A Vision for Resilient and Inclusive India: Decoding the Union Budget 2025-2026

Introduction

As India strides confidently into the first quarter of the 21st century, its economic landscape remains dynamic and full of potential. The world watches with keen interest as this rising powerhouse continues to defy global headwinds and sets ambitious targets for inclusive development and sustainable growth. Against this backdrop, the Union Budget 2025-2026, presented by Finance Minister Nirmala Sitharaman, becomes a defining moment in India's journey toward becoming a "Viksit Bharat" (Developed India).

In her budget speech, Sitharaman emphasized the government's commitment to fostering inclusive growth, stimulating private sector investments, and uplifting the sentiments of households across the nation. With a focus on bolstering key sectors such as agriculture, manufacturing, exports, and innovation, the budget seeks to create a holistic framework that addresses the immediate needs of the economy while laying the foundation for long-term prosperity.

The emphasis on inclusivity is evident in the budget's multi-pronged approach, aiming to empower marginalized sections, stimulate entrepreneurship, and fortify India's economic infrastructure. By quoting the great Telugu poet Gurajada Appa Rao, Sitharaman reminded the nation, “Desamante Matti Kaadoi, Desamante Manushuloi” which means "A country is not just its soil, a country is its people." This philosophy encapsulates the essence of the budget, which is designed to uplift the lives of all citizens, bridge regional disparities, and stimulate balanced economic growth.

Agriculture as the First Growth Engine

Agriculture remains a vital pillar of the Indian economy, supporting millions of livelihoods and ensuring food security. Recognizing the sector's importance, the budget introduces a slew of measures to modernize agricultural practices, enhance productivity, and improve farmer welfare.

F.M pronounced Prime Minister Dhan-Dhaanya Krishi Yojana as a agriculture engine, inspired by the success of the Aspirational Districts Program, this initiative targets 100 Agri-districts with low productivity and below-average credit parameters. The program aims to:

• Improve irrigation infrastructure
• Enhance post-harvest storage facilities
• Promote crop diversification and sustainable agricultural practices
• Facilitate long-term and short-term credit availability

By converging existing schemes and implementing specialized measures, this program is expected to benefit over 1.7 crore farmers.

Budget specially focused on the mission for Aatmanirbharta in Pulses with a special focus on Tur, Urad, and Masoor, this six-year mission aims to achieve self-reliance in pulses production. The initiative emphasizes:

• Development of climate-resilient seeds
• Enhanced protein content in pulses
• Improved post-harvest storage and management
• Assured remunerative prices for farmers

Central agencies such as NAFED and NCCF will play a crucial role in procuring these pulses from registered farmers.

Makhana Board in Bihar was also highlighted in budget, Bihar's unique position as a major producer of makhana has led to the establishment of a dedicated Makhana Board. This initiative seeks to:

• Improve production, processing, and value addition of makhana
• Organize farmers into Farmer Producer Organizations (FPOs)
• Provide training and ensure access to government schemes

Budget notified that National Mission on High-Yielding Seeds will be programmed and this mission will focus on developing and propagating seeds with high yield, pest resistance, and climate resilience. Strengthening the research ecosystem and ensuring the commercial availability of advanced seed varieties are key objectives.

The budget also emphasizes the untapped potential of the marine sector and aims to improve cotton farming productivity through a dedicated five-year mission.

Empowering MSMEs as the Second Growth Engine

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s economy, contributing significantly to employment and exports. The budget introduces several measures to bolster this sector and foster entrepreneurship. The Micro, Small, and Medium Enterprises (MSMEs) sector is a key pillar of India’s economy, contributing 36% to manufacturing output, 45% to exports, and employing over 11 crore people. Recognizing MSMEs as a major force driving economic growth, the Budget 2025-26 has introduced a multi-faceted strategy to provide them with financial support, market access, digital infrastructure, and policy incentives.

