On February 1, 2025, India's Finance Minister, Nirmala Sitharaman, presented the Union Budget for the fiscal year 2025-26. This budget aims to stimulate economic growth, enhance the spending power of the middle class, and promote inclusive development across various sectors. Below is a comprehensive overview of the key highlights and initiatives introduced in the budget.

1. Tax Reforms and Reliefs

A significant focus of the budget is on providing tax relief to the middle class to boost disposable income and stimulate domestic consumption.

• Income Tax Exemptions: The income tax exemption threshold has been raised to ₹1.2 million annually, up from the previous ₹700,000. This adjustment is expected to increase savings and spending among middle-class taxpayers.
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• Revised Tax Slabs: The budget introduces a recalibrated tax structure with reduced rates for higher income brackets. The maximum tax rate of 30% now applies to incomes above ₹2.4 million. These changes aim to simplify the tax regime and encourage compliance.
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• Standard Deduction: For salaried individuals, the standard deduction has been increased to ₹75,000. Consequently, individuals earning up to ₹1.275 million annually will not be liable to pay any income tax.
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2. Agricultural Initiatives

Recognizing agriculture as a pivotal sector, the budget outlines several measures to enhance productivity and support farmers.

• High-Yield Crop Program: A national mission targeting 17 million farmers has been launched to boost crop productivity, focusing on pulses and cotton. This initiative aims to achieve self-sufficiency and reduce import dependence.
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• Subsidized Credit: The budget increases the subsidized credit limit for farmers, facilitating easier access to funds for purchasing inputs and investing in modern farming techniques.
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3. Support for Startups and MSMEs

Micro, Small, and Medium Enterprises (MSMEs) and startups receive substantial support to foster innovation and entrepreneurship.

• Incorporation Period Extension: The period for startups to avail tax benefits has been extended to five years, providing them with a longer window to establish and grow their businesses.
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• Incentives and Funds: Dedicated funds and incentives have been introduced to support startups and small firms, encouraging innovation and job creation.
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4. Infrastructure Development

The budget places a strong emphasis on infrastructure to drive economic growth and improve connectivity.

• National Manufacturing Mission: A mission has been established to bolster the manufacturing sector, aiming to increase its contribution to GDP and create employment opportunities.
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• Regional Air Connectivity: Initiatives to enhance regional air connectivity are proposed, aiming to improve accessibility and promote balanced regional development.
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5. Energy and Environment

Sustainable development and energy security are key focus areas in the budget.

• Nuclear Energy Mission: A mission has been announced to achieve 100 GW of nuclear power by 2047, aiming to diversify energy sources and reduce carbon emissions. apnews.com

6. Fiscal Management

The budget outlines the government's fiscal strategy, balancing growth initiatives with fiscal prudence.

• Fiscal Deficit: The fiscal deficit is projected to decline to 4.4% of GDP in 2025-26, reflecting the government's commitment to fiscal consolidation.
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• Borrowing Plan: To finance the deficit, the government plans to borrow ₹14.82 trillion, ensuring adequate funds for developmental projects.
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7. Social Welfare and Inclusivity

The budget introduces measures to support various segments of society, promoting inclusive growth.

• Gig Economy Workers: Steps are being taken to formalize gig economy workers, improving their access to healthcare and welfare initiatives.
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• Senior Citizens: The limit for tax deduction on interest for senior citizens has been doubled from ₹50,000 to ₹100,000, providing additional financial relief.
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8. Sectoral Reforms

The budget proposes transformative reforms across various sectors to enhance efficiency and competitiveness.

• Taxation: Rationalization of Tax Deduction at Source (TDS) by reducing the number of rates and thresholds above which TDS is deducted.
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• Power Sector: Reforms aimed at improving efficiency and sustainability in the power sector are proposed, though specific details are awaited.
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Conclusion

The Union Budget 2025-26 presents a comprehensive roadmap aimed at stimulating economic growth, enhancing the spending power of the middle class, and promoting inclusive development across various sectors. By implementing these measures, the government seeks to navigate global economic uncertainties and position India on a path toward sustained prosperity.