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Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025 on Saturday. Finance Minister Nirmala Sitharaman lists four engines of development in the Union Budget 2025-26. These are agriculture, MSMEs, investments, and exports. ” The fuel in the journey is provided by reforms, the guiding spirit is inclusivityi and the destination is Viksit Bharat,” said the Finance Minister.
She added that the Budget aims to initiate transformative reforms across 6 domains: Taxation, power sector, urban development, mining, financial sector, and regulatory reforms.
As Union Budget is a very essentials part of the syllabus of any stage of the competitive exams, especially UPSC, here are the key pointers and highlights of Budget 2025 announcements. Also, don’t miss to brush up your basics on budget towards the end of the article.
— The government will promote self-sufficiency in pulses, focusing on the production and procurement of toor, urad, and masur. Bihar will get a Makhana board, to boost the cultivation and marketing of fox nuts. The people engaged in Makhana cultivation will be organized in FPOs. About 10 lakh people are directly or indirectly involved in Makhana cultivation and production process in Bihar, with the state accounting for about 85 per cent of the total Makhana production of the country. The Bihar government has been demanding measures from the Central government to promote Makhana cultivation. The state government had also demanded a declaration of the minimum support price of Makhana.
— A holistic, multi-sectoral ‘Rural Prosperity and Resilience’ program will be launched in collaboration with states. This initiative aims to tackle under-employment in agriculture by promoting skill development, investment, technology adoption, and revitalization of the rural economy. The objective is to create abundant opportunities in rural areas, ensuring migration remains a choice rather than a necessity. The program will prioritize rural women, young farmers, rural youth, marginal and small farmers, and landless families.
— A National Mission on High Yielding Seeds will be launched, aimed at (1) strengthening the research ecosystem, (2) targeted development and propagation of seeds with high yield, pest resistance and climate resilience, and (3) commercial availability of more than 100 seed varieties released since July 2024.
— For the benefit of cotton growing farmers a 5-year ‘Mission for Cotton Productivity’ is announced.
— The government will bring in an enabling framework for sustainable harnessing of fisheries from Indian Exclusive Economic Zone and High Seas, with a special focus on the Andaman & Nicobar and Lakshadweep Islands.
— India Post, along with India Post Payments bank, will be repositioned to be a catalyst for the rural economy. India Post will also be transformed into a large public logistics organization.
— The loan limit under the Modified Interest Subvention Scheme will be enhanced from Rs. 3 lakh to 5 lakh for loans taken through the KCC.
— A new scheme for the agriculture sector—Prime Minister Dhan Dhanya Krishi Yojana (PMDDKY). This scheme will be implemented in partnership with states, across 100 districts in its first phase. The scheme will be on the lines of Aspirational Districts Programme (ADP), which was launched by Prime Minister Narendra Modi in 2018. The ADP is implemented across 112 districts. The PMDDKY will be implemented across agriculture districts.
— Finance Minister has announced the setting up of a new urea plant at Namrup (Assam) with an annual production capacity of 12.70 lakh tonnes. If it takes off, that would be the 7th new urea plant to come up in India since 2019. These include plants in Gadepan (Rajasthan), Ramagundam (Telangana), Panagarh (West Bengal), Gorakhpur (Uttar Pradesh), Barauni (Bihar), Sindri (Jharkhand) and Talcher (Odisha). The last plant is yet to be commissioned (about 65% completed), while the other six are up and running.
— The Government will provide support to NCDC for its lending operations for the cooperative sector.
— To help them achieve higher efficiencies of scale, technological upgradation and better access to capital, the investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and 2 times respectively.
According to Finance Minister,
“To improve access to credit, the credit guarantee cover will be enhanced:
1. For Micro and Small Enterprises, from Rs. 5 crore to 10 crore, leading to additional credit of Rs 1.5 lakh crore in the next 5 years;
2. For Startups, from Rs. 10 crore to 20 crore, with the guarantee fee being moderated to 1 per cent for loans in 27 focus sectors important for Atmanirbhar Bharat; and
3. For well-run exporter MSMEs, for term loans up to Rs. 20 crore.”
— In a boost to credit to Micro industries, the government will provide customised credit cards with limit of Rs 5 lakh under Udyam portal. In the first year, 10 lakh such cards will be issued.
