“Sabka Vikas” — Development for All: The guiding theme of Union Budget 2025-26
Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 — her eighth consecutive budget — with a focus on economic growth, tax relief, employment, and infrastructure. The budget aims to accelerate India’s path toward self-reliance and global competitiveness while providing substantial relief to the middle class.
In a notable gesture, Sitharaman wore a saree with a Madhubani art border, honoring Padma Shri awardee Dulari Devi from Bihar. The budget introduces landmark tax reforms including zero tax up to ₹12 lakh income, major MSME incentives, and ambitious infrastructure projects worth lakhs of crores.
💰 Budget Overview & Key Financial Estimates
The Union Budget 2025-26 maintains fiscal discipline while prioritizing growth. The fiscal deficit is projected at 4.4% of GDP, marking progress toward the government’s target of reducing it below 4% in coming years. Capital expenditure remains robust at ₹11.21 lakh crore (3.1% of GDP).
Key financial highlights include total receipts (excluding borrowings) of ₹34.96 lakh crore, total expenditure of ₹50.65 lakh crore, and gross market borrowings of ₹14.82 lakh crore. The budget balances welfare spending with investment in productive assets.
| Parameter | Amount/Value | Significance |
|---|---|---|
| Total Receipts (excl. borrowings) | ₹34.96 Lakh Crore | Government’s own revenue |
| Total Expenditure | ₹50.65 Lakh Crore | All government spending |
| Net Tax Receipts | ₹28.37 Lakh Crore | After states’ share |
| Capital Expenditure | ₹11.21 Lakh Crore | 3.1% of GDP |
| Fiscal Deficit | 4.4% of GDP | Fiscal consolidation path |
| Gross Market Borrowings | ₹14.82 Lakh Crore | Government debt issuance |
📋 Income Tax Reforms: Major Relief for Middle Class
The budget introduces landmark tax relief under the new tax regime. Individuals earning up to ₹12 lakh annually will pay zero income tax. For salaried taxpayers, with the standard deduction of ₹75,000, the effective tax-free limit becomes ₹12.75 lakh.
The new progressive tax structure features seven slabs ranging from 0% to 30%, designed to reduce burden on the middle class while maintaining revenue from high earners.
| Income Bracket | Tax Rate | Tax Payable (Max) |
|---|---|---|
| ₹0 – ₹4 Lakh | Nil | ₹0 |
| ₹4 – ₹8 Lakh | 5% | ₹20,000 |
| ₹8 – ₹12 Lakh | 10% | ₹40,000 |
| ₹12 – ₹16 Lakh | 15% | ₹60,000 |
| ₹16 – ₹20 Lakh | 20% | ₹80,000 |
| ₹20 – ₹24 Lakh | 25% | ₹1,00,000 |
| Above ₹24 Lakh | 30% | Variable |
Key Numbers: ₹12 lakh tax-free (₹12.75 lakh for salaried with standard deduction). Seven tax slabs: 0%, 5%, 10%, 15%, 20%, 25%, 30%. Each slab covers ₹4 lakh bracket (except the highest).
Other Tax Reforms:
- Senior Citizens: Interest deduction limit raised to ₹1 lakh
- Rent TDS Threshold: Increased from ₹2.4 lakh to ₹6 lakh
- Foreign Remittances (LRS): TCS threshold raised to ₹10 lakh
Don’t confuse: ₹12 lakh is the tax-free limit under the NEW tax regime only. The old regime continues with different slabs and deductions. Also, ₹12.75 lakh (with standard deduction) applies only to salaried individuals, not self-employed.
🌾 Agriculture & Rural Development Reforms
Agriculture receives significant attention with multiple new initiatives aimed at self-reliance, higher productivity, and farmer welfare.
Key Announcements:
- PM Dhan-Dhaanya Krishi Yojana: Development of 100 Agri-Districts benefiting 7 crore farmers
- Aatmanirbharta in Pulses: Six-year mission for Tur, Urad, and Masoor production
- National Mission on High-Yielding Seeds: Research and adoption of high-yield varieties
- Makhana Board in Bihar: Dedicated board for production, processing, and exports
- KCC Loan Limit: Increased from ₹3 lakh to ₹5 lakh
- New Urea Plant in Assam: Namrup Plant to produce 12.7 lakh metric tons annually
- Mission for Cotton Productivity: Five-year plan for extra-long staple cotton
Think of these reforms as a “farm-to-fork” upgrade. The government is addressing every stage: better seeds (High-Yielding Seeds Mission), more credit (KCC ₹5 lakh), specialty crops (Makhana Board, Cotton Mission), and self-sufficiency (Pulses Mission). The 100 Agri-Districts will serve as model zones showcasing integrated development.