The objective is to help MSMEs scale up, integrate into global supply chains, and become more competitive while retaining their ease-of-doing-business benefits. The government’s approach is centered on credit expansion, technological upgradation, entrepreneurship support, and manufacturing incentives, ensuring MSMEs play a transformative role in India’s journey towards "Viksit Bharat."

To facilitate the growth and expansion of MSMEs, the government has revised the classification criteria by increasing investment and turnover limits by 2.5 times. This allows MSMEs to grow without losing their official classification and the associated benefits such as priority sector lending, tax incentives, and government procurement advantages. The change encourages businesses to invest in technology, workforce expansion, and capacity enhancement, fostering an ecosystem where small businesses can scale up sustainably.

Additionally, this revision is expected to boost job creation as MSMEs will now have the confidence to expand operations without regulatory constraints, ensuring higher efficiencies and better market competitiveness.

The budget also dealt with ways for boosting credit availability and financial inclusion. One of the biggest challenges MSMEs face is access to credit, which limits their ability to invest in new technology, expansion, and working capital needs. The Budget 2025-26 has significantly enhanced credit availability to MSMEs through multiple financial interventions.

• Firstly, the Credit Guarantee Scheme has been strengthened. The credit guarantee cover for Micro & Small Enterprises has been increased from ₹5 crore to ₹10 crore, allowing easier access to loans. Similarly, startups will benefit from a higher credit guarantee cover of ₹20 crore, encouraging innovation-driven enterprises to thrive. Additionally, well-run exporter MSMEs can now access term loans up to ₹20 crore, ensuring that businesses engaged in international trade have the necessary liquidity to scale their operations.
• A new initiative for micro-enterprises is the introduction of customized Credit Cards with a ₹5 lakh limit for businesses registered on the Udyam portal. This initiative will help small businesses secure quick funding without excessive paperwork. The first phase aims to issue 10 lakh such credit cards within the first year, significantly improving financial inclusion for small enterprises.
• Furthermore, the government has announced an additional ₹10,000 crore for the Fund of Funds for Startups, providing venture capital support to high-potential businesses. This fund will encourage private investment in emerging industries, ensuring a steady flow of capital for MSMEs engaged in high-growth sectors.

The budget of this year also focused on encouraging First-Time Entrepreneurs & Promoting Inclusivity and to encourage entrepreneurship among underrepresented groups, the government has launched a dedicated scheme for first-time entrepreneurs, particularly targeting women, Scheduled Castes (SC), and Scheduled Tribes (ST). Under this initiative, 5 lakh first-time entrepreneurs will receive loans of up to ₹2 crore over the next five years.

This scheme is modeled on the successful Stand-Up India scheme, which has empowered thousands of entrepreneurs by providing access to capital. In addition to financial assistance, online capacity-building programs will be introduced to train entrepreneurs in business management, financial planning, and market strategies. This initiative ensures that new businesses have the necessary skills and resources to succeed, fostering a culture of innovation and self-reliance.

The Budget 2025-26 acknowledged the importance of labor-intensive industries in generating employment and driving exports. To further support these sectors, a Focus Product Scheme has been introduced for the footwear and leather industry.

• This initiative will increase production efficiency, improve quality standards, and enhance global competitiveness. The expected impact includes the creation of 22 lakh jobs, a turnover of ₹4 lakh crore, and exports exceeding ₹1.1 lakh crore.

The toy industry is another area where India has significant potential to become a global manufacturing hub. The government has announced a specialized scheme for the toy sector, focusing on cluster development, skill training, and infrastructure enhancement. By promoting locally produced, high-quality, and innovative toys, this initiative will reduce reliance on imports while creating thousands of jobs.

The food processing industry, which plays a crucial role in value addition for agricultural products, will also receive a boost with the establishment of a National Institute of Food Technology, Entrepreneurship, and Management in Bihar. This will serve as a center for skilling, entrepreneurship training, and R&D in food processing, particularly benefiting farmers and rural entrepreneurs.

