Introduction
The Union Budget 2025–26, presented on February 1, 2025, by Finance Minister Nirmala Sitharaman, marks a pivotal moment in India’s economic trajectory. Building upon the government’s third term, this budget emphasizes inclusive growth, innovation, and sustainable development. With a projected nominal GDP growth of 10.1% and a fiscal deficit target of 4.4% of GDP, the budget outlines comprehensive strategies across various sectors to bolster the nation’s economic resilience.
Financial Overview
The Government of India has projected total receipts (excluding borrowings) at ₹34.96 lakh crore for FY 2025–26, with overall expenditure pegged at ₹50.65 lakh crore. Net tax revenues are estimated at ₹28.37 lakh crore, while the fiscal deficit is targeted at 4.4% of GDP. Gross market borrowings are expected to touch ₹14.82 lakh crore. A capital expenditure allocation of ₹11.21 lakh crore, equivalent to 3.1% of GDP, has been earmarked to support economic growth.
Agriculture – First Pillar of Development
Prime Minister Dhan-Dhaanya Krishi Yojana – A transformative programme will be introduced in collaboration with state governments, targeting 100 districts characterized by low productivity, moderate crop intensity, and weak credit performance. This initiative aims to benefit 1.7 crore farmers.
Rural Development and Employment Generation – A broad-based, multi-sectoral scheme will address underemployment in the agricultural sector through enhanced skilling, technological advancement, and strategic investments, beginning with 100 agri-focused districts in the first phase.
Self-Reliance in Pulses – A six-year mission for self-sufficiency in pulses such as Tur, Urad, and Masoor will be launched. Procurement over the next four years will be undertaken by NAFED and NCCF.
Vegetable and Fruit Sector Reforms – A collaborative programme with states will be rolled out to bolster the production, supply chains, processing, and pricing mechanisms for horticultural crops.
Makhana Sector Boost – A dedicated Makhana Board will be set up in Bihar to promote the crop’s production, processing, value addition, and marketing.
High-Yielding Seeds Mission – To drive agricultural productivity, a National Mission on High Yielding Seeds will focus on research, targeted development, and widespread availability of over 100 high-performing seed varieties.
Fisheries Sector Framework – A comprehensive policy for sustainable exploitation of marine resources, particularly from India’s Exclusive Economic Zone and high seas, will focus on coastal regions including the Andaman & Nicobar and Lakshadweep Islands.
Cotton Productivity Enhancement – A five-year mission will seek to significantly improve cotton yields and promote sustainable farming, especially of extra-long staple varieties.
Enhanced Credit Access for Farmers – The loan limit under the Modified Interest Subvention Scheme for Kisan Credit Card (KCC) users will be raised from ₹3 lakh to ₹5 lakh.
Fertilizer Security in Northeast – A urea production plant with an annual capacity of 12.7 lakh metric tons will be set up in Namrup, Assam.
MSMEs – The Second Engine of Economic Momentum
MSME Classification Reforms – The investment and turnover thresholds for MSME categorization will be increased by 2.5 and 2 times respectively.
Credit Empowerment for Micro Enterprises – Ten lakh tailored credit cards with a limit of ₹5 lakh will be issued to micro enterprises registered on the Udyam portal in the first year.
Startup Ecosystem Expansion – A refreshed Fund of Funds with an infusion of ₹10,000 crore will be established to support startup ventures.
Inclusive Entrepreneurship Scheme – A new initiative will offer term loans of up to ₹2 crore to 5 lakh first-time entrepreneurs, particularly women and individuals from Scheduled Castes and Scheduled Tribes, over the next five years.
Support for Footwear & Leather Industry – A dedicated scheme will enhance the quality and competitiveness of these sectors, aiming to create 22 lakh jobs, generate ₹4 lakh crore in turnover, and export over ₹1.1 lakh crore.
Toy Industry Boost – A sector-specific initiative will aim to position India as a global manufacturing hub for sustainable and innovative toys.
Food Processing Development – A National Institute of Food Technology, Entrepreneurship and Management will be established in Bihar to drive innovation in food processing.
National Manufacturing Mission – This mission will span small to large-scale industries, reinforcing the “Make in India” vision.
