Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 today, unveiling significant tax reforms and strategic initiatives aimed at bolstering economic growth, enhancing middle-class spending power, and promoting inclusive development across various sectors.
Key Highlights:
Personal Income Tax Overhaul:
In a move to stimulate domestic consumption, the government has raised the income tax exemption threshold to ₹12 lakh per annum, up from the previous ₹7 lakh. The revised tax slabs are as follows:
- Income up to ₹4 lakh: Nil
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹20 lakh: 20%
- Above ₹20 lakh: 30%
These adjustments aim to increase disposable incomes, thereby boosting savings and consumer spending.
Agriculture and Farmer Welfare:
The budget introduces a six-year program to enhance the production of pulses and cotton, aiming to reduce import dependence. State agencies will procure pulses at guaranteed prices to support farmers. Additionally, a “National Mission” will focus on developing high-yielding seed varieties to address challenges posed by shrinking farmlands and climate variability.
Manufacturing and Industry Support:
To strengthen the manufacturing sector, the government plans to launch focused schemes for the footwear, leather, and toy industries. These initiatives aim to boost domestic production, create jobs, and enhance export competitiveness.
Foreign Direct Investment (FDI) Reforms:
In a significant policy shift, the FDI limit in the insurance sector has been raised to 100%. This move is expected to attract substantial foreign capital, fostering competition and improving service quality in the insurance market.
Infrastructure Development:
The budget allocates ₹11.2 trillion for capital expenditure, focusing on infrastructure projects such as roads, railways, and urban development. This investment aims to stimulate economic activity and generate employment opportunities.
Fiscal Outlook:
The government projects a fiscal deficit of 4.4% of GDP for 2025-26, aligning with its commitment to fiscal consolidation while supporting growth initiatives.
Expert Reactions:
Economists and industry leaders have largely welcomed the budget, particularly the tax reforms aimed at increasing middle-class spending power. However, some have expressed concerns regarding the modest increase in capital expenditure and its potential impact on infrastructure development.
Conclusion:
The Union Budget 2025-26 presents a comprehensive plan to drive economic growth through tax reforms, sector-specific support, and strategic investments. Its success will hinge on effective implementation and the government’s ability to balance fiscal discipline with developmental priorities.