This budget also discussed the modus of strengthening of manufacturing & Driving ‘Make in India’ and to achieve the desirable goal The National Manufacturing Mission, introduced in this budget, aims to enhance domestic production across all sectors by providing policy support, execution roadmaps, and governance mechanisms.

• It will focus on improving the ease and cost of doing business, ensuring a future-ready workforce, fostering a dynamic MSME sector, promoting technology adoption, and ensuring the availability of high-quality products.

A significant part of this mission is the promotion of clean tech manufacturing, including solar PV cells, EV batteries, electrolyzers, wind turbines, and high-voltage transmission equipment. By incentivizing domestic production in these sectors, India will reduce import dependency while fostering a robust green technology ecosystem.

In furtherance the budget talked of leveraging digital & technological advancements and to help MSMEs adapt to Industry 4.0, the budget introduces measures to support digitization and automation.

• The government will provide financial incentives for MSMEs to invest in cloud computing, artificial intelligence, and digital payments infrastructure.
• Additionally, a Deep Tech Fund of Funds will be launched to support next-generation startups in AI, machine learning, and robotics, ensuring that Indian MSMEs remain at the forefront of global technological advancements.

Another key initiative is the integration of MSMEs into global supply chains. The government will provide support for exporters to navigate non-tariff trade barriers and develop customized solutions to meet global quality standards. By fostering better trade facilitation and logistics support, MSMEs will have enhanced access to international markets, strengthening India’s export base.

Investing in People and Infrastructure

The Union Budget 2025-26 places a strong emphasis on human capital development and infrastructure expansion, recognizing that a nation's progress is intricately tied to the well-being of its people and the strength of its infrastructure. By investing in education, healthcare, nutrition, and connectivity, the government aims to lay the foundation for long-term economic growth, enhance quality of life, and improve access to essential services for all citizens. The budget’s approach integrates social welfare with economic modernization, ensuring that India’s growth story is both inclusive and sustainable.

A. Investing in People: Education, Healthcare, and Social Development 

Recognizing that a well-educated and healthy population is the backbone of any developed economy, the government has introduced several key initiatives to improve learning outcomes, expand healthcare access, and strengthen social security programs.

One of the most significant measures in this regard is the Saksham Anganwadi and Poshan 2.0 program, which aims to eradicate malnutrition and support maternal and child health. This initiative directly benefits over 8 crore children, 1 crore pregnant women, and 20 lakh adolescent girls, providing them with fortified food, essential vitamins, and iron supplements.

Given that malnutrition affects both physical and cognitive development, this program plays a crucial role in ensuring that children grow up healthier and perform better academically. Anganwadi centers will be modernized with digital tracking tools, improved storage facilities, and better-trained staff, allowing for more effective monitoring of children’s nutritional progress. The government has also integrated this program with healthcare initiatives, ensuring that pregnant women receive regular medical check-ups and immunizations, reducing maternal and infant mortality rates.

Another landmark initiative in this budget is the expansion of IITs and medical education, aimed at creating a future-ready workforce that can drive India’s technological and healthcare sectors. India’s engineering institutions have played a pivotal role in fostering innovation and entrepreneurship, and the government plans to strengthen this ecosystem by

• expanding infrastructure in five IITs, enabling them to accommodate 6,500 additional students.
• To ensure that India meets its growing healthcare needs, the budget also proposes the addition of 10,000 medical seats, significantly boosting the availability of trained doctors and healthcare professionals. This initiative is part of a broader effort to increase India's doctor-to-patient ratio, thereby improving access to medical care, particularly in rural and underserved areas.
• Healthcare infrastructure expansion is further reinforced by the establishment of 200 Day Care Cancer Centers in district hospitals, a move designed to enhance cancer diagnosis and treatment accessibility across the country. Cancer treatment in India is often expensive and concentrated in metropolitan hospitals, forcing patients from smaller towns and villages to travel long distances for chemotherapy and specialized care. These new centers will help decentralize cancer treatment, ensuring early detection and affordable care for millions of patients. Equipped with modern diagnostic tools, trained oncologists, and financial assistance schemes for low-income families, these centers are expected to significantly improve cancer survival rates in India.

