The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, lays down the government’s roadmap for economic growth, infrastructure development, and fiscal policies. The budget aims to provide relief to taxpayers, enhance employment opportunities, and promote innovation while addressing inflation and fiscal deficit concerns. Let’s explore the key highlights and their implications.

Taxation Reforms: Relief for Middle-Class Taxpayers

One of the most awaited aspects of any union budget 2025 is the tax structure. The government has made significant revisions to reduce the financial burden on taxpayers:

• The income tax exemption limit has been raised to ₹12 lakh, benefiting middle-class earners.
• Revised tax slabs under the new tax regime provide relief for individuals with moderate incomes while simplifying tax compliance.
• The TDS (Tax Deducted at Source) threshold on interest income for senior citizens has been doubled from ₹50,000 to ₹1 lakh.
• The annual TDS limit on rent payments has been raised from ₹2.4 lakh to ₹6 lakh, benefiting landlords and tenants alike.
• Withdrawals from the National Savings Scheme (NSS) made on or after August 29, 2024, are now tax-exempt.
• The deadline for filing updated income tax returns has been extended from two to four years, allowing greater flexibility for taxpayers.
• The government has announced a new Income Tax Bill aimed at streamlining taxation laws and reducing compliance burdens for individuals and businesses.

Boost for Agriculture and Rural Economy

The agricultural sector has received substantial financial support under the Prime Minister Dhan-Dhaanya Krishi Yojana, a scheme designed to improve farm productivity and rural incomes:

• The budget proposes short-term loans of up to ₹5 lakh for farmers, fishermen, and dairy farmers at concessional interest rates.
• A six-year mission has been launched to achieve self-reliance in pulses like Tur, Urad, and Masoor to reduce dependency on imports.
• The government will establish a Makhana Board in Bihar, recognizing the state’s contribution to India’s Makhana production and export potential.
• Increased allocations for rural infrastructure, irrigation, and organic farming initiatives.

Encouraging Research, Innovation, and Startups

Acknowledging the role of technology and innovation in driving economic growth, the budget allocates ₹20,000 crore for research and development:

• The Prime Minister Research Fellowship will fund 10,000 fellowships to promote advanced technological research in IITs, IISc, and other leading institutions.
• A second Gene Bank will be established, housing 10 lakh germplasm lines to safeguard food and nutritional security.
• Increased funding for deep-tech startups, semiconductor manufacturing, and AI-driven research projects.

Industry, Trade, and Export Promotion

To boost domestic manufacturing and exports, several incentives and exemptions have been introduced:

• Customs duty exemptions for electronic components like open cells used in LED/LCD TVs and capital goods for lithium-ion battery production to encourage domestic manufacturing.
• The Maintenance, Repair, and Overhaul (MRO) sector will receive a 10-year exemption on goods required for shipbuilding and ship-breaking operations.
• Wet blue leather has been fully exempted from basic customs duties, supporting local producers and enhancing export potential.
• Faster trade facilitation with well-defined time limits for provisional assessment finalization and provisions for voluntary declarations with interest but no penalties.

Healthcare and Pharmaceutical Sector Reforms

The healthcare industry has received a substantial boost to improve accessibility and affordability:

• 36 life-saving drugs have been exempted from Basic Customs Duty, making essential medicines more affordable.
• 37 new medicines and 13 patient assistance programs have been introduced to benefit the general public.
• The Production Linked Incentive (PLI) scheme for pharmaceuticals receives ₹2,445 crore, continuing the push for self-reliance in Active Pharmaceutical Ingredients (APIs) and MedTech innovations.
• Increased funding for public healthcare infrastructure and digital health records.

Infrastructure and Economic Growth Measures

The budget prioritizes massive infrastructure investments as a core driver of economic growth:

• Increased allocations for highway expansion, metro projects, and smart city initiatives.
• Additional funds for renewable energy projects, particularly in solar, wind, and green hydrogen technologies.
• Strengthening of railway networks, logistics hubs, and inland waterways to boost freight movement and trade efficiency.

Employment Generation and Skill Development

The government is focused on job creation through investments in manufacturing, services, and digital sectors:

• Expansion of the Skill India Mission with new programs for AI, cybersecurity, and renewable energy sectors.
• Increased funding for MSMEs (Micro, Small, and Medium Enterprises) to support local entrepreneurs.
• Enhancements to Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to ensure rural employment opportunities.

Fiscal Deficit and Economic Stability

To ensure economic stability, the government has set a fiscal deficit target of 5.1% of GDP, reflecting a gradual path to fiscal consolidation. Key measures include:

• Disinvestment and privatization of select public sector enterprises to generate revenue.
• Rationalization of subsidies to focus on direct benefit transfers (DBT) for efficiency.
• Increased capital expenditure on growth-oriented projects to drive economic recovery.

Conclusion

The Union Budget 2025-26 strikes a balance between economic growth, fiscal discipline, and public welfare. With tax relief measures, support for agriculture and industries, investments in research and infrastructure, and an emphasis on job creation, the budget aims to position India on a path of sustained economic progress. By addressing both short-term economic challenges and long-term development goals, the government reinforces its vision of making India a global economic powerhouse in the coming years.