India is on a strong trajectory of economic progress, with GDP projected to grow by around 6.3% to 6.8% in the current fiscal year. The country has effectively overcome global economic challenges, reducing their impact. The new budget represents a crucial turning point in the nation’s economic path, focusing to accelerate growth, secure inclusive development, enhance spending power of India’s rising middle class, invigorate private sector investments, uplift household sentiments.

In this article, we will focus on some of the key points of the 2025 Budget including both the Budget Priorities and Tax Modifications.

– Budget Priorities:

The year 2025 budget mainly focuses on Agricultural Growth and Building Rural Prosperity, Supporting MSMEs and Furthering Make in India, Investing in People, Economy and Innovation, Financial Sector Reforms and Development, Tax Reforms and Regulatory Reforms.

According to the official budget report, reforms will serve as the fuel for progress, driven by the guiding spirit of inclusivity, with the ultimate goal of achieving a Viksit Bharat (Developed India).

The government’s budget priorities center around four key pillars of development: Agriculture, Investments, MSMEs, and Exports.

1. Agriculture

Spurring Agricultural Growth & Building Rural Prosperity

Scheme 1: Prime Minister Dhan-Dhaanya Krishi Yojana Developing Agri Districts Programme:

This scheme aims to cover 100 districts and help around1.7 crores farmers.

Scheme 2: Mission for Cotton Productivity:

This scheme aims for a 5-year mission to facilitate improvements in productivity and sustainability of cotton farming.

Scheme 3: Enhanced Credit through KCC:

Provide short-term loans of up to ₹5 lakh to 7.7 crore farmers, fishermen, and dairy farmers.

Scheme 4: National Mission on High Yielding Seeds:

Focus on developing and spreading seeds that are high-yielding, pest-resistant, and climate-resilient.

Scheme 5: Makhana Board in Bihar:

It will be established to enhance production, processing, value addition, marketing, and the organization of FPOs.

2.Micro Small and Medium Scale Enterprise (MSME)

Supporting MSMEs & Furthering Make in India Inclusive Human Resource Development and Social Justice.

 Scheme 1: Credit Cards for Micro Enterprises:

The government will provide Customized Credit Cards with a ₹5 lakh limit to micro enterprises registered on the Udyam portal, issuing 10 lakh cards in the first year.

Scheme 2: Scheme for first time Entrepreneurs:

A new scheme will be launched to provide term loans up to ₹2 crore for 5 lakh first-time entrepreneurs, including women, Scheduled Castes, and Scheduled Tribes, over the next 5 years.

Scheme 3: Focus Product Scheme for Footwear & Leather Sectors:

This scheme is expected to create 22 lakh jobs, generate a turnover of ₹4 lakh crore, and exports worth over ₹1.1 lakh crore.

Scheme 4: Measures for the Toy Sector:

This scheme aims to develop clusters, skills, and a manufacturing ecosystem to create high-quality, unique, innovative, and sustainable toys that represent the ‘Made in India’ brand.

Scheme 5:  Support for Food Processing:

This scheme focuses on setting up a National Institute of Food Technology in Bihar, increasing farmers’ income, and providing skilling, entrepreneurship, and employment opportunities for the youth.

Scheme 6: Manufacturing mission with the mandate to focus on:

• Ease and cost of doing business;

• Future ready workforce for in demand jobs;

• A vibrant and dynamic MSME sector;

• Availability of technology;

• Quality products;

• Clean tech manufacturing for climate-friendly development.

3. Investments

Investing in people, economy and innovation

1. Agriculture: Gene Bank, housing 10 lakh germplasm lines, is being established to ensure future food and nutritional security.

2. Infrastructure, Healthcare and Education:

• Support to States for Infrastructure: With an outlay of ₹ 1.5 lakh crore, 50-year interest free loans to states for capital expenditure and incentives for reforms

• Urban Challenge Fund: ₹ 1 lakh crore to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water &Sanitation’

• Day Care Cancer Centres in all District Hospitals

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

• Centre of Excellence in Artificial Intelligence for education with a total outlay of ₹500 crore.