The budget also includes several employment-focused initiatives, ensuring that urban and rural populations have access to stable livelihoods. The revamped PM SVANidhi scheme aims to

• Support street vendors by providing them with enhanced micro-loans,
• UPI-linked credit cards, and training in financial literacy, helping them expand their businesses and transition into formal financial systems.
• Additionally, the social security scheme for online gig workers will bring 1 crore platform-based workers under a structured safety net, providing them with identity cards, health insurance, and pension benefits. This initiative recognizes the growing importance of gig and digital economy jobs, ensuring that workers in this sector receive the same protection as those in traditional employment models.

B. Investing in Infrastructure: Strengthening Connectivity, Urban Development, and Energy Security 

Infrastructure development is a key driver of economic growth and employment generation, and the Budget 2025-26 includes large-scale investments to improve transportation networks, water supply systems, and urban planning.

The government has launched an ambitious ₹10 lakh crore Asset Monetization Plan, designed to leverage underutilized public assets such as highways, ports, and railways, unlocking capital for new infrastructure projects. This initiative is expected to accelerate private sector investments, improve asset efficiency, and create millions of jobs in construction, logistics, and engineering.

To support state-led infrastructure development, the budget also allocates ₹1.5 lakh crore in interest-free loans to states, enabling them to undertake critical capital expenditure projects. This funding will be used for

• Building highways, metro rail systems, industrial parks, and smart cities, ensuring that all regions of India benefit from economic growth.

The government is also encouraging states to prepare project pipelines under the Public-Private Partnership (PPP) model, allowing private investors to co-develop infrastructure projects in transportation, renewable energy, and digital services. By ensuring efficient execution and regulatory oversight, these partnerships will help reduce costs and improve service delivery.

A key focus of the infrastructure push is ensuring universal access to potable water, and in line with this goal, the Jal Jeevan Mission has been extended until 2028. Over the past few years, this program has successfully provided piped water connections to 15 crore rural households, significantly improving sanitation and public health outcomes. The new budget allocation

• Ensures that 100% potable water coverage is achieved nationwide, with special attention to drought-prone and water-scarce regions.
• The mission also prioritizes the sustainability of water sources, incorporating rainwater harvesting and groundwater recharge projects to mitigate climate-related water shortages.

Transportation and energy infrastructure also receive substantial funding, ensuring that India’s cities and industries remain globally competitive. The expansion of the UDAN regional connectivity scheme will

• See 120 new airports and helipads developed, improving air travel accessibility for smaller towns and remote regions.
• Similarly, a greenfield airport will be developed in Bihar, catering to the rising demand for air travel in the state.

On the maritime front, the revamp of the Shipbuilding Financial Assistance Policy and the creation of a ₹25,000 crore Maritime Development Fund aim to boost India’s domestic shipbuilding industry, reducing dependency on foreign-built vessels and supporting local manufacturers.

The government is also taking decisive steps toward achieving energy security and environmental sustainability by investing in green energy projects. Large-scale funding has been earmarked for solar power grids, wind energy farms, and electric vehicle (EV) charging stations, ensuring that India transitions toward a low-carbon economy.

The expansion of India’s nuclear energy capacity is another critical step toward reducing dependence on fossil fuels, with the government announcing plans to develop 100 GW of nuclear power by 2047. Additionally, the introduction of a new Nuclear Energy Research Mission, with an outlay of ₹20,000 crore, aims to develop Small Modular Reactors (SMRs), which will provide cost-effective and scalable clean energy solutions.

