Union Budget 2025-26, Check Key Highlights

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Union Budget 2025-26: On February 1, 2025, Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2025-26, outlining a series of strategic measures aimed at revitalizing India’s economy. The budget focuses on tax reforms, agricultural development, infrastructure enhancement, support for startups and MSMEs, and social welfare initiatives.

Union Budget 2025-26 Highlights

This article delves into the key provisions of the budget, their implementation timelines, and the anticipated impact on various sectors.

1. Tax Reforms: Empowering the Middle Class

To stimulate consumption and savings among the middle class, the government has introduced significant tax reforms:

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Increased Tax Exemption Limit: The tax exemption threshold has been raised to ₹12 lakh, up from ₹7 lakh in the previous fiscal year. This change allows taxpayers to retain a larger portion of their income, thereby enhancing disposable income.
Revised Tax Slabs: The maximum tax rate of 30% will now apply only to income exceeding ₹24 lakh, with reduced rates for income below this threshold. This progressive taxation structure aims to alleviate the tax burden on the salaried class.
Simplified Tax Filing: The introduction of a streamlined tax filing process is expected to reduce compliance burdens, making it easier for taxpayers to fulfill their obligations.

Implementation Date: These tax reforms are effective from the commencement of the financial year 2025-26, starting April 1, 2025.

2. Agriculture and Rural Development: Strengthening the Backbone of India

Recognizing the importance of agriculture in India’s economy, the budget allocates substantial resources to support farmers and rural development:

High-Yield Crop Programs: A national mission has been launched to enhance crop productivity, benefiting approximately 17 million farmers. This initiative aims to improve food security and farmers’ income.
Irrigation and Infrastructure Investment: An allocation of ₹1.5 lakh crore has been earmarked for irrigation projects and rural infrastructure development, ensuring sustainable water resources and improved rural connectivity.
Subsidies and Credit Access: The government has increased subsidies and facilitated easier access to credit for farmers, promoting agricultural growth and financial inclusion.

Implementation Date: These measures are set to commence in the upcoming monsoon season, with irrigation projects expected to begin by June 2025.

3. Infrastructure and Industrial Growth: Building a Robust Foundation

To bolster economic growth, the budget emphasizes infrastructure development and industrial expansion:

Record Allocation for Infrastructure: The budget includes a record allocation for railways, highways, and regional airports, aiming to enhance connectivity and stimulate economic activity.
Focus on Critical Minerals: A new initiative targets the exploration and utilization of critical minerals to strengthen India’s manufacturing sector, reducing dependence on imports and fostering self-reliance.
Smart City Expansion: The government plans to expand smart city projects and urban infrastructure, improving living standards and attracting investment.

Implementation Date: Infrastructure projects are slated to commence in the first quarter of the financial year 2025-26, with phased completions over the next two years.

4. Support for Startups and MSMEs: Fostering Innovation and Entrepreneurship

The budget introduces measures to encourage startups and micro, small, and medium enterprises (MSMEs):

Lower Interest Rates: Interest rates on business loans for startups and MSMEs have been reduced, easing financial constraints and promoting entrepreneurship.
Tax Incentives: Tax incentives have been introduced to promote innovation, artificial intelligence, and digital transformation, positioning India as a global hub for technology and innovation.
Ease of Doing Business: The expansion of ease-of-doing-business policies aims to attract global investment and simplify regulatory processes for businesses.

Implementation Date: These initiatives are effective immediately, with financial institutions expected to adjust interest rates by April 2025.

5. Social Welfare and Employment: A People-Centric Approach

The budget prioritizes social welfare and employment generation:

Increased Budget for Healthcare and Education: Significant funds have been allocated to enhance healthcare and education facilities, ensuring better access and quality services for citizens.
Skill Development Programs: Skill development initiatives are set to create 2 million new jobs, equipping the youth with necessary skills and reducing unemployment.
Support for Women Entrepreneurs: Special schemes have been introduced to support women entrepreneurs and promote financial inclusion, empowering women in the economic sphere.

Implementation Date: Healthcare and education projects are expected to commence in the first quarter of the financial year 2025-26, with skill development programs rolling out by July 2025.

6. Fiscal Policy and Economic Growth: Ensuring Stability

The budget outlines fiscal policies to ensure economic stability:

Fiscal Deficit Target: The government aims to reduce the fiscal deficit to 4.4% of GDP in 2025-26, aligning with fiscal consolidation goals.
GDP Growth Projection: The GDP growth rate is projected at 6.4% for the financial year 2025-26, reflecting optimism about economic recovery and expansion.
Revenue Measures: The budget includes measures to enhance tax compliance and broaden the tax base, ensuring sustainable revenue generation.

Implementation Date: Fiscal policies are effective from April 1, 2025, with revenue measures to be enforced throughout the financial year.

Conclusion

The Union Budget 2025-26 presents a comprehensive roadmap for India’s economic growth, focusing on tax reforms, agricultural development, infrastructure enhancement, support for startups and MSMEs, and social.