🏭 MSMEs & Startup Benefits: Second Engine of Growth
The MSME sector has been recognized as the “Second Engine of Growth” for India. The budget introduces major incentives for entrepreneurship, exports, and job creation.
Key Reforms:
- Revised MSME Classification: Investment & turnover limits doubled
- Credit Cards for Micro Enterprises: ₹5 lakh limit; 10 lakh cards in first year
- Fund of Funds for Startups: ₹10,000 crore for innovative startups
- First-time Entrepreneurs: ₹2 crore term loans for SC/ST and women entrepreneurs
- Focus Product Scheme (Footwear & Leather): Target 22 lakh jobs, ₹4 lakh crore turnover
- Toy Manufacturing: Push for India to become global toy export leader
The ₹10,000 crore Fund of Funds for startups signals government’s bet on innovation-led growth. Combined with ₹2 crore loans for first-time SC/ST/women entrepreneurs, it addresses both cutting-edge tech startups and grassroots entrepreneurship. Consider: How can these schemes complement each other to create an inclusive startup ecosystem?
🏗️ Infrastructure & Investment Announcements
Infrastructure expansion remains a cornerstone of Budget 2025-26, with massive allocations for states, transportation, and energy.
Major Announcements:
- 50-Year Interest-Free Loans for States: ₹1.5 lakh crore for capital expenditure
- Asset Monetization Plan (2025-30): Target ₹10 lakh crore for reinvestment
- Nuclear Energy Mission: ₹20,000 crore for Small Modular Reactors (SMRs)
- Maritime Development Fund: ₹25,000 crore for port modernization
- UDAN Scheme Expansion: 120 new regional airports; target 4 crore passengers in 10 years
- Jal Jeevan Mission Extended: Till 2028 for universal piped water
- New Greenfield Airport in Bihar: Regional connectivity boost
📦 Customs & Indirect Tax Reforms
The budget simplifies customs duties and promotes domestic manufacturing and exports.
Key Changes:
- Customs Duty Slabs: Simplified to only 8 slabs
- Life-Saving Medicines: 36 drugs fully exempted from Basic Customs Duty (BCD)
- EV & Mobile Batteries: Duty exemptions increased
- Interactive Flat Panel Displays: Duty raised from 10% to 20%
- Carrier-Grade Ethernet Switch: Duty reduced from 20% to 10%
- Wet Blue Leather: Full BCD exemption for leather industry
- Frozen Fish Paste: Duty reduced from 30% to 5%
- Handicrafts Export Period: Extended to one year
Duty Exemptions: 36 life-saving drugs (cancer, rare diseases). Reduced Duties: Fish paste (30%→5%), Ethernet switch (20%→10%). Increased Duties: Flat panel displays (10%→20%) to promote domestic manufacturing.
🌍 Sector-wise Impact Summary
| Sector | Key Reforms | Expected Impact |
|---|---|---|
| Agriculture | 100 Agri-Districts, KCC ₹5 lakh, Urea Plant | Higher productivity, self-reliance |
| MSMEs | ₹10,000 Cr Startup Fund, Credit Cards | Job creation, innovation boost |
| Healthcare | 200 Cancer Centers, 10,000 MBBS seats | Better healthcare access |
| Infrastructure | ₹1.5 L Cr state loans, UDAN expansion | Connectivity, urban development |
| Taxation | ₹12 lakh tax-free, simplified slabs | Higher disposable income |
| Energy | ₹20,000 Cr Nuclear SMRs | Clean energy expansion |
Click to flip • Master key facts
For GDPI, Essay Writing & Critical Analysis
5 questions • Instant feedback
The total expenditure in Union Budget 2025-26 is ₹50.65 lakh crore.
The fiscal deficit is projected at 4.4% of GDP for 2025-26.
Income up to ₹12 lakh is tax-free under the new tax regime (₹12.75 lakh for salaried with standard deduction).
₹10,000 crore has been allocated for the Fund of Funds to support innovative startups.
The KCC loan limit has been increased from ₹3 lakh to ₹5 lakh.
