Below is a comprehensive overview of the key highlights and live updates from India’s Union Budget 2025‐26, which was presented on 1 February 2025 by Finance Minister Nirmala Sitharaman:
Overview
The 2025–26 Union Budget has been designed with a clear focus on boosting the spending power of the middle class while maintaining fiscal discipline amid moderate growth projections. In her address, the finance minister emphasized reforms across taxation, infrastructure, agriculture, manufacturing, and foreign investment to drive long‐term growth and support inclusive development.
Key Tax Reforms and Relief for the Middle Class
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Income Tax Changes:
The new regime raises the nil tax slab threshold to ₹12 lakh (and ₹12.75 lakh for salaried individuals with the standard deduction). This move is intended to leave more money in the hands of taxpayers, thereby stimulating household consumption and savings. The restructuring of tax slabs means that a significant number of middle‐income individuals will now pay little to no income tax, which experts predict will give a boost to domestic demand. -
Additional Measures:
Other steps include rationalizing the tax deduction at source (TDS) rules and introducing a simplified income tax bill aimed at reducing litigation and easing compliance burdens. These initiatives have been welcomed by both industry experts and consumer groups as a “relief package” for the middle class.
Fiscal Discipline and Infrastructure Spending
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Fiscal Deficit and Borrowings:
The government has set a fiscal deficit target of 4.4% of GDP for 2025–26, down from 4.8% in the current fiscal year. To fund this, gross borrowings are projected to be around 14.82 trillion rupees, with net borrowings expected to slightly decline to 11.54 trillion rupees. This approach is aimed at bolstering investor confidence and ensuring a sustainable debt-to-GDP ratio over the coming years. -
Capital Expenditure:
The capital expenditure for the next fiscal year is set at approximately 11.2 lakh crore rupees. However, some market observers have noted that the modest rise in capex may not fully meet the long-term infrastructure needs, a point of concern for sectors reliant on heavy public investment.
Sectoral Initiatives
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Agriculture and Rural Growth:
The budget introduces long-term missions aimed at boosting production in key agricultural segments. Notably, a six-year mission to increase pulse output and a five-year mission for cotton production have been announced. These initiatives are part of a broader effort to enhance food security and reduce import dependency. -
Manufacturing and Investment Incentives:
In support of the ‘Make in India’ agenda, the government is setting up a National Manufacturing Mission. Enhanced credit guarantees for small and medium enterprises, along with a dedicated Fund of Funds for startups (with a government contribution of 100 billion rupees), are expected to spur innovation and boost manufacturing competitiveness. -
FDI in Insurance:
Another significant reform is the decision to raise the foreign direct investment limit in the insurance sector to 100% from 74%, a move aimed at attracting more capital and expertise from abroad.
Market and Industry Reactions
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Stock Market Response:
Sectors tied to consumer spending have generally reacted positively to the tax cuts, as they are likely to benefit from increased disposable incomes. However, stocks in the infrastructure and related sectors have shown some volatility, reflecting concerns that the modest capex increases may not be enough to fully drive long-term economic growth. -
Industry Voices:
Key industry figures have praised the measures targeting the middle class. For instance, leaders in consumer goods and automotive sectors highlighted that the tax relief should boost demand in these areas, while experts in the renewable energy and manufacturing sectors welcomed the increased FDI limit and other targeted incentives.
Live Update Context
Throughout the live coverage—from press conferences and expert panels to real-time market updates—viewers and analysts noted that:
- The tax reforms are seen as the centerpiece of the budget, aimed at providing immediate relief to a vast section of taxpayers.
- There is cautious optimism about the moderate fiscal targets and the emphasis on long-term growth through structural reforms.
- While the budget’s consumer-focused measures are expected to drive short-term demand, the modest capital expenditure increases have sparked debates on whether they will be sufficient to meet the country’s infrastructure challenges.
Conclusion
India’s Union Budget 2025–26 is largely characterized by a dual focus: providing significant tax relief to stimulate consumption and implementing fiscal measures that aim to secure long-term economic stability. Although some areas—particularly infrastructure spending—have drawn critical attention, the overall consensus is that the budget is geared toward empowering the middle class and fostering inclusive growth in a challenging global environment.
This summary consolidates insights from live updates and expert reactions provided by reputable sources such as Reuters and Mint.
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