The integration of digital technology in infrastructure planning is another key highlight of this budget. The Geospatial Mission, powered by the PM Gati Shakti platform, will leverage AI-driven satellite mapping and GIS-based analytics to streamline urban planning, land record management, and disaster resilience. This initiative will help governments and private investors plan large-scale projects more efficiently, reducing delays and cost overruns.

Taxation and Fiscal Policies

The Union Budget 2025-26 introduces a series of taxation and fiscal reforms aimed at simplifying tax structures, reducing compliance burdens, and increasing transparency in tax administration. These measures seek to enhance voluntary compliance, reduce litigation, and provide greater tax certainty for individuals and businesses. With a balanced approach that ensures both revenue generation and economic relief, the budget’s tax reforms focus on promoting disposable income, incentivizing entrepreneurship, and making India a more attractive destination for global investment.

1. Personal Income Tax Relief: Enhancing Disposable Income and Boosting Consumption 

One of the most significant tax-related announcements in the budget is that the tax-free income limit has been raised to ₹12 lakh, benefiting middle-class taxpayers. Salaried individuals can claim up to ₹12.75 lakh in tax-free income, considering the standard deduction. This move provides substantial relief to the middle-class and salaried individuals, increasing their disposable income and encouraging higher consumer spending.

• The new tax structure features revised slabs, with rates progressively increasing for higher-income groups.  A revised tax structure offers reduced rates across multiple income slabs, with rates ranging from 0% for incomes up to ₹4 lakh to 30% for incomes above ₹24 lakh. This ensured that those with lower incomes benefit from tax savings while maintaining revenue neutrality for the government.
• The government aims to boost private consumption, which has been a major driver of GDP growth, by allowing taxpayers to retain more earnings and spend or invest in key sectors such as housing, education, and insurance.
• The reforms are also expected to improve tax compliance as the tax rebates ensure that taxpayers with incomes up to ₹12 lakh will have no tax liability. This made the budget simpler and a more taxpayer-friendly system which will encourage voluntary disclosures and reduce tax evasion.
• Taxpayers now have up to four years to file updated returns, providing greater flexibility to correct errors and omissions. Nearly 90 lakh taxpayers have already benefited from the government's trust-based approach to compliance.

To understand, F.M portrayed the example that “A taxpayer in the new regime with an income of 12 lakh will get a benefit of 80,000 in tax (which is 100% of tax payable as per existing rates). A person having an income of 18 lakh will get a benefit of  70,000 in tax (30% of tax payable as per existing rates). A person with an income of 25 lakh gets a benefit of 1,10,000 (25% of his tax payable as per existing rates).” With these changes, India’s personal tax system becomes more competitive, aligning with global best practices while ensuring progressive taxation.

2. Fiscal Policy Measures 

The government remains committed to fiscal consolidation, targeting a fiscal deficit of 4.4% of GDP in 2025-26. Net market borrowings are projected at ₹11.54 lakh crore, with a focus on sustainable debt management.

• Support to States: A 50-year interest-free loan of ₹1.5 lakh crore to states will support capital expenditure and incentivize reforms. The asset monetization plan for 2025-30 aims to mobilize ₹10 lakh crore for new infrastructure projects.

3. Ease of Doing Business: Creating a Business-Friendly Tax Environment 

The budget introduces several measures aimed at improving the ease of doing business, ensuring that India remains one of the most competitive global markets for trade and investment.

• The introduction of standardized tax dispute resolution mechanisms will ensure that companies, particularly MSMEs and startups, do not face unnecessary financial burdens due to prolonged tax litigation.
• The expansion of safe harbor rules will protect businesses from excessive tax scrutiny, allowing them to operate with greater financial stability and predictability.
• The government is also working on digitizing corporate tax compliance, reducing paperwork, and ensuring that businesses can fulfill tax obligations seamlessly through digital platforms.

These initiatives reflect India’s commitment to tax transparency, investor confidence, and streamlined regulatory processes, ensuring sustainable economic growth and a thriving business ecosystem.

