Vajram-And-RaviVajram-And-Ravi
hamburger-icon

Union Budget 2025-26: Key Features, Growth Engines, and Reforms

02-02-2025

06:30 AM

timer
1 min read
Union Budget 2025-26: Key Features, Growth Engines, and Reforms Blog Image

What’s in Today’s article?

  • Union Budget 2025-26 Latest News
  • About Union Budget
  • Key features of the Union Budget 2025-26
  • Growth engines as highlighted in Union Budget 2025-26
  • Budget 2025-26: Reforms as the Fuel of growth
  • Financial Sector Reforms and Development as outlined in Union Budget 2025-26
  • Key Measures for a Modern Regulatory System
  • Union Budget 2025-26: Fiscal Consolidation
  • Other highlights of the Union Budget 2025-26
  • Vision for Viksit Bharat
  • Union Budget 2025-26 FAQs

Union Budget 2025-26 Latest News

  • The Finance Minister presented the Union Budget 2025-26 with the theme “Sabka Vikas” stimulating balanced growth of all regions.

About Union Budget

  • Article 112 of the Constitution requires the government to present to Parliament a statement of estimated receipts and expenditure in respect of every financial year, from April 1 to March 31. 
  • This statement is called the annual financial statement.
  • It is divided into three parts - Consolidated Fund, Contingency Fund and Public Account
  • For each of these funds, the government has to present a statement of receipts and expenditure.

Key features of the Union Budget 2025-26

  • Quoting Telugu poet Shri Gurajada Appa Rao’s famous saying, ‘A country is not just its soil; a country is its people.’ – the FM presented the Union Budget.
  • In line with the theme of this year’s budget, the FM outlined the broad Principles of Viksit Bharat.

Six key principles of Viksit Bharat as outlined in the Union Budget 2025-26

  • Zero poverty
  • Quality education for all
  • Affordable, high-quality healthcare
  • Skilled workforce with meaningful employment
  • 70% women participation in economic activities
  • Farmers making India the ‘food basket of the world’

Prioritized Section under the Union Budget 2025-26

  • The Budget prioritizes the poor (Garib), youth, farmers (Annadata), and women (Nari).
  • It does so while aiming to boost growth, attract private investment, uplift households, and empower the middle class.

Key reform areas as outlined in the Union Budget 2025-26

  • Key reform areas include Taxation, Power, Urban Development, Mining, Financial Sector, and Regulations to enhance India's global competitiveness.

Engines in the journey to Viksit Bharat

  • Agriculture, MSMEs, Investment, and Exports are identified as growth engines, with reforms as the driving force and inclusivity as the guiding principle.

Growth engines as highlighted in Union Budget 2025-26

  • Agriculture, MSMEs, Investment, and Exports are identified as growth engines in the Union Budget 2025-26.

1st Engine: Agriculture

  • Prime Minister Dhan-Dhaanya Krishi Yojana
    • Launched in partnership with states, covering 100 districts.
    • Aims to increase productivity, promote crop diversification, enhance storage, improve irrigation, and provide credit access.
  • Rural Prosperity and Resilience Programme
    • Multi-sectoral initiative with states to tackle underemployment in agriculture.
    • Focus on skilling, investment, technology, and boosting the rural economy.
    • Benefits rural women, young farmers, rural youth, small & marginal farmers, and landless families.
  • Mission for Aatmanirbharta in Pulses (6 Years)
    • Special focus on Tur, Urad, and Masoor pulses.
    • NAFED & NCCF to procure these pulses from farmers for the next 4 years.
  • Key Agricultural Initiatives
    • Comprehensive Programme for Vegetables & Fruits.
    • National Mission on High Yielding Seeds.
    • Five-yearMission for Cotton Productivity.
  • Increased Loan Limits for Farmers
    • Kisan Credit Card loan limit raised from ₹3 lakh to ₹5 lakh under a modified interest subvention scheme.

2nd Engine: MSMEs

  • Strengthening MSMEs for Growth
    • MSMEs contribute 45% of India's exports and are key to economic development.
    • Investment and turnover limits for MSME classification increased to 2.5 times and 2 times, respectively.
    • Enhanced credit availability with expanded guarantee cover announced.
  • Support for Women, SC/ST Entrepreneurs
    • New scheme for 5 lakh first-time entrepreneurs from women, Scheduled Castes, and Scheduled Tribes.
    • Provides term loans up to ₹2 crore over the next 5 years.
  • Boosting Manufacturing and 'Made in India'
    • Scheme to make India a global hub for toys under the 'Made in India' initiative.
    • Launch of a National Manufacturing Mission to support small, medium, and large industries, reinforcing 'Make in India'.

