Union Budget 2025-26: India’s Roadmap for Growth & Development | Crash Course for XAT - CAT PDF Download

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Union Budget 2025-26: Key Highlights

• The Finance Minister has presented the Union Budget 2025-26, which lays out a detailed plan for economic growth in India.
• The budget focuses on several important areas, including:
  • Agriculture
  • Micro, Small and Medium Enterprises (MSMEs)
  • Investment
  • Exports
  • Taxation
  • Social Development
• The ultimate goal of these efforts is to achieve Viksit Bharat, which means a developed and prosperous India.
  

What are the Four Engines for Development of the Budget 2025-26? 

Agriculture: Strengthening Farmers and Rural Economy

• The Prime Minister Dhan-Dhaanya Krishi Yojana aims to improve agriculture in 100 districts by enhancing crop variety, irrigation, and storage facilities after harvest.
• This initiative will boost productivity, ensure food availability, and promote sustainable farming practices.
• A six-year plan for Aatmanirbharta in Pulses will concentrate on increasing domestic production of Tur, Urad, and Masoor dal, reducing the need for imports.
• This will help stabilize domestic prices and increase farmers’ incomes.
• The loan limit for the Kisan Credit Card (KCC) has been increased from ₹3 lakh to ₹5 lakh under the Modified Interest Subvention Scheme.
• This change will enhance financial inclusion for farmers, fishermen, and dairy producers, allowing for better investment in agricultural inputs.
• A five-year mission aimed at improving Cotton Productivity will focus on scientific farming methods and technological advancements to enhance cotton yields.
• Strengthening cotton production will benefit India’s textile industry and boost global trade competitiveness.
• India Post will be revamped into a public logistics entity, promoting rural economic development and improving agriculture-related trade and supply chains.
• This transformation will link rural producers with national markets, reducing waste and increasing farmers’ profits.

MSMEs: Boosting Manufacturing and Employment

• The classification limit for MSMEs has been raised to 2.5 times investment and 2 times turnover, facilitating business expansion and operational scaling.
• Enhanced classification criteria will allow more enterprises to access benefits, promoting growth and job creation.
• MSME Credit Guarantee Scheme has been expanded to provide an additional ₹1.5 lakh crore in credit support over five years, improving liquidity for MSMEs.
• A new scheme will offer loans up to ₹2 crore to SC/ST and women entrepreneurs, benefiting 5 lakh individuals over five years, promoting financial inclusion and entrepreneurship.
• A National Manufacturing Mission will be launched to support MSMEs, including clusters for toy manufacturing and non-leather footwear production, boosting exports and positioning India as a global production hub.
• Government support for electronic equipment manufacturing will enhance Industry 4.0 capabilities and reduce import reliance, establishing India as a leader in advanced manufacturing.

Investment: Strengthening Infrastructure and Innovation

• A 50-year interest-free loan of ₹1.5 lakh crore will be allocated to states for capital expenditure and reforms, stimulating economic growth and job creation.
• The second Asset Monetization Plan (2025-30) aims to raise ₹10 lakh crore for reinvestment in new infrastructure projects, ensuring sustainable economic development.
• 50,000 Atal Tinkering Labs (ATLs) will be established in government schools over five years to promote STEM learning and innovation, equipping students with future-ready skills.
• A ₹20,000 crore fund for Research, Development, and Innovation will encourage private-sector-driven technological advancement, enhancing India’s global competitiveness in emerging technologies.
• The BharatNet Project aims to provide broadband connectivity to all government schools and rural healthcare centers, bridging the rural-urban digital divide and improving e-governance, education, and telemedicine services.

Exports: Expanding Global Trade Prospects

• The Export Promotion Mission will assist MSMEs in accessing global markets and facilitating trade, diversifying India’s trade portfolio and enhancing foreign exchange reserves.
• BharatTradeNet (BTN) will streamline international trade documentation and financing through digital public infrastructure, improving efficiency and reducing costs.
• Upgrading infrastructure and warehousing for air cargo, including perishable goods, will enhance agricultural and industrial export competitiveness.
• A National Framework for Global Capability Centres (GCCs) will promote Tier-2 cities as global IT and R&D hubs, creating high-skilled jobs and boosting India’s digital economy.
• Supporting domestic electronic equipment manufacturing will facilitate integration into global supply chains, reducing import dependency and increasing exports.

What are Other Major Highlights of the Budget 2025-26? 

Gender Budget: The gender budget allocation has risen to 8.86% of the total budget, up from 6.8% in 2024-25.. total of Rs. 4.49 lakh crore is allocated for the welfare of women and girls, marking a 37.25% increase from the previous year.