— A new Fund of Funds for startups, with expanded scope and a fresh contribution of another Rs. 10,000 crore will be set up. It should be noted that the Alternate Investment Funds (AIFs) for startups have received commitments of more than Rs. 91,000 crore. These are supported by the Fund of Funds set up with a Government contribution of Rs. 10,000 crore.
— The government will launch a new scheme offering term loans of up to Rs 2 crore to first-time entrepreneurs among women, Scheduled Castes, and Scheduled Tribes.
— Building on the National Action Plan for Toys, the government will implement a scheme to make India a global hub for toys – promoting ‘Make in India’ brand.
— As part of the government’s commitment to ‘Purvodaya,’ it will set up a National Institute of Food Technology, Entrepreneurship, and Management in Bihar.
— The government will launch the National Manufacturing Mission covering small, medium, and large enterprises for furthering Make in India. Under this Mission, the government will assist with policy support, execution roadmaps, and governance and monitoring frameworks for central ministries and states. The National Manufacturing Mission will also support clean tech manufacturing, given India’s commitment to climate-friendly development. Focus segments will include solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, very high voltage transmission equipment, and grid-scale batteries.
— Extension of Jal Jeevan Mission until 2028 to obtain 100 percent coverage.
— The Government will establish a ₹1 lakh crore Urban Challenge Fund to support initiatives like ‘Cities as Growth Hubs,’ ‘Creative Redevelopment,’ and ‘Water & Sanitation’. The fund will cover up to 25% of viable project costs, requiring at least 50% funding from bonds, bank loans, or PPPs. ₹10,000 crore is allocated for 2025-26.
— A Nuclear Energy Mission for research & development of Small Modular Reactors (SMR) with an outlay of Rs. 20,000 crore will be set up.
— The Shipbuilding Financial Assistance Policy will be revised to offset cost disadvantages, including Credit Notes for shipbreaking in Indian yards to support the circular economy. Large ships above a set size will be added to the infrastructure harmonized master list (HML). Shipbuilding Clusters will be developed with enhanced infrastructure, skilling, and technology to expand ship categories and capacity.
— A Maritime Development Fund with a corpus of Rs.25,000 crore will be set up.
— Bihar Specific:
— SWAMIH Fund 2 will be established as a blended finance facility with contribution from the Government, banks and private investors. This fund of 1completion of 1 lakh units.
— The plan focuses on developing the top 50 tourist destinations in partnership with states, with states providing land for key infrastructure. Key initiatives include:
Additionally, there will be special attention on destinations tied to Lord Buddha’s life and promoting medical tourism with easier visa norms and private sector collaboration.
— A modified UDAN scheme will be launched to enhance regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years. The scheme will also support helipads and smaller airports in hilly, aspirational, and North East region districts.
— Investing in innovation the budget announced a ‘Deep Tech Fund of Funds’ for next generation startups and ten thousand PM research fellowships for technological research in IITs and IISc in next 5 years.The 2nd Gene Bank was announced with 10 lakh germplasm lines will be set up for future food and nutritional security. (Supporting both public and private sector.) A National Geospatial Mission will be started to develop foundational geospatial infrastructure and data. A Gyan Bharatam Mission will be launched to survey, document, and preserve our rich manuscript heritage in collaboration with academic institutions, museums, libraries, and private collectors, covering over 1 crore manuscripts. Additionally, a National Digital Repository of Indian Knowledge Systems will be established to facilitate knowledge sharing.
— Establish an Export Promotion Mission to enhance export credit access and support MSMEs in global markets.
— BharatTradeNet: Develop a unified digital platform for international trade documentation and financing solutions.
— Global Supply Chain Integration: Support domestic manufacturing to integrate India’s economy into global supply chains, focusing on Industry 4.0 and youth talent.
— National Framework for GCC: Create a framework to promote Global Capability Centres in tier 2 cities, focusing on talent and infrastructure.
— Improve air cargo infrastructure and streamline customs for perishable goods.