3rd Engine: Investment

  • Investment in People
    • 50,000 Atal Tinkering Labs to be set up in government schools over the next 5 years.
    • Broadband connectivity for all government secondary schools and primary health centres in rural areas under Bharatnet.
    • Bharatiya Bhasha Pustak Scheme to provide digital-form Indian language books for school and higher education.
    • Five National Centres of Excellence for Skilling with global partnerships for Make for India, Make for the World” manufacturing.
    • Centre of Excellence in AI for Education with an outlay of ₹500 crore.
    • Gig workers to receive identity cards, e-Shram portal registration, and healthcare under PM Jan Arogya Yojana.
  • Investment in Economy
    • Infrastructure ministries to create a 3-year PPP project pipeline.
    • ₹1.5 lakh crore allocated for 50-year interest-free loans to states for capital expenditure and reforms.
    • Second Asset Monetization Plan (2025-30) to reinvest ₹10 lakh crore into new projects.
    • Jal Jeevan Mission extended till 2028 with focus on quality, operations, and maintenance through Jan Bhagidhari.
    • Urban Challenge Fund of ₹1 lakh crore for initiatives like Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’, and ‘Water & Sanitation’.
  • Investment in Innovation
    • ₹20,000 crore allocated for a private sector-driven Research, Development, and Innovation initiative.
    • National Geospatial Mission to develop geospatial infrastructure and data for urban planning.
    • Gyan Bharatam Mission for survey, documentation, and conservation of 1 crore+ manuscripts.
    • National Digital Repository of Indian Knowledge Systems proposed for knowledge sharing.

4th Engine: Exports

  • Export Promotion & Digital Infrastructure
    • Export Promotion Mission to help MSMEs tap into global markets, jointly driven by Commerce, MSME, and Finance Ministries.
    • ‘BharatTradeNet’ (BTN) proposed as a unified digital public infrastructure for trade documentation and financing solutions.
  • Boosting Domestic Manufacturing & Industry 4.0
    • Government to develop domestic manufacturing capacities for better integration with global supply chains.
    • Support for domestic electronic equipment industry to leverage Industry 4.0 opportunities.
    • National Framework proposed for Global Capability Centres (GCCs) in emerging Tier-2 cities.
  • Infrastructure & Warehousing Support
    • Government to upgrade infrastructure and warehousing for air cargo, with special focus on high-value perishable horticulture produce.

Budget 2025-26: Reforms as the Fuel of growth

  • Over the past 10 years, the government has implemented key taxpayer-friendly reforms, including:
    • Faceless assessment; Taxpayers' charter; Faster refunds
    • 99% returns on self-assessment
    • Vivad se Vishwas scheme for dispute resolution
  • Reaffirming commitment to “Trust First, Scrutinize Later”, the Finance Minister emphasized continued tax reforms to enhance convenience for taxpayers.

Financial Sector Reforms and Development as outlined in Union Budget 2025-26

  • The Union Budget 2025-26 introduced key reforms to improve compliance, attract investments, and build a strong regulatory environment:
    • FDI Limit in Insurance: Raised from 74% to 100% for companies investing the entire premium in India.
    • Light-Touch Regulatory Framework: Focus on trust-based governance to boost productivity and employment.

Key Measures for a Modern Regulatory System

  • High-Level Committee for Regulatory Reforms
    • Review non-financial sector regulations, licenses, and permissions.
    • Strengthen trust-based governance and ease of compliance.
    • Provide recommendations within one year.
  • Investment Friendliness Index of States
    • Launched in 2025 to promote competitive cooperative federalism.
  • Financial Stability and Development Council (FSDC) Mechanism
    • Assess impact of financial regulations.
    • Enhance financial sector responsiveness and development.
  • Jan Vishwas Bill 2.0
    • Decriminalize 100+ provisions in various laws to improve ease of doing business.

Union Budget 2025-26: Fiscal Consolidation

  • The Union Budget 2025-26 reaffirms the Government's commitment to fiscal discipline by ensuring that the fiscal deficit remains on a declining trajectory and Central Government debt stays sustainable.

