Finance Minister Nirmala Sitharaman created history on February 1, 2025, by presenting the Union Budget for the eighth consecutive time. This marks the second full financial budget of the Modi government’s third term.
In Union Budget 2025, Finance Minister Nirmala Sitharaman emphasised India’s position as the world’s fastest-growing major economy. She described the next five years as an opportunity for ‘Sabka Vikas’, ensuring balanced growth across all sectors.
The budget focuses on the poor, youth, farmers, and women, proposing development measures across ten key areas. The vision of a ‘Viksit Bharat’ includes zero poverty, 100% quality education, affordable healthcare, skilled employment, 70% economic participation of women, and positioning India as the global food basket through enhanced agricultural productivity.
Let’s delve into the key aspects, major announcements, and highlights of Union Budget 2025 in detail:
Key Highlights
- According to Finance Minister Nirmala Sitharaman, the fiscal deficit for FY26 is projected to be 4.4% of GDP.
- A new Income Tax Bill will be introduced next week.
- To boost domestic manufacturing, taxes have been waived on cobalt powder, lithium battery scrap, lead, zinc, and 12 other minerals.
- Custom duty on flat LED panels has been increased from 10% to 20%.
- The tariff structure has been simplified, reducing seven more tariff rates, leaving only eight in place.
- An interest-free 50-year loan of Rs 1.5 lakh crore has been allocated to states for infrastructure development.
- 36 life-saving drugs have been exempted from custom duty, making healthcare services more affordable and accessible.
Agriculture: The Primary Growth Engine
Recognising agriculture as the backbone of the Indian economy, Finance Minister Nirmala Sitharaman announced several significant schemes. Under the ‘PM Dhan Dhanya Krishi Yojana,’ 100 agricultural districts will be developed. A national mission will be launched for high-yield seeds, along with a comprehensive program for fruits and vegetables in collaboration with state governments. A Makhana Board will be established in Bihar to support farmers.
Under the Kisan Credit Card (KCC) scheme, short-term loan limits for 7.7 crore farmers, fishermen, and dairy farmers have been increased from Rs 3 lakh to Rs 5 lakh. To achieve self-sufficiency in urea production, a new plant with a capacity of 12.7 lakh metric tons will be set up in Assam.
MSME Sector
The MSME sector is the second major growth engine of the Indian economy, driving both manufacturing and services. The finance minister highlighted that India has 5.7 crore MSMEs, over 1 crore of which are registered. These businesses contribute 36% to India’s manufacturing output and account for 45% of exports. To enhance their capacity, facilitate technological advancement, and improve access to capital, the investment and turnover limits for MSMEs will be increased by 2.5 and 2 times, respectively.
To improve credit availability, the credit guarantee cover will be expanded, including support for startups. Under the ‘Fund of Funds’ initiative, over Rs 91,000 crore has already been invested in startups. This will be further strengthened with an additional Rs 10,000 crore contribution to a new Fund of Funds. Additionally, a new scheme will be introduced for 5 lakh women entrepreneurs from Scheduled Castes (SC) and Scheduled Tribes (ST), helping them start businesses for the first time.
National Manufacturing Mission: Boosting ‘Make in India’
To further strengthen the ‘Make in India’ initiative, Finance Minister Nirmala Sitharaman announced a National Manufacturing Mission. This mission aims to support small, medium, and large industries, making India a global manufacturing hub. The focus will be on promoting clean tech manufacturing, developing a robust ecosystem for solar cells, electric vehicle batteries, motors, controllers, wind turbines, and grid-scale batteries.
Major Relief for Gig Workers
A major relief was announced for gig workers, with Finance Minister Nirmala Sitharaman stating that they will now receive registration and insurance facilities on the e-Shram portal. This move will benefit approximately 1 crore gig workers. The e-Shram portal serves as a ‘one-stop solution’ for unorganised sector workers, streamlining the registration process and ensuring access to government welfare schemes.
Nuclear Energy Mission: Targeting 100 GW by 2047
To advance India’s energy transition goals, Finance Minister Nirmala Sitharaman emphasised the need to develop at least 100 gigawatts of nuclear energy by 2047. A Nuclear Energy Mission will be launched with an initial allocation of Rs 20,000 crore for research and development on small and modular reactors. The goal is to operationalise at least five domestically developed small modular reactors by 2033.
New Income Tax Bill to be Introduced Next Week
Finance Minister Nirmala Sitharaman announced that a new Income Tax Bill will be presented next week. She stated, “I propose to introduce a new Income Tax Bill next week.” This bill aims to improve the tax system and simplify procedures for taxpayers. Additionally, she announced that individuals earning up to Rs 12 lakh per year will not be required to pay income tax.
Wrapping Up
Union Budget 2025 presents a strong roadmap for transforming India into a developed and prosperous nation. With a focus on the poor, youth, farmers, and women, the budget promotes balanced development and social equity. Provisions in agriculture, MSME, manufacturing, clean energy, and healthcare sectors are key steps toward self-reliance and strengthening India’s global standing. Additionally, initiatives like the new Income Tax Bill and tariff simplifications will provide relief to both individuals and businesses.
*This article is for informational purposes only. This is not investment advice.
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