Budget 2025-26 by Finance Minister "Nirmala Sitharaman"

Budget 2025-2026

Nirmala Sitharaman

Minister of Finance

                                                       

Introduction

1. This Budget continues our Government’s efforts to:

a) accelerate growth

b) secure inclusive development,

c) invigorate private sector investments

d) uplift household sentiments, and

e) enhance spending power of India’s rising middle class.

2. Together, we embark on a journey to unlock our nation’s tremendous potential for greater prosperity and global positioning under the leadership of Hon’ble Prime Minister Shri Narendra Modi.

3. As we complete the first quarter of the 21^st century, continuing geopolitical headwinds suggest lower global economic growth over the medium term. However, our aspiration for a Viksit Bharat inspires us, and the transformative work we have done during our Government’s first two terms guides us, to march forward resolutely.

Budget Theme

4. Our economy is the fastest-growing among all major global economies. Our development track record of the past 10 years and structural reforms have drawn global attention. Confidence in India’s capability and potential has only grown in this period. We see the next five years as a unique opportunity to realize ‘Sabka Vikas’, stimulating balanced growth of all regions.

5. The great Telugu poet and playwright Gurajada Appa Rao had said, ‘Desamante Matti Kaadoi, Desamante Manushuloi’; meaning, ‘A country is not just its soil, a country is its people.’ In line with this, for us, Viksit Bharat, encompasses:

a) zero-poverty;

b) hundred per cent good quality school education;

c) access to high-quality, affordable, and comprehensive healthcare;

d) hundred per cent skilled labour with meaningful employment;

e) seventy per cent women in economic activities; and

f) farmers making our country the ‘food basket of the world’.

6. In this Budget, the proposed development measures span ten broad areas focusing on Garib, Youth, Annadata and Nari.

a) Spurring Agricultural Growth and Productivity;

b) Building Rural Prosperity and Resilience;

c) Taking Everyone Together on an Inclusive Growth path;

d) Boosting Manufacturing and Furthering Make in India;

e) Supporting MSMEs;

f) Enabling Employment-led Development;

g) Investing in people, economy and innovation;

h) Securing Energy Supplies;

i) Promoting Exports; and

j) Nurturing Innovation.

7.  For this journey of development,

a) Our four powerful engines are: Agriculture, MSME, Investment, and Exports

b) The fuel: our Reforms

c) Our guiding spirit: Inclusivity

d) And the destination: Viksit Bharat

8. This Budget aims to initiate transformative reforms across six domains. During the next five years, these will augment our growth potential and global competitiveness. The domains are:

a) Taxation;

b) Power Sector;

c) Urban Development;

d) Mining;

e) Financial Sector; and

f) Regulatory Reforms. 

Agriculture as the 1^st Engine

the Union Budget 2025-26 introduces several initiatives aimed at strengthening India's agricultural sector, recognizing its critical role in the nation's economy and food security.

Key highlights include:

1. Six-Year Program to Boost Pulses and Cotton Production:

The government has launched a six-year program to enhance the production of pulses and cotton, aiming to reduce dependence on imports. state agencies will procure pulses such as pigeon peas, and red lentils at guaranteed prices to support farmers. additionally, efforts will focus on increasing the production of extra-long staple cotton through research and development initiatives.

2. High-Yield Crop Program:

A new high-yield crop program has been introduced, targeting 17 million farmers. this initiative aims to boost agricultural productivity by promoting the adoption of high-yielding seed varieties and modern farming practices.

3. National Mission on High-Yielding Seed Varieties:

the budget announces a "national mission" to develop high-yielding seed varieties. this mission seeks to address challenges arising from shrinking farmlands and erratic weather patterns, ensuring sustainable agricultural growth.

4. Increased Subsidized Farm Credit:

To support farmers facing low incomes, the government has increased the subsidized farm loan limit. this measure aims to provide farmers with greater access to affordable credit, enabling them to invest in necessary inputs and technologies.

 5. Establishment of a New Urea Plant:

Recognizing the importance of crop nutrients, the government plans to set up a new urea plant. this initiative is expected to enhance the availability of fertilizers, supporting higher crop yields.

These measures reflect the government's commitment to revitalizing the agricultural sector, aiming to enhance productivity, ensure food security, and improve the livelihoods of farmers across the country.

MSMEs as the 2^nd engine

The Union Budget 2025-26 introduces several measures to bolster the Micro, Small, and Medium Enterprises (MSME) sector, recognizing its pivotal role in India's economic growth and employment generation. Key initiatives include:

1. Enhanced Credit Access:

To facilitate easier access to financing for MSMEs, the government has increased the credit guarantee scheme's outlay, enabling higher loan disbursements with reduced collateral requirements. this move aims to alleviate liquidity constraints and promote business expansion within the sector.

2. Tax Relief Measures:

The budget proposes tax incentives for MSMEs, including a reduction in corporate tax rates for small businesses and simplified tax compliance procedures. these measures are designed to reduce the financial burden on MSMEs and encourage formalization.

3. Digital Infrastructure Support:

Recognizing the importance of digitalization, the government plans to establish a dedicated digital platform to provide MSMEs with access to markets, technology, and mentorship. this initiative aims to enhance the competitiveness of MSMEs in the global market.

