Nuclear and Power Sector Reforms
- Nuclear Energy Mission: Target of 100 GW nuclear power by 2047 with private sector participation.
- Research & Development: ₹20,000 crore for Small Modular Reactors (SMRs) with at least five operational by 2033.
- Power Sector Reforms: Incentives for states implementing electricity distribution improvements and increased intrastate transmission capacity.
MSME and Agriculture: Strengthening Economic Pillars
- MSME Support: Customized credit cards, expanded fund-of-funds, and increased investment and turnover limits.
- Agriculture Reforms:
- Prime Minister Krishi Yojana: Crop diversification, irrigation improvements, and credit access for 1.7 crore farmers.
- Pulses Mission: Six-year initiative to achieve self-reliance in pulses, with focus on tur and masoor.
- Kisan Credit Cards (KCC): Loan limit increased from ₹3,000 to ₹5,000 crore.
Aviation and Connectivity: Expanding UDAN Scheme
- UDAN Expansion: Increased connectivity to 120 new destinations.
- Greenfield Airports: Development plans for Bihar and other underserved regions.
- Passenger Growth: Target of 4 crore additional passengers through the modified UDAN scheme.
Fiscal Health: Deficit Management and Expenditure
- Revised Fiscal Deficit FY25: 4.8%
- Fiscal Deficit Target FY26: 4.4%
- Total Expenditure: ₹47.16 lakh crore, with ₹10.1 lakh crore allocated for capital expenditure.
- Total Receipts (Excluding Borrowings): ₹31.47 lakh crore, with net tax receipts at ₹25.57 lakh crore.
Conclusion: A Budget That Responds to Aspirations
Thus far, the Budget 2025-26 reflects a government increasingly attuned to public expectations, particularly the middle class, which remains the backbone of India’s economic expansion. With strategic investments in infrastructure, energy, agriculture, and financial reforms, the budget aims to sustain India’s position as the fastest-growing major economy while fostering inclusive and sustainable development.
