The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, introduced a series of transformative measures aimed at economic expansion, infrastructure development, and financial reforms. This budget, the first of Prime Minister Narendra Modi-led government’s third term, focuses on regional connectivity, taxation, power sector reforms, and rural development.
Tax Reforms and Reliefs
One of the most significant announcements in Budget 2025 is the new income tax relief, where no tax will be payable on income up to ₹12 lakh under the new regime. Other key changes include:
- New Income Tax Bill to be announced next week.
- Tax slabs revised, with individuals earning above ₹24 lakh subject to 30% tax.
- Increase in the tax return filing limit from 2 years to 4 years.
- Senior citizens’ tax threshold on interest income raised to ₹1 lakh.
- TDS on rent increased from ₹2.4 lakh to ₹6 lakh.
- Removal of TCS (Tax Collected at Source) on education remittances funded through loans.
Infrastructure Development and Aviation Expansion
To enhance regional connectivity, the government introduced a Modified UDAN Scheme, aiming to:
- Add 120 new destinations and cater to 4 crore additional passengers over the next decade.
- Develop helipads and smaller airports in hilly, aspirational, and northeastern districts.
- Facilitate greenfield airports in Bihar, supplementing Patna’s airport capacity and developing a brownfield airport in Bihta.
Additionally, a ₹1 lakh crore Urban Challenge Fund has been announced to transform cities into economic hubs, improve sanitation, and encourage redevelopment projects through public-private partnerships (PPPs).
Agriculture and Rural Development
In a move to boost agriculture, the Finance Minister announced financial support for the Western Kosi Canal Extension, Renovation, and Modernization (ERM) project in Mithalanchal, benefiting over 50,000 hectares of farmland. Other key agricultural reforms include:
- Jan Dhanya Krishi Yojana, targeting 100 districts with low productivity to improve crop diversification, storage, and irrigation.
- A 6-year mission to achieve self-reliance in pulses production, focusing on crops like tur and masoor.
- Establishment of a Makhana Board in Bihar to promote the cultivation and trade of the superfood.
- Expansion of Kisan Credit Cards (KCCs) with an increased loan limit from ₹3,000 to ₹5,000.
Power and Energy Reforms
The Finance Minister introduced the Nuclear Energy Mission, with an ambitious target to develop 100 GW of nuclear power by 2047. Key initiatives include:
- Amendments to the Atomic Energy Act to facilitate private sector participation.
- A ₹20,000 crore R&D initiative for Small Modular Reactors (SMRs), with a goal to deploy five SMRs by 2033.
- Additional incentives for state governments to improve electricity distribution and transmission capacity.
Boost for MSMEs and Financial Sector
Recognizing MSMEs as the second engine of growth, the government introduced:
- Customized credit cards for MSMEs.
- An expanded fund-of-funds (FoF) initiative to provide easier access to capital.
- Increase in investment and turnover limits by 2.5x and 2x, respectively.
A new Investment Friendliness Index will be launched in 2025 to encourage competitive federalism among states. The government also plans to develop a modern, trust-based regulatory framework for faster approvals of company mergers.
Affordable Housing and Welfare Schemes
- Completion of 40,000 affordable housing units in FY26.
- Establishment of SWAMI Fund 2 with ₹15,000 crore for housing development.
- Expansion of Sashakt Anganwadi and Poshan 2.0 to provide nutritional support for over 8 crore children, pregnant women, and lactating mothers.
- Infrastructure expansion in five IITs, accommodating an additional 6,500 students.
- Gig workers to be registered on the e-Shram portal, benefiting 1 crore workers.
Key Economic Figures and Fiscal Targets
- Revised fiscal deficit for FY25: 4.8%.
- Fiscal deficit target for FY26: 4.4%.
- Total receipts (excluding borrowings): ₹31.47 lakh crore.
- Net tax receipts: ₹25.57 lakh crore.
- Total expenditure: ₹47.16 lakh crore, including ₹10.1 lakh crore in capital expenditure.
Conclusion
Union Budget 2025-26 reflects the government’s commitment to inclusive economic growth, with a focus on tax reforms, infrastructure expansion, regional connectivity, and agricultural modernization. With ambitious reforms across multiple sectors, the budget aims to accelerate India’s journey toward becoming a ‘Viksit Bharat’ by unlocking economic potential and empowering citizens.