4. Skill Development Programs:

The budget allocates funds for skill development initiatives tailored to the needs of MSMEs, focusing on upskilling the workforce and promoting entrepreneurship. this is expected to improve productivity and innovation within the sector.

5. Export Promotion:

To encourage MSMEs to explore international markets, the government has introduced export incentives and simplified export procedures. this includes providing financial assistance for participation in international trade fairs and establishing export facilitation centers.

These measures reflect the government's commitment to strengthening the MSME sector, aiming to foster a more inclusive and robust economic environment.

Investment as the 3^rd engine

In the Union Budget 2025-26, the Indian government emphasizes investment as a pivotal driver of economic growth, complementing consumption and exports. Key initiatives include:

1. Increased Capital Expenditure:

The budget proposes a significant increase in capital expenditure, focusing on infrastructure development across sectors such as railways, power, and urban infrastructure. this strategic investment aims to stimulate economic activity and create employment opportunities.

2. Private Investment Stimulation:

To encourage private sector participation, the government plans to implement policies that enhance the ease of doing business, provide tax incentives, and offer support for startups and innovation. these measures are designed to foster a conducive environment for private investments, thereby driving economic growth.

3. Focus on Sustainable Growth:

The budget outlines investments in green energy and sustainable infrastructure projects, aligning with global environmental commitments and ensuring long-term economic resilience. this approach aims to balance economic development with environmental sustainability. by prioritizing these investment strategies, the government aims to establish a robust foundation for sustained economic growth, leveraging investment as a key engine alongside consumption and exports.

Exports as the 4^th engine

In the Union Budget 2025-26, the Indian government underscores exports as a critical engine of economic growth, introducing several initiatives to enhance the country's export performance:

1. Export Promotion Mission:

 A new Export Promotion Mission has been launched with a budgetary allocation of ₹2,250 crore. this mission is a collaborative effort among the Ministries of Commerce, MSME, and Finance, aiming to facilitate easier access to export credit, provide cross-border factoring support, and assist MSMEs in navigating non-tariff measures in international markets.

2. Maritime Development Fund:

To bolster the shipping industry, the government will establish a ₹250 billion ($3 billion) Maritime Development Fund. the government will contribute 49% of the fund, with the remainder mobilized from ports and the private sector. this initiative aims to support the shipbuilding and repair industry, promoting the development of world-class maritime infrastructure.

 3. Infrastructure Development:

Each infrastructure-related ministry has been tasked with developing a three-year pipeline of public-private partnership projects. this strategy is designed to enhance infrastructure development, thereby improving the efficiency and competitiveness of India's export logistics. these measures reflect the government's commitment to strengthening India's export capabilities, recognizing the sector's vital role in driving economic growth and integration into global value chains.

Personal Income- tax Reforms with special focus on middle class

Rebate on income-tax  

To tax payers upto 12 lakh of normal income (other than special rate income such as capital gains) tax rebate is being provided in addition to the benefit due to slab rate reduction in such a manner that there is no tax payable by them. The total tax benefit of slab rate changes and rebate at different income levels can be illustrated with examples. A tax payer in the new regime with an income of ` 12 lakh will get a benefit of ` 80,000 in tax (which is 100% of tax payable as per existing rates). A person having income of ` 18 lakh will get a benefit of ` 70,000 in tax (30% of tax payable as per existing rates).

A person with an income of ` 25 lakh gets a benefit of ` 1,10,000 (25% of his tax payable as per existing rates).

1. Substantial relief is proposed under the new tax regime with new slabs and tax rates as under: -             Total income Rate of tax Upto ` 4,00,000 Nil From ` 4,00,001 to ` 8,00,000 5 per cent From ` 8,00,001 to ` 12,00,000 10 per cent From ` 12,00,001 to ` 16,00,000 15 per cent From ` 16,00,001 to ` 20,00,000 20 per cent From ` 20,00,001 to ` 24,00,000 25 per cent Above ` 24,00,000 30 per cent   Income Tax on Slabs and rates Benefit of Rebate benefit Total Benefit Tax after rebate Benefit Present Proposed Rate /Slab Full upto Rs 12 lacs 8 lac 30,000 20,000 10,000 20,000 30,000 0 9 lac 40,000 30,000 10,000 30,000 40,000 0 10 lac 50,000 40,000 10,000 40,000 50,000 0 11 lac 65,000 50,000 15,000 50,000 65,000 0 12 lac 80,000 60,000 20,000 60,000 80,000 0 16 lac 1,70,000 1,20,000 50,000 0 50,000 1,20,000 20 lac 2,90,000 2,00,000 90,000 0 90,000 2,00,000 24 lac 4,10,000 3,00,000 1,10,000 0 1,10,000 3,00,000 50 lac 11,90,000 10,80,000 1,10,000 0 1,10,000 10,80,000

 

In summary, the Union Budget 2025-26 reflects the government's commitment to fostering economic growth through tax reforms, sector-specific initiatives, and substantial investments in infrastructure and innovation. These measures are designed to build a more resilient and inclusive economy, addressing both immediate challenges and long-term development goals. To read full budget here is the link below.

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