Budget 2025-26 presents a balanced approach, aiming to stimulate economic growth through tax reforms and substantial investments in agriculture and infrastructure
The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, introduces significant measures aimed at stimulating economic growth, enhancing middle-class spending power, and promoting inclusive development.
A notable highlight is the increase in the income tax exemption threshold to Rs 12 lakh, accompanied by a restructuring of tax slabs. Under the new regime, incomes up to Rs 12 lakh are exempt from tax, with the maximum rate of 30 per cent applying to incomes above Rs 24 lakh. This initiative is designed to boost consumer demand by increasing disposable incomes among the middle class.
The Budget also places a strong emphasis on agriculture, launching a high-yield crop programme targeting 17 million farmers and enhancing subsidised credit. These measures aim to increase farm output and support the rural economy.
In the realm of infrastructure, the Government has allocated substantial funds for development projects, including regional air connectivity and critical mineral development. These initiatives are expected to bolster economic growth and create employment opportunities.
However, concerns have been raised regarding the potential impact of these tax cuts on revenue generation. Further, while infrastructure spending may generate jobs, what was perhaps needed was a direct roadmap for addressing unemployment in high-skill industries or boosting employment in the services sector, where job creation has lagged. The absence of targeted incentives for sectors like IT, green technology, and manufacturing may limit employment opportunities for educated youth.
While the introduction of Day Care Cancer Centres and customs duty exemptions on cancer drugs address critical healthcare challenges, broader investments in healthcare infrastructure, especially rural health facilities, remain insufficient. Public health spending is still below the targeted 2.5 per cent of GDP recommended by the National Health Policy.
With rising climate concerns, stronger commitments and investments for renewable energy, climate adaptation projects, and sustainable agriculture would have been timely. Outlining of comprehensive steps to accelerate India’s green transition or incentives for EV adoption would have been welcome.
Overall, Budget 2025-26 presents a balanced approach, aiming to stimulate economic growth through tax reforms and substantial investments in agriculture and infrastructure. While the tax cuts are poised to enhance middle-class spending power, the emphasis on infrastructure development is expected to provide a more sustainable boost to the economy.
The success of these measures will, however, depend on effective implementation and the Government’s ability to manage fiscal constraints while fostering inclusive growth.