New Delhi, February 1, 2025 — Finance Minister Nirmala Sitharaman today unveiled the Union Budget for 2025-26, outlining a series of reforms aimed at boosting economic growth, providing tax relief for the middle class, and supporting critical sectors such as agriculture, manufacturing, and the gig economy.
Income Tax Reforms
The budget introduces significant changes to the income tax structure. The exemption threshold has been raised to ₹12 lakh per annum, a move intended to boost household savings and spur consumption among middle-income groups. The revised tax slabs are as follows:
- Up to ₹4 lakh: Nil
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹16 lakh: 15%
- ₹16 lakh to ₹20 lakh: 20%
- Above ₹20 lakh: 30%
Officials note that these adjustments aim to simplify compliance and offer relief to taxpayers, though the government maintains that the structure is designed to be progressive.
Agriculture and Rural Development
In a bid to revitalize agriculture, the government has announced the launch of the Prime Minister Dhan-Dhaanya Krishi Yojana. Targeting 100 districts with low agricultural productivity, this initiative is expected to benefit approximately 1.7 crore farmers by enhancing crop yields and promoting sustainable farming practices.
Another key measure is the Mission for Aatmanirbharta in Pulses, a six-year program focused on boosting domestic production of pulses such as tur, urad, and masoor. The program also emphasizes the development of climate-resilient seed varieties to reduce the country’s dependence on imports.
Support for Gig Workers
Recognizing the growing gig economy, the government has committed to extending better support for gig workers. Under the PM Jan Arogya Yojana, gig workers will now receive enhanced healthcare coverage. Additionally, plans are underway to issue identity cards and facilitate registration on the e-Shram portal, ensuring easier access to various welfare schemes.
Boost to Startups and MSMEs
To further encourage entrepreneurship and innovation, the budget extends the incorporation period for startups to five years, allowing new businesses more time to qualify for tax benefits. Moreover, financial support for the agricultural sector has been bolstered by increasing the loan limit under the Modified Interest Subvention Scheme for Kisan Credit Cards from ₹3 lakh to ₹5 lakh. This change is set to aid not only farmers but also fishermen and dairy farmers.
Infrastructure and Manufacturing Initiatives
In the manufacturing arena, the government is focusing on reducing import dependence by promoting domestic production. The new budget proposes the addition of 35 capital goods for electric vehicle (EV) battery manufacturing and 28 for mobile phone battery manufacturing. These initiatives are expected to enhance the country’s capabilities in these strategically important industries.
Fiscal Outlook
The budget maintains a commitment to fiscal consolidation, with a target to reduce the fiscal deficit to 4.4% of GDP in the coming fiscal year. Officials have stated that this approach is intended to balance the need for investment in growth-oriented sectors with the imperative of fiscal responsibility.
Overall, the Union Budget 2025-26 presents a balanced approach by combining tax relief measures with strategic investments in key sectors. The government’s emphasis on both fiscal prudence and sectoral support reflects an effort to sustain economic momentum while addressing the diverse needs of the country’s population. Analysts will be watching closely to see how these measures impact growth and stability in the months ahead.