FDI in Insurance Sector:
FDI limit increased from 74% to 100% for companies investing entirely in India.
Review and simplification of foreign investment guardrails.
Expanding India Post Payment Bank Services:
Deepening and expanding services in rural areas.
Credit Enhancement Facility by NaBFID:
Introduction of a ‘Partial Credit Enhancement Facility’ for corporate bonds in infrastructure.
Grameen Credit Score:
Public Sector Banks to develop a framework for serving rural areas and SHG members.
Pension Sector:
A forum will be set up for regulatory coordination and pension product development.
KYC Simplification:
Rollout of revamped Central KYC Registry in 2025 and implementation of streamlined periodic updates.
Merger of Companies:
Rationalization of approval procedures for company mergers and expansion of fast-track mergers.
Bilateral Investment Treaties:
Signed BITs with two countries in 2024 and revamping the BIT model to be more investor-friendly.
Regulatory Reforms:
Commitment to ‘Ease of Doing Business’ through light-touch regulatory frameworks.
Updating old regulations to keep up with technological and global policy changes.
High-Level Committee for Regulatory Reforms:
Review of non-financial sector regulations, licenses, and compliance procedures.
Recommendations within a year to improve governance and ease of doing business.
Investment Friendliness Index of States:
Launch of an index in 2025 to promote competitive cooperative federalism.
FSDC Mechanism:
Evaluation of financial regulations under the Financial Stability and Development Council.
Framework to improve the responsiveness and development of the financial sector.
Jan Vishwas Bill 2.0:
Decriminalization of over 100 provisions in various laws through the new Bill.
Revised Estimates 2024-25
The Revised Estimate of the total receipts other than borrowings is Rs. 47 lakh crore, of which the net tax receipts are ` 25.57 lakh crore. The Revised Estimate of the total expenditure is Rs. 47.16 lakh crore, of which the capital expenditure is about ` 10.18 lakh crore. The Revised Estimate of the fiscal deficit is 4.8 per cent of GDP.
Budget Estimates 2025-26
The total receipts other than borrowings and the total expenditure are estimated at Rs. 96 lakh crore and Rs. 50.65 lakh crore respectively. The net tax receipts are estimated at Rs. 28.37 lakh crore. The fiscal deficit is estimated to be 4 per cent of GDP. To finance the fiscal deficit, the net market borrowings from dated securities are estimated at `54 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at ` 14.82 lakh crore.
1. Customs Tariff Structure: Proposes to remove 7 tariff rates, reduce duty incidence on some items, and apply only one cess or surcharge on certain goods.
2. Relief on Drugs/Medicines: 36 lifesaving medicines to be exempted from Basic Customs Duty (BCD), and 6 more will attract concessional duty of 5%.
3. Support for Domestic Manufacturing: Proposes to exempt critical minerals like cobalt powder, lithium-ion battery scrap, and others to support manufacturing and job creation.
4. Textile Sector: Aims to boost domestic production by exempting certain textile machinery and revising BCD rates on knitted fabrics.
5. Electronics: Plans to increase BCD on Interactive Flat Panel Displays, reduce BCD on Open Cells for TVs, and exempt parts of Open Cells for LCD/LED TVs.
6. Lithium-ion Batteries: Proposes to add 35 capital goods for EV battery manufacturing and 28 for mobile phone battery production.
7. Shipping Sector: Proposes to extend the exemption of BCD on shipbuilding materials and shipbreaking for another 10 years.
8. Export Promotion: Extends export time for handicrafts, exempts export duty on crust leather, and reduces BCD on seafood products.
9. Trade Facilitation – Provisional Assessment: Introduces a 2-year time limit for provisional assessments, extendable by 1 year, to reduce uncertainty.
10. Voluntary Compliance: Proposes a new provision for importers/exporters to voluntarily declare facts and pay duties with interest, without penalty, unless audit/investigation is initiated.
1. TDS/TCS Rationalization: The number of TDS rates and thresholds will be reduced, and limits for senior citizens and rent will be increased. TCS on remittances for education loans and transactions for the sale of goods will be removed. Higher TDS deductions will only apply in non-PAN cases, and TCS will also be decriminalized.