• Broadband connectivity to be provided to all government secondary schools and primary health centres in rural areas.

• Expansion of medical education: 10,000 additional seats with the goal of adding 75,000 seats in the next 5 years.

• Expansion of Capacity in IITs

• Atal Tinkering Labs: 50 Thousand Labs to be set up in government schools in next 5 years.

• PM Research Fellowship: To provide ten thousand fellowships for technological research in IITs and IISc.

4. Other schemes:

• Power Sector Reforms: States can borrow an additional 0.5% of their GSDP if they implement distribution reforms and improve intra-state transmission.

• Nuclear Energy Mission for Viksit Bharat:  Amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be made to encourage active partnership with the private sector.

• Maritime Development Fund: A corpus of ₹25,000 crore will be set up for long-term financing, with the government contributing up to 49%.

• National Geospatial Mission: The plan is to develop geospatial infrastructure and data, using PM Gati Shakti to modernize land records, urban planning, and infrastructure projects.

• Jal Jeevan Mission: The mission has been extended until 2028 with an increased total budget to achieve 100% coverage.

• UDAN (Ude Desh ka Aam Naagrik): Regional connectivity will be expanded to 120 new destinations, aiming to carry 4 crore passengers over the next 10 years.

• Asset Monetization Plan 2025-30:  It has been launched to reinvest ₹10 lakh crore in new projects.

• SWAMIH Fund-2 (Special Window for Affordable and Mid-Income Housing): ₹15,000 crore will be used to speed up the completion of one lakh dwelling units through blended finance.

• Research, Development & Innovation: ₹20,000 crore will be allocated to implement a private sector-driven Research, Development, and Innovation initiative.

• Gyan Bharatam Mission: The documentation and conservation of over 1 crore manuscripts will be done, and a National Digital Repository of Indian knowledge systems will be set up for knowledge sharing.

5. Promoting Exports

• Export Promotion Mission: Sectoral and ministerial targets will be set to provide easy access to export credit, cross-border factoring support, and assistance to MSMEs in overcoming non-tariff barriers in international markets.

• Bharat Trade Net: A digital platform, ‘Bharat Trade Net’ (BTN), will be established to streamline trade documentation and financing, with support for integration into global supply chains.

• National Framework for GCC: States will be guided to promote Global Capability Centres in emerging tier 2 cities.

• Warehousing facility for air cargo: Efforts will be made to upgrade infrastructure and warehousing for air cargo, including high-value perishable horticultural produce.

• Financial Sector Reforms and Development

1. ‘Grameen Credit Score’ framework to serve the credit needs of SHG members and people in rural areas

2. NaBFID to set up a ‘Partial Credit Enhancement Facility’ for corporate bonds for infrastructure.

3. Revamped Central KYC registry to be rolled out in 2025

4. Rationalisation of requirements and procedures for speedy approval of company mergers.

5. FDI limit for the insurance sector will be raised from 74 to 100 per cent.

– Tax Modification:

The Government has revised income tax rate in the New Regime in the budget for the year 2025-2026.

New to new comparison:

Under the new tax regime, individuals earning up to ₹12 lakh annually (₹1 lakh per month) will not be liable for personal income tax, excluding special rate income such as capital gains. For salaried individuals, the tax-free threshold rises to ₹12.75 lakh, factoring in a standard deduction of ₹75,000.

This updated framework is set to ease the tax burden on the middle class, enabling them to retain more of their earnings—boosting household consumption, savings, and investment prospects.

Apart from the above, the budget also focuses on streamlining the TDS/TCS to simplify compliance and reduce the challenges.

Conclusion:

The Union Budget 2025-26 highlights the government’s dedication to promoting sustainable economic growth by adopting a balanced strategy that includes taxation, infrastructure development, and sector-specific reforms. It strikes a balance between the economic growth, tax relief, and fiscal discipline. Key takeaways include income tax reductions, infrastructure expansion, incentives for startups and MSMEs, and support for the manufacturing sector.

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The article is authored by Ms. Ritika Sharma from Team RichVik.