Investment – The Third Engine Driving Transformation
I. Human Capital Development
Nutrition and Child Welfare – Saksham Anganwadi and Poshan 2.0 will see revised cost norms to improve nutritional support.
Promotion of Innovation in Schools – Fifty thousand Atal Tinkering Labs will be established in government schools over the next five years.
Digital Inclusion in Rural Institutions – Broadband connectivity will be provided to all government secondary schools and primary health centres in rural areas under the BharatNet initiative.
Indian Language Education Resources – The Bharatiya Bhasha Pustak Scheme will make digital-format Indian language books available for school and higher education levels.
Skilling Excellence – Five National Centres of Excellence will be developed for skill-building in partnership with global institutions, aligned with domestic and international manufacturing needs.
IIT Infrastructure Expansion – Five new IITs established post-2014 will receive additional infrastructure to accommodate 6,500 more students.
AI for Education – A ₹500 crore Centre of Excellence in Artificial Intelligence for education will be set up.
Medical Education Expansion – An additional 10,000 medical seats will be created next year, with a goal of adding 75,000 new seats over five years.
District-Level Cancer Care – Day care cancer treatment centres will be established in every district hospital, with 200 to be operational in 2025–26.
Urban Worker Welfare – A new scheme will enhance the socio-economic status of urban workers, improving their income stability.
PM SVANidhi Overhaul – This scheme will be upgraded to offer higher loan limits, UPI-linked credit cards with a ₹30,000 cap, and skills support for street vendors.
Gig Worker Social Protection – Gig economy workers will be registered under the e-Shram portal, provided with identity cards, and covered under PM Jan Arogya Yojana for healthcare.
II. Economic Infrastructure Investments
PPP in Infrastructure – Infrastructure ministries will publish a three-year project pipeline in the PPP model; states will also be encouraged to participate.
State-Level Capex Support – An allocation of ₹1.5 lakh crore is proposed as interest-free loans to states to promote capital expenditure and reforms.
Asset Monetization Strategy – The second phase of the National Monetization Pipeline (2025–30) aims to unlock ₹10 lakh crore for reinvestment in new projects.
Jal Jeevan Mission Extension – The mission will be extended till 2028 with an expanded budget to ensure water security.
Urban Redevelopment Incentives – An Urban Challenge Fund worth ₹1 lakh crore is proposed to revitalize urban spaces and infrastructure. ₹10,000 crore is earmarked for FY26.
Nuclear Energy Advancement – Legislative amendments to key nuclear laws will facilitate a ₹20,000 crore mission focused on Small Modular Reactors, targeting operationalization of five indigenously built SMRs by 2033.
Shipbuilding Promotion – A revised Shipbuilding Financial Assistance Policy will include large vessels in the Harmonized Master List of Infrastructure.
Maritime Infrastructure Fund – A ₹25,000 crore Maritime Development Fund will be formed with up to 49% government participation and the remainder from ports and private players.
Regional Connectivity Expansion – A revamped UDAN scheme will expand regional connectivity to 120 new destinations over the next decade, with a special focus on remote regions.
Airport Development in Bihar – A greenfield airport will be constructed in Bihar, alongside enhancements to Patna airport and development of Bihta as a brownfield airport.
Water Management in Mithilanchal – Support has been pledged for the Western Koshi Canal ERM project in Bihar.
Mining Sector Revamp – New policies will support the recovery of critical minerals from tailings.
SWAMIH Fund 2 – A second version of the SWAMIH fund with ₹15,000 crore will aim to complete 1 lakh stalled housing units.
Tourism-Led Job Creation – The top 50 tourist sites in the country will be developed through a challenge-mode partnership with state governments.
III. Innovation and Research
Private-Sector Driven R&D – A ₹20,000 crore initiative will promote industry-led research, development, and innovation.
Deep Tech Ecosystem Boost – A Deep Tech Fund of Funds is being considered to accelerate cutting-edge startups.
PM Research Fellowships – Ten thousand fellowships will be awarded to scholars in IITs and IISc for high-impact technology research.
Gene Bank Expansion – A second gene bank preserving 10 lakh germplasm lines will be set up for future food and nutritional resilience.
National Geospatial Infrastructure – A new mission will lay the groundwork for geospatial data development and accessibility.
