Union Budget 2025: Key Highlights & Implications for India’s Economy

The budget acknowledged that robust consumer demand is key to stimulating private sector investments.

Union Budget 2025: Key Highlights & Implications for India’s Economy. Finance Minister Nirmala Sitharaman presented India’s Union Budget for 2025 on Saturday, marking her eighth consecutive budget.

The Budget comes at a critical juncture, as the country faces slowing economic growth and widespread discontent, particularly within the middle class. The government has announced several significant initiatives, with a strong focus on tax relief, boosting exports, and improving the economic outlook for various sectors.

FM Sitharaman announced that no income tax will be due for those with annual income up to Rs 12 lakh, among other changes in the tax slab.

New income tax slab under Union Budget 2025-26

Here are the Key Highlights of Indian Budget 2025:

Income Tax Rebate Boost

The biggest announcement in this year’s Budget was the revision of the income tax rebate limit. Sitharaman raised the income tax rebate from Rs 7 lakh to Rs 12 lakh, meaning individuals earning up to Rs 12 lakh annually will have no tax liability. This is a major relief for the middle class, which has been calling for tax relief due to increasing living costs. For those earning above Rs 12 lakh, the government has made changes to tax slabs to reduce the burden.

Support for Women & Farmers

Finance Minister Sitharaman reaffirmed the government’s focus on women and farmers. In line with the ‘Nari Shakti’ initiative, the budget included provisions to improve opportunities for women in business, entrepreneurship, and the workforce. Additionally, farmers will benefit from enhanced support for irrigation, crop insurance, and access to technology.

MSME Sector and Self-Reliance Focus

The government is doubling down on its push for self-reliance, or Atmanirbhar Bharat, by unveiling schemes for the Micro, Small, and Medium Enterprises (MSME) sector. These initiatives are expected to boost production and employment opportunities in local businesses, helping to create a more resilient domestic economy.

Tax Breaks for the Private Sector

The budget acknowledged that robust consumer demand is key to stimulating private sector investments. As such, there are significant tax breaks and incentives aimed at encouraging private businesses to expand and hire. This is expected to foster job creation and economic growth, especially in the manufacturing and services sectors.

Focus on Infrastructure and Export Promotion

A number of infrastructure projects were announced to support India’s economic growth, including the construction of new ports, roads, and railways. Additionally, the Budget identified exports as a critical growth engine, with initiatives such as the Export Promotion Mission and BharatTradeNet, aimed at easing trade and financing solutions for Indian businesses.

Water Security & Sustainability

In response to India’s water challenges, Sitharaman announced the extension of the Jal Jeevan Mission until 2028, with a Rs 67,000 crore allocation. This program aims to provide clean and sustainable drinking water to rural areas across the country.

Healthcare & Education

The government proposed an increase in the allocation for healthcare, including a focus on expanding access to life-saving medicines. The Budget also emphasized the importance of education, with new initiatives to support skill development, research, and high-yielding crops through the launch of a National Mission on High Yielding Seeds.

New Missions for Nuclear and Renewable Energy

As part of its long-term energy goals, the government announced the creation of a Nuclear Energy Mission aimed at developing 100GW of nuclear energy capacity by 2047. This will be paired with investments in small modular reactors and clean energy alternatives.

Housing for the Middle Class

Addressing housing concerns, the government expanded the Special Window for Affordable, Mid-Income Housing (SWAMIH) scheme, which will expedite the completion of housing projects for middle-class families. With an outlay of Rs 15,000 crore, this initiative aims to complete an additional 1 lakh housing units by 2025.

Regulatory Reforms and Ease of Doing Business

The government announced a series of regulatory reforms aimed at boosting the ease of doing business. A High-Level Committee will be set up to review non-financial sector regulations, and a new Investment Friendliness Index will help promote competition between states.

Economic Projections & Growth Outlook:

The Economic Survey, tabled earlier, projected a growth rate of 6.3-6.8% for the next financial year, aiming for an average 8% growth annually to achieve the vision of a “Viksit Bharat” by 2047. The Budget’s emphasis on private sector investments, exports, and infrastructure development is expected to align with these goals, although challenges remain in the form of inflation and global economic uncertainties.

The Union Budget 2025 has outlined a broad roadmap for economic recovery and self-reliance, targeting several key areas such as job creation, tax relief, manufacturing, and rural development. While the middle class has welcomed the tax breaks, the success of these initiatives will depend on their effective implementation and the ability to maintain fiscal discipline amid global economic challenges.