2. Voluntary Compliance: The time limit for filing updated returns will be extended from 2 years to 4 years, encouraging more voluntary compliance from taxpayers.
3. Reduced Compliance Burden: Charitable trusts will have an extended registration period of 10 years, and taxpayers can claim two self-occupied properties without conditions.
4. Ease of Doing Business: A scheme for determining arm’s length prices for international transactions will be introduced, and the scope of safe harbour rules will be expanded to reduce litigation. The digitalization of processes, including appellate orders, is now operational.
5. Promoting Investment and Employment: Proposals include tax certainty for electronics manufacturing schemes, extending the tonnage tax scheme to inland vessels, supporting start-ups with a 5-year extension for incorporation, and providing incentives for the International Financial Services Centre (IFSC) and Alternate Investment Funds (AIFs).
The government will forgo Rs 1 lakh crore in direct taxes, Rs 2,600 crore in indirect taxes on account of changes in tax rates.
The annual limit for TDS on rent has been raised from Rs 2.40 lakh to Rs 6 lakh, benefiting small taxpayers receiving smaller payments.
What is the Union Budget?
The Union Budget (technically called the Annual Financial Statement under Article 112 of the Constitution of India) lays out an account of the government’s financial health. It tells the citizens not only how much money the government raised last year, where it spent it, and how much it had to borrow to meet the gap, but also gives an estimate of what it expects to earn in the next financial year (in the present case, the current financial year), how much and where it plans to spend it, and how much it would likely have to borrow to bridge the gap. The Revenue and the Capital sections together, make the Union Budget.
What are the important Budget Documents?
Besides the Union Finance Minister’s Budget Speech, various Budget documents are presented to the Parliament.
A. Documents mandated under the constitution of India:
1. Annual Financial Statement (AFS) – Under Art. 112
2. Demands for Grants (DG) — Under Art. 113
3. Finance Bill— Under Art. 110
B. Documents presented as per the provisions of the Fiscal Responsibility and Budget Management Act, 2003:
1. Macro-Economic Framework Statement
2. Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
What are some important terms related to Budget?
1. Revenue Budget: The revenue budget consists of the government’s revenue receipts (Tax revenues and non-tax revenues) and revenue expenditures. Tax revenues comprise proceeds of taxes and other duties levied by the Union.
2. Revenue Expenditure: Revenue expenditure is for the normal running of Government Departments and for rendering of various services, making interest payments on debt, meeting subsidies, 11 grants in aid, etc. Broadly, the expenditure which does not result in the creation of assets for the Government of India is treated as revenue expenditure.
3. Capital Budget: Capital receipts and capital expenditures together constitute the Capital Budget. The capital receipts are loans raised by the Government. Capital expenditure consists of the acquisition of assets like land, buildings, machinery, equipment, as well as investments in shares, etc., and loans and advances granted by the Central Government to the State and the Union Territory Governments, Government companies, Corporations, and other parties.
4. Fiscal Deficit: Fiscal Deficit is the difference between the Revenue Receipts plus Non-debt Capital Receipts (NDCR) and the total expenditure. In other words, fiscal deficit is “reflective of the total borrowing requirements of Government”.
5. Demands for Grants: Article 113 of the Constitution mandates that the estimates of expenditure from the Consolidated Fund of India included in the Annual Financial Statement and required to be voted by the Lok Sabha, be submitted in the form of Demands for Grants.
6. Money Bill: Article 110 defines a “Money Bill” as one containing provisions dealing with taxes, regulation of the government’s borrowing of money, and expenditure or receipt of money from the Consolidated Fund of India, among others.
7. Finance Bill: At the time of presentation of the Annual Financial Statement before the Parliament, a Finance Bill is also presented in fulfillment of the requirement of Article 110 (1)(a) of the Constitution, detailing the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. A major difference between money and Financial Bills is that while the latter has the provision of including the Rajya Sabha’s (Upper House) recommendations, the former does not make their inclusion mandatory. The Lok Sabha has the right to reject the Rajya Sabha’s recommendations when it comes to Money Bills.
(Source: http://www.indiabudget.gov.in)
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