The Union Budget for 2025-26, presented by Finance Minister Nirmala Sitharaman, focuses on driving economic growth while maintaining fiscal prudence. With a mix of tax reliefs, infrastructure investments, and social welfare measures, the budget aims to balance short-term recovery with long-term development.
Key Highlights of Budget 2025-26
1. Tax Reforms: Relief for the Middle Class
One of the most notable announcements is the revision of personal income tax slabs, increasing the exemption threshold to ₹12 lakh from ₹7 lakh. This move is expected to boost consumer spending, stimulate demand, and provide financial relief to the salaried class. However, it will also result in a revenue loss for the government, which raises questions about how the shortfall will be managed.
2. Boost for Agriculture and Rural Economy
Recognizing the importance of the agricultural sector, the budget introduces a new mission to enhance crop productivity, benefiting around 1.7 crore farmers. Additionally, increased access to subsidized credit aims to strengthen rural economies. These measures align with the government’s goal of ensuring food security and improving farmers’ incomes.
3. Infrastructure Development: A Gradual Approach
Capital expenditure has been raised to ₹11.2 lakh crore, a modest increase compared to previous years. While the government continues to invest in roads, railways, and urban development, the pace of spending has slowed slightly. This cautious approach suggests a focus on maintaining fiscal discipline while ensuring long-term infrastructure growth.
4. Fiscal Deficit and Borrowing Plans
The government has set an ambitious target to reduce the fiscal deficit to 4.4% of GDP in 2025-26, down from 4.8% this year. To meet this goal, gross market borrowing is projected at ₹14.82 lakh crore. While this reflects a commitment to responsible financial management, it also means that the government must carefully balance spending priorities.
5. Support for MSMEs and Startups
The budget includes measures to support Micro, Small, and Medium Enterprises (MSMEs) through easier credit access and reduced compliance burdens. Additionally, the startup ecosystem benefits from tax incentives and digital infrastructure support. These steps aim to encourage entrepreneurship and job creation, particularly in the technology and innovation sectors.
6. Strengthening Social Welfare Programs
Education, healthcare, and employment programs receive significant allocations. Special initiatives focus on skilling young workers, empowering women, and improving access to essential services. By prioritizing inclusive growth, the government seeks to address social inequalities and ensure long-term economic stability.
Analysis: A Balancing Act
The budget takes a strategic approach by cutting taxes to boost consumption while maintaining fiscal discipline. However, with a reduced fiscal deficit target, the government must ensure that critical development projects are not underfunded. The slower increase in capital expenditure has raised concerns among industry leaders who expected more aggressive infrastructure investments.
The focus on rural development and MSME growth is a welcome step, as these sectors form the backbone of India’s economy. However, the success of these initiatives will depend on efficient implementation and access to necessary financial resources.
The Union Budget 2025-26 presents a well-rounded approach to economic recovery and growth. By balancing tax relief, social welfare, and infrastructure development, the government aims to create a stable foundation for sustainable progress. However, the real challenge lies in execution—ensuring that policies translate into tangible benefits for businesses, workers, and the general public.