Union Budget 2025-26: Key Announcements and Economic Outlook

Finance Minister Nirmala Sitharaman today presented the Union Budget 2025-26, outlining the government’s economic priorities for the upcoming fiscal year. The budget focuses on infrastructure development, taxation reforms, social welfare, and technology-driven growth while maintaining fiscal prudence. With general elections approaching in 2026, the budget attempts to balance economic expansion with financial stability.

Economic Growth and Fiscal Position

The government has projected a GDP growth rate of 6.8% for FY26, reflecting optimism about economic recovery and resilience. The fiscal deficit target has been set at 5.3% of GDP, indicating efforts to reduce the shortfall while sustaining capital expenditure. Revenue generation measures, including tax policy adjustments and subsidy rationalization, are expected to play a key role in achieving these targets.

Also read: Unemployment Rate Declines to 3.2% in 2023-24 from 6.0% in 2017-18: Economic Survey 2024-25

Taxation and Relief Measures

Changes in income tax slabs provide some relief to middle-class taxpayers, with an increase in the basic exemption limit under the new tax regime. The budget maintains corporate tax rates, aiming to support business growth while ensuring fiscal stability. Additionally, incentives for micro, small, and medium enterprises (MSMEs) and startups are expected to encourage entrepreneurship and job creation.

Infrastructure and Manufacturing Investments

The government has allocated ₹12.5 lakh crore for infrastructure projects, with a focus on roads, railways, and urban development. The PM Gati Shakti initiative continues to receive funding to enhance logistics efficiency. The Make in India and Production-Linked Incentive (PLI) schemes receive further support, particularly in sectors such as electronics, renewable energy, and defense manufacturing.

Also read: Indian Industries Association (IIA) Announces Build Bharat Expo-2025: A New Platform for Global Trade and Industrial Innovation


Agriculture and Rural Development

The budget includes measures to strengthen the agriculture sector and rural economy, with an expanded PM Kisan Samman Nidhi scheme, irrigation projects, and support for agri-tech innovations. A ₹1.2 lakh crore rural employment package under MGNREGA has been introduced to address job security concerns in rural areas.

Technology and Digital Economy

A key highlight of the budget is the ₹10,000 crore AI development fund, aimed at promoting artificial intelligence, robotics, and digital infrastructure. The budget also includes provisions for 5G expansion, cybersecurity enhancements, and digital banking, reflecting the government’s focus on technological advancements.

Healthcare and Education Investments

Public healthcare spending has been increased, with ₹1 lakh crore allocated to medical infrastructure, including the establishment of new AIIMS institutions and medical colleges. The education sector sees investments in STEM research, digital learning, and vocational training, aligning with efforts to enhance skill development and employment opportunities.

Sustainability and Green Energy

The budget emphasizes environmental sustainability, with ₹3 lakh crore allocated for renewable energy projects. Incentives for electric vehicles (EVs), green hydrogen production, and sustainable urban transport are expected to support India’s climate commitments and energy transition goals.

Prateeksha Thakur

[Prateeksha Thakur] is a seasoned journalist known for [her] sharp analysis and clear communication. At Newsisland, [she] focus on political reporting, offering readers a nuanced understanding of complex issues.

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