Know the Key Insights of Union Budget 2025-26: An Economic Reflection

By Dr. Abdur Rashid Ahmed

Finance Minister of India, Nirmala Sitharaman introduced the Union Budget of India for the fiscal year 2025-26 in February 2025 with a wide range of optimistic reforms and initiatives intended to spur economic growth, support different sectors, and offer relief to taxpayers focusing on ‘Sabka Vikas’.

However, the following reforms and initiatives are very important and should be understood clearly being one of the economic agents in the whole economy.

Reforms in Education:

1. • Almost 50,000 Atal Tinkering Labs will be set up in Govt. schools in next 5 years.

• • Bharatiya Bhasha Pustak Scheme to provide digital-form Indian language books for school and higher education.

• • Centre of Excellence in Artificial Intelligence for education will be set up.

• • Broadband internet connectivity will be provided in all Govt. schools.

Reforms in Health Sector:

• • 5 National Centres of Excellence for skilling will be set up with global expertise.

• • 200 Day Care Cancer Centres in all district hospitals will be established in the next 3 years.

• • Capacity expansion for medical education and infrastructure development in IITs will be carried out.

• • Besides, broadband internet connectivity will be provided in all Govt. hospitals.

Taxation Reforms:

• • Budget provides revised tax slabs that will ease the tax burden on middle and upper middle class taxpayers whose income crosses ₹12 lakh. Now, individuals earning up to ₹12 lakh annually are exempted from income tax.

• • The budget proposes rationalization measures including increase in the limit of TDS on interest for the senior citizens from ₹50,000 to ₹1 lakh and increase in the limit of annual TDS on rent from ₹2.4 lakh to ₹6 lakh.

• • Any withdrawal from the National Savings Scheme that was made after August 29, 2024 will be tax exempt. At the same time, the deadline to file updated returns of income tax has been extended to a period of four years instead of two.

Agricultural Initiatives:

• • Revitalizing the agricultural sector is the priority in the budget. A new scheme to raise the agricultural productivity as well as to ensure food security in 100 districts helping 1.7 crore farmers under Prime Minister Dan-Dhaanya Krishi Yojana.

• • Kisan Credit Card (KCC) scheme will now offer enhanced short term loans with the introduced limits of up to ₹5 lakh to about 7.7 crore farmers, fishermen and dairy farmers.

• • A six years initiative for making India self sufficient on pulses especially Tur, Urad and Masoor to reduce pulses imports under Pulses Self Reliance Mission.

• • A Board dedicated to the makhana (fox nuts) board will be established in Bihar to promote the production and marketing of makhana and will create a link between farmers, industries, and traders.

Science and Innovation:

• • Private sector driven research, development and innovation initiative with ₹20,000 crore allocation, aimed for collaboration with industry and academia.

• • Almost 10,000 fellowships will also be provided to scale technological research in premier institutions such as IITs and IISc through PM Research Fellowship.

• • A new gene bank (Second Gene Bank) holding 10 lakh germplasm lines will be set up to achieve future food and nutritional security through preserving of diverse crop genetics.

• • Additional ₹10,000 crore ‘Fund of Funds for Startups’ will be set up.

Export Promotion and Manufacturing:

• • For Electronics and EVs incentives, the budget envisages customs duty exemptions on open cells used in LED/LCD TVs and capital goods for lithium ion battery based used in manufacture of electronics and electric vehicles.

• • For Maintenance, Repair, and Overhaul (MRO) Services, an exemption for 10 years for the goods used for shipbuilding and ship breaking has been provided to support the industry’s competitiveness.

• • Time bound provisional assessments and voluntary declaration provisions are introduced to facilitate trade to ease of customs procedures and reduction of compliance burden on exporters and importers.

• • Basic customs duties on wet blue leather are exempted so as to enable increased local consumption and its enhancement as an export product.

Infrastructure and Development:

• • City redevelopment projects to modernize urban infrastructure and enhance living standards with proposals to funnel ₹1 lakh crore to be funded by Urban Challenge Fund.

• • Jal Jeevan Mission has been extended till 2028 and is to be accomplished to make 100 percent potable tap water coverage to rural households as a step to tackle the critical issue of water.

• • Maritime Development Fund has been comprised with corpus of ₹25,000 crore to boost infrastructure of ports, support coastal shipping and others part of the maritime economy.

• • Under the UDAN scheme, 120 more new destinations will come under the regional connectivity scheme to provide easier air travel connectivity across the country.

Energy and Environment:

• • Focusing on sustainable energy solutions, a dedicated mission for research and development of Small Modular Reactors (SMRs) to diversify the energy portfolio of India and reduce carbon emissions.

• • Budget proposes to allow basic customs duty exemptions on cobalt powder, lithium ion battery waste and other such critical minerals to support manufacture of lithium ion batteries for mobile phones and electric vehicles.

Financial Sector Reforms:

• • In order to attract foreign investment and simplify tax, Foreign Direct Investment (FDI) in the insurance sector has been allowed from 74% to 100% to attract more foreign participation and bring more capital into the country.

• • There is a new tax bill which targets simplification of the tax regime, lowering of litigations, and making compliance for taxpayers easier.

Women Empowerment & Employment:

1. • Term loans up to ₹2 crore for first-time women entrepreneurs will be provided in the next 5 years.

• • Increased funding for self-help groups (SHGs) to boost women’s participation in economic activities.

• • Besides, maternity benefits extended, with more financial support for pregnant and lactating mothers.

To sum up, it clearly discernible that this budget will provide the solid foundation for India’s prime vision of ‘Viksit Bharat@2047’.