Union Budget 2025-26: Main Highlights

Nirmala Sitharaman presented her eight consecutive budget as the Union Finance Minister in the Lok Sabha on 1st February 2025..

She holds the record for presenting the union budget for eight consecutive times.  Morarji Desai holds the record for presenting ten union budgets from 1959 to 1963 and then from 1967 to 1969.

Nirmala Sitharaman was appointed the Union Minister for Finance and Corporate Affairs on 31 May 2019.

Following are the main highlights of the 2025-26 Union Budget.

GDP growth Rate 

According to the first estimate of the National Statistical Office, the real GDP (Gross Domestic Product) growth of the Indian economy in 2024-25 was 6.4 percent. The nominal growth rate was 9.7 percent.

Four Engines of the  Indian Economy 

The Union Minister identified four engines of the Indian economy - Agriculture, Micro Small, and Medium Enterprises (MSME), Investment, and Export.

Theme of the Union Budget 2025-26 

According to the Finance Minister, the budget's theme is to achieve the target of making India a Viksit Bharat by 2047.The government has identified the following as the sub target for this goal of Vikshit Bharat. 

• zero-poverty;
• 100 % good quality school education; 
• access to high-quality, affordable, and comprehensive healthcare;
• hundred percent skilled labour with meaningful employment;
• seventy percent of women in economic activities; and
• farmers making our country the ‘food basket of the world’.

Focus on Reform in 6 Sectors 

The budget targets reform in six sectors;

• Taxation;
• Power Sector;
• Urban Development;
• Mining;
• Financial Sector; and
• Regulatory Reforms.

Agriculture as First Engine 

Agriculture has been identified as the first engine of Growth

• Allocation of Rs 1.37 lakh crore for 2025-26 as compared to Rs 1.32 lakh crore in 2024-25.
• Allocation to Pradhan Mantri Kisan Samman Nidhi ( Rs 63,500 crore same as last year), Pradhan Mantri Fasal Bima Yojana (Rs 12,242.27 crore in 2025-26  as compared to  Rs 15,864 crore in revised estimates for the financial year 2024-25). 

Prime Minister Dhan-Dhaanya Krishi Yojana - Developing Agri Districts Programme

• New Scheme to be launched by the central government in partnership with the state government.
• cover 100 districts with low productivity, moderate crop intensity, and below-average credit parameters. 

Aim

• enhance agricultural productivity,
• adopt crop diversification and sustainable agriculture practices,
• augment post-harvest storage at the panchayat and block level, 
• improve irrigation facilities, and 
• availability of long-term and short-term credit to farmers, to help around 1.7 crore farmers.

Building Rural Prosperity and Resilience

• The programme will be launched by the central government in partnership with states. 

Aim 

• Address under-employment in agriculture through skilling, investment, and technology to invigorate the rural economy. 
• Focus on rural women, young farmers, rural youth, marginal and small farmers, and landless families.
• In Phase 1, 100 developing agri-districts will be covered. 

Aatmanirbharta in Pulses  

• a 6-year “Mission for Aatmanirbharta in Pulses” with a special focus on Tur, Urad, and Masoor will be launched.

Makhana Board in Bihar

• The Makhana Board will be set up in Bihar to improve the production, processing, value addition, and marketing of makhana.

National Mission on High-Yielding Seeds

It will be a new scheme to be launched by the central government.

Aim 

• strengthening the research ecosystem, 
• targeted development and propagation of seeds with high yield, pest resistance, and climate resilience, and 
• commercial availability of more than 100 seed varieties released since July 2024.

Mission for Cotton Productivity

• 5-year mission for cotton productivity to be launched.
• To increase the productivity and sustainability of cotton farming, and promote extra-long staple cotton varieties.

Loan limit through KCC increased to Rs 5 lakh

• Under the Modified Interest Subvention Scheme the short-term loan provided through Kisan Credit Card will be increased from  3 lakh to 5 lakh. 

New Urea Plant in Namrup, Assam

• A new Urea plant is to be set up with an annual capacity of 12.7 lakh metric tons in Namrup, Assam.

MSMEs as the 2^nd engine

Contribution of the MSME in India's Economy

• There are 1 crore registered MSMEs(Micro, Small, and Medium Enterprises) in the country, employing 7.5 crore people, contribution to the manufacturing sector 36 % and 45 % in exports.