Education: The Ministry of Education has received ₹1,28,650 crore, a 6.22% increase from 2024-25. Key initiatives include expanding broadband in rural schools, establishing ATLs in government schools, and enhancing IIT infrastructure. Additionally, ₹500 crore is allocated for AI in education and ₹20,000 crore for private sector research and innovation.

Taxation and Relief for Middle Class:

• No Income Tax for individuals earning up to ₹12 lakh per annum, with ₹12.75 lakh exemption for salaried employees due to standard deductions. This puts more money in the hands of taxpayers, boosting consumption, savings, and investments.
• New Tax Slabs introduced, ranging from 5% for incomes between ₹4-8 lakh to 30% for incomes above ₹24 lakh. The simplified tax structure will enhance voluntary compliance and reduce litigation.
• TDS exemption limits increased, with interest income exemption for senior citizens raised from ₹50,000 to ₹1 lakh. This will benefit retirees by increasing disposable income, supporting financial stability for the elderly.
• Vivad Se Vishwas scheme extended, allowing taxpayers four years (instead of two) to rectify returns. Extending the dispute resolution window will reduce litigation and increase tax collection efficiency.
• Presumptive taxation introduced for non-residents providing services to Indian electronics manufacturers. This will attract more foreign expertise, fostering domestic industrial growth and innovation.

Financial Sector and Regulatory Reforms:

• FDI limit in insurance sector raised from 74% to 100%, with investments required to remain in India. Higher FDI inflows will strengthen the insurance sector, enhancing risk coverage and financial inclusion.
• Regulatory reforms proposed, including a High-Level Committee to review licenses, permits, and compliance rules. A business-friendly environment will promote entrepreneurship and ease of doing business.
• Investment Friendliness Index introduced to promote competition among states for attracting investments. Competitive federalism will drive states to create better business ecosystems, boosting economic growth.
• Partial Credit Enhancement Facility for corporate bonds to improve infrastructure financing. Easier access to corporate debt markets will facilitate large-scale infrastructure projects.
• Jan Vishwas Bill 2.0 to decriminalize over 100 business laws, reducing harassment of entrepreneurs. This will encourage risk-taking and investment, fostering a more innovation-driven economy.

Energy and Infrastructure Development:

• ₹20,000 crore allocated for Small Modular Reactors (SMRs) as part of the 100 GW nuclear energy goal by 2047. This would support clean energy expansion, ensuring sustainable power for industries and households.
• Urban Challenge Fund of ₹1 lakh crore launched to develop cities as economic hubs. This fund would enhance urban infrastructure, making cities globally competitive for businesses.
• Jal Jeevan Mission extended until 2028, ensuring 100% rural tap water connectivity. Reliable water access will improve public health, reducing waterborne diseases and rural hardships.
• Green manufacturing incentives introduced for solar PV cells, EV batteries, and wind turbines. Promoting clean-tech manufacturing will reduce dependence on imports and improve sustainability.
• UDAN Scheme expansion will connect 120 new destinations, targeting 4 crore air passengers in 10 years. Improved connectivity will enhance regional tourism, foster trade, and generate employment opportunities.

Defence, Cybersecurity, and Space Exploration:

• Increased investments in defence manufacturing, supporting AI-driven security solutions and surveillance systems. Enhancing indigenous defence technology will help to reduce reliance on imports and strengthen national security.
• Cybersecurity infrastructure upgraded, with more funds for National Cybersecurity Mission and AI-powered threat detection. This will strengthen India’s cyber resilience, protecting critical financial and infrastructure systems.
• ₹25,000 crore Maritime Development Fund launched to upgrade shipbuilding and port modernization. Improving maritime infrastructure will boost global trade efficiency and attract foreign investments.
• ISRO funding increased, with a focus on Gaganyaan, SSLV expansion, and private-sector space collaboration. Expanding India’s space sector is set to position the country as a key player in global satellite markets.
• Public-private partnerships encouraged for nuclear propulsion in space missions, ensuring sustained deep-space exploration. Collaboration is set to drive technological advancements and enhance global leadership in space.

Major Allocations for Bihar: Significant allocations for Bihar include the establishment of a Makhana Board to support farmers with training and government schemes. Additionally, a National Institute of Food Technology, Processing, and Innovation will be set up to boost agricultural value and employment. The budget also includes greenfield airports, an expanded Patna airport, and financial support for the West Kosi canal project to aid farmers.