As of February 28, 2025, the Indian government has tabled the Union Budget for the year 2025-2026, setting out major initiatives and financial proposals to spur economic growth and development.
Fiscal Overview:
Fiscal Deficit Target: The fiscal deficit target for 2025-26 has been set by the government at 4.4% of GDP, down from the revised 4.8% for the current year.
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Total Expenditure and Receipts: Total receipts (net of borrowings) are placed at ₹34.96 lakh crore, while total expenditure is estimated at ₹50.65 lakh crore.
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Tax Reforms:
Personal Income Tax: The budget provides substantial relief to the middle class through taxes on annual incomes up to ₹12 lakh being exempt, along with new tax slabs for greater incomes.
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Corporate Tax: No significant announcements have been made regarding corporate tax rates.
Agriculture and Rural Development
Pulses and Cotton Output: A six-year program has been initiated to increase pulses output, which would help to curtail import dependency. Measures to increase cotton output, particularly the extra-long staple variety, have also been announced.
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Urea Plant: Proposals for setting up a new 1.2 million metric ton capacity urea plant annually to service the agricultural sector have been made.
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Help to MSMEs and Startups:
Credit Facilities: The budget seeks to increase credit support to Micro, Small, and Medium Enterprises (MSMEs) by revised classification norms and issuing credit cards to micro enterprises.
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Startup Promotion: A Fund of Funds has been created to promote startup businesses, in addition to schemes for first-time entrepreneurs.
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Infrastructure and Investment:
Capital Expenditure: The budget lays out a moderate hike in capital expenditure for building infrastructure in the next fiscal year.
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Public-Private Partnerships: Focus has been given to utilizing public-private partnerships to speed up infrastructure development in different sectors.
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Social Welfare and Employment:
Youth Employment Schemes: A five-scheme package, with an outlay of ₹2 lakh crore, will help provide employment and skill development opportunities to 4.1 crore youth in the next five years.
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Gig Economy Workers: The budget provides for measures regarding the registration and well-being of gig economy workers, such as health insurance measures.
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Energy and Environment:
Nuclear Energy Mission: Targeting 100 GW of nuclear energy capacity by 2047, the Nuclear Energy Mission has been initiated to diversify the energy mix and encourage clean energy.
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Green Initiatives: More funding has been allocated for greenery and environmental sustainability initiatives, including investments in alternative energy and environmentally friendly technologies.
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Financial Sector Reforms:
Insurance Sector: Foreign Direct Investment (FDI) limit in the insurance sector has been raised to 100% from 74% for insurers that invest all the premium locally with a view to bringing greater foreign investment as well as broadening market depth.
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Credit Enhancement: National Bank for Financing Infrastructure and Development (NaBFID) shall set up a Partial Credit Enhancement Facility to back corporate bonds on infrastructure projects.
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State-Federal Financial Relations:
Tax Revenue Sharing: Government suggests lowering states’ share in federal taxes from the existing 41% to at least 40% beginning in 2026, with the potential of giving the federal government an extra ₹350 billion every year.
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These programs are an indication of the government’s resolve to promoting economic growth, improving social welfare, and encouraging sustainable development during the next fiscal year.