Cultural Knowledge Conservation – The Gyan Bharatam Mission will archive and preserve over one crore Indian manuscripts through collaboration with educational and cultural institutions.
Exports – The Fourth Growth Driver
Export Promotion Strategy – An Export Promotion Mission will be launched with sector-wise and ministry-specific targets, jointly managed by Commerce, MSME, and Finance ministries.
Trade Infrastructure Digitization – A unified trade documentation and financing platform named ‘BharatTradeNet’ will be established to facilitate international commerce.
Global Capability Centre Framework – A national policy will guide states in attracting Global Capability Centres to Tier 2 cities.
Green Growth and Sustainability – The Fifth Pillar of Long-Term Development
The Union Budget 2025–26 also reinforces India’s commitment to a sustainable future, reflecting the government’s strategic pivot towards green growth and environmental stewardship. In alignment with India’s Net Zero targets by 2070, the budget outlines key initiatives to integrate environmental considerations into the country’s economic growth strategy.
Renewable Energy Push
An ambitious solar and wind energy rollout is underway, with budgetary support for solar parks and offshore wind projects in Gujarat and Tamil Nadu. The government aims to add over 30 GW of renewable energy capacity in the next three years. In addition, the PM-Surya Ghar Muft Bijli Yojana, aimed at enabling residential solar power generation, will be scaled up with added incentives for adoption in low-income households.
Green Hydrogen Mission
The National Green Hydrogen Mission receives a fresh impetus with an allocation of ₹8,000 crore to support pilot projects, R&D, and infrastructure development. This initiative is poised to make India a global hub for green hydrogen production, reducing dependence on fossil fuels and opening avenues for export.
Sustainable Agriculture
In tandem with the broader agricultural reforms, the government will promote climate-resilient farming practices, organic cultivation, and micro-irrigation systems. Incentives will be provided for the adoption of bio-inputs and precision agriculture technologies to optimize water and nutrient use, especially in water-stressed regions.
Electric Mobility Expansion
The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme will be expanded with a focus on rural mobility solutions. Battery-swapping infrastructure will also receive a fresh investment package, aimed at reducing urban air pollution and cutting logistics costs in last-mile delivery sectors.
Carbon Credit Market Development
To facilitate green financing and incentivize emission reduction, a regulatory framework for a voluntary carbon credit market will be introduced. This system will allow companies and public sector units to offset their emissions while funding eco-friendly projects.
Circular Economy and Waste Management
The budget proposes a nationwide campaign to strengthen urban waste segregation, recycling, and composting systems. A new Centre of Excellence for Circular Economy will be established to foster innovation in reusability, sustainable packaging, and zero-waste manufacturing.
By aligning economic development with ecological responsibility, the Union Budget 2025–26 lays the groundwork for a future that is not only prosperous but also sustainable and resilient. These green initiatives are integral to ensuring that India’s growth story remains inclusive, balanced, and in harmony with nature.
Financial Reforms – Catalyzing Development
FDI Reform in Insurance – The FDI cap in the insurance sector will be raised from 74% to 100% for companies investing their full premium collections domestically.
Credit Support for Infrastructure Bonds – NaBFID will launch a Partial Credit Enhancement Facility to strengthen corporate bond issuance for infrastructure.
Rural Credit Assessment – Public sector banks will introduce a ‘Grameen Credit Score’ to streamline credit disbursal for SHGs and rural citizens.
Pension Sector Governance – A new forum will be created to foster regulatory coordination and product innovation in the pension domain.
Regulatory Simplification – A high-level committee will review all non-financial sector laws, certifications, and licensing frameworks.
State Investment Index – An ‘Investment Friendliness Index’ for Indian states will be introduced in 2025 to encourage healthy economic competition.
Legal Reforms – Jan Vishwas Bill 2.0 will decriminalize over 100 provisions across various legislations to enhance ease of doing business.
Conclusion
The Union Budget 2025–26 presents a comprehensive roadmap for India’s economic development, focusing on inclusive growth, innovation, and sustainable infrastructure. By addressing key sectors such as agriculture, education, infrastructure, and social welfare, the budget aims to create a resilient economy that benefits all segments of society. As the nation progresses towards its development goals, the strategic initiatives outlined in this budget are poised to play a crucial role in shaping India’s future.
(Source – PIB)