Fiscal Deficit Targets

  • Revised Estimate (RE) 2024-25: 4.8% of GDP
  • Budget Estimate (BE) 2025-26: 4.4% of GDP

Revised Estimates (2024-25)

  • Total Receipts (excluding borrowings): ₹31.47 lakh crore
  • Net Tax Receipts: ₹25.57 lakh crore
  • Total Expenditure: ₹47.16 lakh crore
  • Capital Expenditure: ₹10.18 lakh crore

Budget Estimates (2025-26)

  • Total Receipts (excluding borrowings): ₹34.96 lakh crore
  • Net Tax Receipts: ₹28.37 lakh crore
  • Total Expenditure: ₹50.65 lakh crore

Other highlights of the Union Budget 2025-26

  • Reposing faith on middle class in nation building, the Union Budget 2025-26 proposes new direct tax slabs and rates under the new income tax regime.
  • Middle-Class Tax Relief & Personal Income Tax Reforms
    • No Income Tax on total income up to ₹12 lakh per annum under the new tax regime.
    • Salaried individuals earning up to ₹12.75 lakh per annum will pay NIL tax after a ₹75,000 standard deduction.
    • Estimated revenue loss of ₹1 lakh crore due to new tax structure.
  • TDS/TCS Rationalization:
    • Senior citizens' tax deduction limit on interest doubled from ₹50,000 to ₹1 lakh.
    • TDS threshold on rent raised from ₹2.4 lakh to ₹6 lakh per annum.
    • TCS collection threshold increased to ₹10 lakh.
    • Delay in TCS payments decriminalized (following TDS decriminalization).
  • Compliance Ease & Incentives:
    • Updated return filing period extended from 2 years to 4 years.
    • Registration period for small charitable trusts increased from 5 to 10 years.
    • Annual value of two self-occupied properties can be claimed as NIL without conditions.
    • National Savings Scheme withdrawals (post-Aug 29, 2024) & NPS Vatsalya accounts exempted from tax.
  • Ease of Doing Business & Investment Promotion
    • New Scheme for International Transactions: Arm’s length pricing for a block period of 3 years to ensure tax certainty.
    • Presumptive Taxation for Non-Residents: Applicable to those offering services to electronics manufacturing companies in India.
  • Tonnage Tax Benefits Extended to inland vessels.
    • Startup Incentives: Incorporation period extended by 5 years.
    • Infrastructure Investment Boost: Sovereign Wealth and Pension Fund investment deadline extended to March 31, 2030.
  • Customs Reforms & Trade Promotion
    • Industrial Tariff Rationalization:
      • Removal of seven tariffs and introduction of a single cess/surcharge per category.
    • Healthcare & Essential Medicines:
      • 36 life-saving drugs for cancer, rare, and chronic diseases fully exempted from Basic Customs Duty (BCD).
      • 37 more medicines & 13 Patient Assistance Program drugs also exempted.
  • Boost for Domestic Manufacturing:
    • 25 critical minerals (cobalt powder, lithium-ion battery waste, lead, zinc, etc.) fully exempted from BCD.
  • Textile Sector Support:
    • Two more shuttle-less looms fully exempted.
    • BCD on knitted fabrics increased to 20% or ₹115/kg (whichever is higher).
  • Electronics & Make in India:
    • BCD on Interactive Flat Panel Displays (IFPDs) raised to 20%.
    • BCD on Open Cells reduced to 5%; parts of Open Cells fully exempted.
    • Lithium-ion battery manufacturing: 35 capital goods for EVs & 28 for mobile batteries added to exemption list.
  • Shipbuilding Industry: BCD exemption on raw materials extended for 10 more years.
  • Export Promotion Measures
    • Handicrafts exports facilitated with BCD exemptions.
  • Leather Industry Support: BCD fully exempted on Wet Blue leather to boost value addition and employment.
  • Fisheries Export Support:
    • BCD on Frozen Fish Paste reduced from 30% to 5%.
    • BCD on Fish Hydrolysate for shrimp/fish feeds reduced from 15% to 5%.

Vision for Viksit Bharat

  • Finance Minister Nirmala Sitharaman highlighted Democracy, Demography, and Demand as key pillars of India's growth. 
  • The new tax regime aims to boost consumption, savings, and investment by putting more money into the hands of the middle class, strengthening India's economic trajectory.

Union Budget 2025-26 FAQs

Q1. In which house is the Union Budget presented?

Ans. The Union Budget is presented in the Lok Sabha.

Q2. On which day is the Union Budget presented?

Ans. The Union Budget is presented on February 1 since 2017.

Q3. Who presents the Union Budget in Parliament?

Ans. The Union Budget is presented by the Union Finance Minister. 

Q4. Who presented the first-ever budget in India?

Ans. India's first Union Budget was presented on April 7, 1860, by James Wilson, the finance member of the Indian Council and the founder of The Economist newspaper.

Q5. Which is the first paperless budget in India?

Ans. On 1 February 2021, Finance Minister Nirmala Sitharaman presented the first paperless budget. She took a digital tablet wrapped in a tradition 'bahi-khata' style pouch.

Source: PIB | India Budget