Environmental and Technological Reforms: A Green and Digital Future

The Budget 2025-26 underscores India’s commitment to sustainability and technological advancement, ensuring that economic growth is aligned with environmental responsibility and digital transformation. The government has earmarked significant resources for clean energy production, geospatial infrastructure, and cutting-edge technological research, reinforcing India’s leadership in global sustainability and innovation.

In this arena, budget focused on clean tech manufacturing which talked of the components, which could accelerate India’s green industrial revolution and as part of it "Make in India: Green Energy" strategy is being introduced by the government for the domestic manufacturing of renewable energy components, ensuring that India transitions towards self-sufficiency in clean energy production.

• The budget provides production-linked incentives (PLIs) for manufacturers of solar PV cells, electric vehicle (EV) batteries, and wind turbines, ensuring that India becomes a global hub for clean energy technology.
• The initiative will not only reduce dependency on imported solar modules and battery storage solutions but also create thousands of jobs in the clean energy sector.
• The government has also expanded financial support for R&D in energy storage solutions, focusing on developing next-generation lithium-ion and sodium-ion batteries, which are critical for India’s electric mobility and grid storage capabilities.

This initiative is expected to position India as a leader in clean energy exports, reducing the country’s carbon footprint while generating substantial economic benefits.

Nuclear Energy Mission: Expanding Clean and Reliable Power

To further diversify India’s energy mix, the budget has introduced an ambitious Nuclear Energy Mission, targeting 100 GW of nuclear energy production by 2047.

• This initiative will see the development of Small Modular Reactors (SMRs), allowing for scalable and decentralized nuclear energy production.
• The government has also allocated ₹20,000 crore towards nuclear research and development, ensuring that India stays at the forefront of next-generation energy solutions.

With these measures, India is taking decisive steps toward achieving net-zero emissions, ensuring long-term energy security and sustainability.

The budget also included the ambit of the National Geospatial Mission for modernizing infrastructure and urban planning. The National Geospatial Mission, powered by the PM Gati Shakti platform, aims to leverage AI-driven geospatial data for efficient infrastructure planning and land management.

• This initiative will ensure accurate land records, smarter urban development, and better disaster management strategies.
• Government departments, businesses, and research institutions will have access to real-time geospatial data, enabling data-driven decision-making in infrastructure development.

By integrating GIS mapping, AI-based analytics, and satellite imagery, the mission will revolutionize how India plans and executes large-scale infrastructure projects.

Sustainable Tourism and Energy Initiatives: Integrating Green Practices into Economic Growth

The budget also promotes sustainable tourism and medical tourism, ensuring that economic activities align with environmental conservation.

• The government has introduced policies for better destination management, ensuring that tourist hotspots are preserved and developed sustainably.
• Streamlined e-visa services for international visitors will boost medical tourism, positioning India as a global destination for affordable and high-quality healthcare services.
• Additional funding has been allocated to green energy initiatives within the tourism sector, such as solar-powered tourist infrastructure and electric transport in eco-sensitive zones.

These initiatives ensure that India’s economic growth remains ecologically responsible, supporting sustainable business practices while promoting tourism and healthcare services.

Conclusion: Towards a Resilient and Prosperous India

The Union Budget 2025-2026 stands as a testament to India's resolve to navigate global uncertainties and lay the groundwork for a prosperous future. By empowering agriculture, strengthening MSMEs, investing in human capital, and simplifying taxation, the government has laid down a transformative blueprint for the nation.

As India marches towards becoming a global economic leader, this budget serves as a reminder that the journey is as significant as the destination. With bold reforms, targeted investments, and an inclusive growth strategy, the vision of "Viksit Bharat" seems not only achievable but inevitable. As geopolitical and economic uncertainties loom large on the global horizon, India's response has been bold and forward-looking. By focusing on transformative reforms, significant investments, and targeted social welfare measures, the Union Budget 2025-2026 aims to harness the country's potential for greater global positioning and prosperity.

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