Budget announcement

• Change in the definition of the MSME proposed.
• Introduction of credit cards for micro-enterprises registered on the Udhyam Portal. 10 lakh cards to be issued in the first year.
• The credit guarantee cover for MSMEs has been increased from Rs 5 crore to Rs 10 crore. 
• For start-ups, the guarantee cover has doubled from Rs 10 crore to Rs 20 crore, with a moderated guarantee fee of 1 percent for loans in 27 focus sectors under the Atmanirbhar Bharat initiative.

Scheme for First-time Entrepreneurs

• A new start-up scheme to be launched for first-time women, Scheduled Castes and Scheduled Tribes entrepreneurs scheme.

Target

• 5 lakh entrepreneurs to be covered
• Entrepreneurs to be provided term loans up to Rs 2 crore in the next 5 years.

National Institute of Food Technology, Entrepreneurship and Management in Bihar

• The institute will be set up in Bihar to provide an impetus to the food processing activities in the entire Eastern region

National Manufacturing Mission 

• Will be launched focused on small, medium, and large industries for furthering the “Make in India’ initiative of the government.
• The mission will support Clean Tech manufacturing to improve domestic value addition and build an ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, etc.

Investment as the 3^rd engine

Atal Tinkering Labs

• Fifty thousand Atal Tinkering Labs will be set up in Government schools in the next 5 years.

Broadband Connectivity to Government Schools and PHCs

• All Government secondary schools and primary health centers in rural areas to have Broadband connectivity under the Bharatnet project.

Bharatiya Bhasha Pustak Scheme

• Government will launch the Bharatiya Bhasha Pustak Scheme to provide digital-form Indian language books for school and higher education.

National Centres of Excellence for Skilling

• Five National Centres of Excellence for Skilling will be set up with global expertise and partnerships to upskill the Indian youth in the skills required for “Make for India, Make for the World” manufacturing. 

Centre of Excellence in AI for Education

• Government to set up a Centre of Excellence in Artificial Intelligence for education with a total outlay of Rs 500 crore.

Expansion of medical education

• Target -10,000 additional seats in medical colleges and hospitals in 2025-26.
• Goal of adding 75,000 seats in the next 5 years.

Day Care Cancer Centres in all District Hospitals 

• Day Care Cancer Centres to be established in all district hospitals in the next 3 years. 
• Target- 200 Centres in 2025-26.

PM SVANidhi

•  UPI-linked credit cards with a Rs 30,000 limit will be introduced for street vendors covered in the scheme.

Online Platform Workers included in PM Jan Arogya Yojana

• Gig workers of online platforms will be included in the PM Jan Arogya Yojana. 

Support to States for Infrastructure Development 

• Center will provide 50 year, Rs 1.5 lakh crore interest-free loan to states for capital expenditure and incentives for reforms.  

Jal Jeevan Mission

• The mission to provide piped water to every rural household has been extended till 2028.
• The outlay for 2025-26- Rs 67,000 crores.

Urban Challenge Fund

• Urban Challenge Fund to be set up to implement ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’, and ‘Water and Sanitation’ initiatives.
• Corpus -Rs 1 lakh crore 
• Allocation for 2025-26- Rs 10,000 crore.
• The fund will finance up to 25 % of the project cost under these initiatives.

Nuclear Energy Mission for Viksit Bharat

• Target to have 100 GW installed nuclear energy by 2047.
• The Nuclear Energy Mission for Research & Development of Small Modular Reactors will be launched.
• Target- build and operationalise 5 indigenously developed reactors by 2033.
• Outlay- Rs 20,000 crore. 

Maritime Development Fund

• Maritime Development Fund to be set up to support the maritime sector.
• Corpus - Rs 25,000 crore.
• Contribution of the Center- 49 % and 51 % from the ports and private sector.

SWAMIH Fund 2

• Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund 2 will be launched.
• Corpus -Rs 15,000 crore with contribution from central government, banks, and private investors.
• Target- completion of 1 lakh houses 
• Under this fund financing facility is provided to the  Affordable and Middle Income Housing sector projects that could not be completed due to the builder's bankruptcy.

PM Research Fellowship

• Target - Ten thousand fellowships to be provided In the next five years for technological research in IITs and Indian Institute of Science Bengaluru.

National Geospatial Mission

• National Geospatial Mission to be launched to develop foundational geospatial infrastructure and data. 

