The Union Budget 2025-26 has been presented, reaffirming Prime Minister Narendra Modi’s unwavering vision for a Viksit Bharat. Over the past decade, while the goal has remained steadfast, everything else has evolved-transformative reforms spanning agriculture, MSMEs, youth empowerment, global trade, and middle-class welfare have redefined India’s economic trajectory. In these turbulent global times, the budget emerges as a beacon of hope. Pragmatic yet bold, visionary yet rooted in reality, it reaffirms the government’s unwavering commitment to building a future where growth is inclusive, opportunities are boundless, and India’s rise on the global stage remains unstoppable.
The Indian middle class is no longer a silent observer; it is a dynamic force shaping the nation’s future. Over the past decade, more than 25 crore Indians have transitioned out of poverty, fueling aspirations in fields such as sports, start-ups, space exploration, and technological advancements. This budget builds upon previous commitments, ensuring continued financial relief and empowerment.
Steady rise in tax exemption limits, offers greater financial relief and empowers millions of taxpayers. From `2.5 lakh in 2014 to `5 lakh in 2019, then `7 lakh in 2023, and now a remarkable `12 lakh in 2025-this consistent expansion has, for the first time, left a vast majority of the middle class completely out of the burden of paying personal income tax. Under the new tax regime, a taxpayer earning `12 lakh will receive a substantial benefit of `80,000-effectively eliminating their entire tax liability under the existing rates. This means 100% of the tax payable as per previous slabs is now saved, allowing individuals to retain more of their hard-earned income. And this comes at a time when the share of income tax in total government receipts has actually increased from 19% to 22%. This makes it even more impressive-stronger tax compliance and a rapidly expanding formal economy have ensured that despite widespread tax relief, revenues remain robust and sustainable.
In a deeply considerate step, the government has doubled the tax deduction limit for senior citizens from `50,000 to `1 lakh, recognizing their evolving financial needs and ensuring a dignified, secure future. Yet, even as tax relief is extended to millions, fiscal prudence remains paramount. The fiscal deficit target has been firmly set at 4.4% of GDP, reinforcing the government’s commitment to responsible economic management.
At the heart of India’s economic fabric lies agriculture-the lifeblood of millions. This budget further strengthens the government’s commitment to our farmers with transformative initiatives: enhanced credit through Kisan Credit Cards (KCC) will benefit 7.7 crore farmers, providing them with greater financial stability. A visionary 5-year mission to boost cotton productivity will enhance India’s textile competitiveness, while the establishment of a dedicated Makhana Board in Bihar will offer vital institutional support to farmers engaged in niche agri-products. Additionally, a six-year roadmap for Aatmanirbharta in pulses will reduce import dependence, ensuring food security and improving rural incomes.
In India, MSMEs have often remained small, not just by circumstance but sometimes by choice-to evade regulatory complexities and compliance burdens. However, this government does not see MSMEs as entities meant to stay small; it envisions them as dynamic engines of growth, capable of scaling, innovating, and driving economic transformation. In line with this vision, the budget introduces structured interventions to propel MSMEs forward so that they are not just surviving but thriving, contributing more significantly to India’s industrial and economic landscape. In a significant move, the MSME classification criteria have been revised, with turnover and investment limits more than doubling-easing regulatory constraints and enabling more businesses to thrive. The credit guarantee cover has been doubled to `10 crore for Micro & Small Enterprises (MSEs) and `20 crore for start-ups, ensuring greater financial security and access to capital. To facilitate financial inclusion, 10 lakh credit cards with a `5 lakh limit will be issued to micro enterprises, enabling them to expand operations with ease. Additionally, a special scheme has been introduced to provide term loans of up to `2 crore for 5 lakh first-time entrepreneurs, with a special focus on women, Scheduled Castes, and Scheduled Tribes. These transformative measures will not only fuel growth but also drive formalization and job creation across the sector.
Recognizing that India’s youth are its greatest asset, the budget places a sharp focus on education, research, and skill development. The expansion of IIT capacities and the introduction of the Bharatiya Bhasha Pustak scheme will strengthen higher education and promote learning in regional languages. To foster innovation from an early age, 50,000 Atal Tinkering Labs will be set up in government schools over the next 5 years, igniting young minds with hands-on scientific learning. Increased investment in medical education will help meet the growing healthcare demands of the nation, ensuring a skilled workforce in critical sectors. Furthermore, broadband connectivity for all government secondary schools and primary health centers will bridge the digital divide, ensuring equitable access to knowledge and healthcare services. A significant `20,000 crore allocation for private-sector-driven research, development, and innovation initiatives will accelerate India’s technological advancements and global competitiveness.
The government’s unwavering commitment to infrastructure development remains a defining pillar of this budget, reinforcing India’s journey toward economic transformation. With a `1.5 lakh crore outlay for 50-year interest-free loans to states for capital expenditure-linked to incentives for structural reforms-the focus is firmly on sustainable and inclusive growth. The Asset Monetization Plan 2025-30, targeting `10 lakh crore in investments for new projects, will unlock value from existing assets while fueling fresh infrastructure expansion. Meanwhile, the extension of the Jal Jeevan Mission till 2028 ensures that the dream of 100% safe drinking water coverage becomes a reality for every household, improving public health and quality of life. These strategic investments will drive economic expansion, generate employment, and elevate India’s global competitiveness.
To make India a more business-friendly destination, the budget introduces progressive regulatory reforms - A regulatory framework based on trust and principles to boost productivity and employment. A High-Level Committee for Regulatory Reforms to ease compliance burdens and Jan Vishwas Bill 2.0 to decriminalize over 100 provisions in various laws will enhance ease of doing business and attract both domestic and foreign investments. With an eye on global leadership, the government has launched key initiatives to integrate India into global supply chains. ‘BharatTradeNet’ (BTN), a unified digital public infrastructure platform for international trade documentation and financing. A National Framework for Global Capability Centers (GCCs) to promote emerging Tier-2 cities as investment hubs. Exemptions on key imports, including 36 lifesaving drugs, LED/LCD TV components, 35 capital goods for EV battery manufacturing, and 28 capital goods for mobile phone battery manufacturing, are expected to boost domestic production and affordability. Rationalization of the customs tariff structure will take place, removing seven tariff rates to enhance trade competitiveness.
The 2025-26 budget is not merely a budget but a bold statement of vision, defining India’s path towards self-dependency, global competitiveness, and shared prosperity. With a sharp accent on farmers, MSMEs, infrastructure, and ease of compliance, it creates a strong platform for long-term growth and yet keeps in consideration that anyone and everyone in India must have an opportunity to flourish. Despite budgeted consolidation, the government has delivered a citizen-first, progressive budget-one that inspires hope, induces investments, and accelerates national development.
Gone are the days when India was counted among the Fragile Five. Today, we stand on the cusp of greatness-soon to be recognized as one of the world’s foremost economic powerhouses, a leader in business, resilience, and global influence. With structural reforms, strategic investments, and a future-ready approach, India is not just navigating change but shaping it. The journey toward Viksit Bharat is well underway, and this budget ensures that no Indian is left behind. From the fields of our farmers to the ambitions of our entrepreneurs, from the aspirations of our youth to the well-being of our senior citizens-this is a budget that empowers, uplifts, and inspires. The future belongs to India, and with unwavering resolve, we are building a nation that is strong, self-reliant, and unstoppable.
— The writer is a professor of finance at Xavier School of Management, XLRI
