On February 1, 2025, Finance Minister Nirmala Sitharaman presented India's Union Budget for the fiscal year 2025-26, introducing significant measures aimed at stimulating economic growth, supporting the middle class, and enhancing various sectors.
Key Highlights:
Tax Reforms:
- Personal Income Tax Relief: The budget proposes a complete tax rebate for individuals earning up to ₹12 lakh annually, effectively eliminating income tax for this segment. This move is anticipated to increase disposable income and boost consumer spending.
- TDS and TCS Adjustments: The threshold for Tax Deducted at Source (TDS) on interest for senior citizens has been doubled from ₹50,000 to ₹1 lakh. Additionally, the annual limit for TDS on rent has been increased from ₹2.4 lakh to ₹6 lakh, aiming to simplify tax compliance.
Agriculture and Rural Development:
- Increased Investment: The government plans to raise agricultural spending by over 15%, marking the largest increase in six years. This funding will support the development of high-yielding variety seeds, enhance storage and supply infrastructure, and boost the production of pulses, oilseeds, vegetables, and dairy products.
- Prime Minister Dhan-Dhaanya Krishi Yojana: A new initiative targeting 100 districts is set to benefit approximately 1.7 crore farmers, focusing on sustainable agricultural practices and increased productivity.
Infrastructure and Transportation:
- Infrastructure Development: The budget allocates substantial funds for infrastructure projects, including the expansion of metro networks and regional connectivity rail projects. Notably, the Delhi-Ghaziabad-Meerut Namo Bharat Corridor and expansions in Delhi Metro Phase-IV are highlighted as key initiatives to enhance urban mobility.
- Railway Modernization: Significant allocations are expected for high-speed rail corridors, advanced freight logistics, and station modernization, aiming to improve passenger experiences and promote sustainable transportation.
Fiscal Discipline:
- Fiscal Deficit Reduction: The government targets a fiscal deficit of 4.4% of GDP for the fiscal year 2025-26, down from the revised 4.8% for the current year. This move is expected to bolster foreign investor confidence and contribute to economic stability.
Economic Growth Projections:
- GDP Growth: The budget underscores the need for deregulation to avoid economic stagnation, with the government's Economic Survey predicting a GDP growth of 6.4% for the current fiscal year.
These comprehensive measures reflect the government's commitment to fostering economic growth, supporting various sectors, and maintaining fiscal prudence in the upcoming fiscal year.