Gyan Bharatam Mission & National Digital Repository

• Gyan Bharatam Mission is to be launched for the survey, documentation, and conservation of manuscript heritage with academic institutions, museums, libraries, and private collectors.
• It will cover more than 1 crore manuscripts.
• The government will launch the National Digital Repository of Indian Knowledge Systems for knowledge sharing.

Exports as the 4^th engine

Export Promotion Mission

• The Export Promotion Mission will be jointly launched by the Union Ministry of Commerce, MSME, and Finance. 
• It will facilitate easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets.

BharatTradeNet

A digital public infrastructure, ‘BharatTradeNet’ (BTN) for international trade will be set up as a unified platform for trade documentation and financing solutions.

Reform in the Financial Sector

FDI in the Insurance Sector

• The FDI limit for the insurance sector will be raised from 74 to 100 percent for foreign insurance companies that invest the entire premium in India.

Grameen Credit Score

•  Public Sector Banks will develop the ‘Grameen Credit Score’ framework to serve the credit needs of Self-Help Group (SHG) members and people in rural areas.

High-Level Committee for Regulatory Reforms

• Government to set up a High-Level Committee for Regulatory Reforms to review all non-financial sector regulations, certifications, licenses, and permissions. 

Investment Friendliness Index of States

• The Government will launch the Investment Friendliness Index of States in 2025 to further the spirit of competitive cooperative federalism.

Jan Vishwas Bill 2.0

• Government will bring Jan Vishwas Act 2.0 to decriminalise more than 100 legal provisions.
• The first Jan Vishwas Act was introduced in 2023 under which more than 180 legal provisions were decriminalized.

Central Government Finance 2025-26

The money received by the government through taxes and non-tax sources plus borrowings are called receipts.

Revised Estimates 2024-25

• Total receipts other than borrowings - Rs 31.47 lakh crore.
• The net tax receipt (after transferring the state share of the taxes) was Rs 25.57 lakh crore. 
• Revised Expenditure estimates -Rs ₹47.16 lakh crore.
• Revenue expenditure -, Rs 36.98 lakh crore ( 11.4 percent of GDP)
• Capital Expenditure - Rs 10.18 lakh crore

Budget Estimates 2025-26

Total Expenditure - Rs 50.65 lakh crore (14.2 percent of GDP) 

• Revenue Expenditure -  Rs 39.44 lakh crore (11.0 percent of GDP)
• Capital Expenditure - Rs 11.21 lakh crore (3.1 percent of GDP) 

Total Receipts other than borrowing - Rs 34.96 lakh crore.

• Revenue Receipts - Rs 34.20 lakh crore
• Net Tax Receipts - Rs 28.37 lakh crore.
• Non-Tax Receipts- Rs 5.83 lakh crore.
• Non-Debt Capital Receipts - Rs `76,000 crore (It includes recovery of loans, dividends received by central governments, etc.)

Borrowings in 2025-26

• Gross Borrowing through dated securities - Rs 14.82 lakh crore (or 4.2 percent of GDP).
• Gross Borrowing through NSSF- Rs 3.43 lakh crore
• External Borrowing - Rs 23,490 crore 
• Net Borrowing through State Provident Funds - Rs 5000 crore.

Deficits of the Government of India 

 All the figures are in percentage of India's Gross Domestic Product at Market prices.

Taxation Proposal 

Revenue loss to the government due to concession in taxes 

• Direct Tax Loss-  Rs1 lakh crore 
• Indirect Taxes - Rs 2600 crore.

Direct Tax Proposals 

-No tax for income up to Rs 12 lakh per annum.

-Salaried person will not pay income tax on income up to Rs 12.75 lakh per annum due to standard deduction of Rs 75,000. 

Tax Deducted at Source (TDS)

• TDS will be applicable on the interest income of senior citizens if the annual interest income is Rs one Lakh or more (existing Rs 50,000).
• TDS on rent will be applicable if the annual income from rent is Rs 6 lakh per year (at present it is Rs 2.40 lakh).

Tax Collected at Source (TCS)

• TCS will now be applicable on remittance (money sent abroad) under the RBI’s Liberalized Remittance Scheme (LRS) if the amount is Rs 10 lakhs or more (earlier Rs 7 lakhs or more.)
• No TCS on remittance sent for education purposes.