Union Budget 2025: A Game-Changer for India’s Economic Growth and Middle-Class Relief

Finance Minister Nirmala Sitharaman has unveiled the Union Budget 2025, marking her record-breaking eighth consecutive budget presentation. With India navigating global economic uncertainties and preparing for its next phase of growth, this budget lays out a roadmap for fiscal consolidation, tax reforms, infrastructure development, and social welfare initiatives.

Key Highlights: New Income Tax Regime & Middle-Class Relief

One of the most awaited announcements was the significant relief in the income tax regime:

• No Tax Up to Rs 12 Lakh: Individuals earning up to Rs 12 lakh annually will not be required to pay income tax, bringing much-needed relief to the middle class.
• Revised Tax Slabs:
  • Up to Rs 4 lakh – No tax
  • Rs 4 lakh – Rs 8 lakh – 5%
  • Rs 8 lakh – Rs 12 lakh – 12%
  • Rs 12 lakh – Rs 16 lakh – 15%
  • Rs 16 lakh – Rs 20 lakh – 20%
  • Rs 20 lakh – Rs 24 lakh – 25%
  • Above Rs 24 lakh – 30%
• TDS & TCS Rationalization: The government has reduced the number of TDS rates and thresholds to simplify compliance.
• Higher TCS Threshold for LRS: The TCS threshold for remittances under the Liberalized Remittance Scheme (LRS) has been raised from Rs 7 lakh to Rs 10 lakh.
• Education Loan Exemption: TCS on education loans up to Rs 10 lakh will be removed, making higher education more accessible.
• Decriminalization of TCS Delay: Delayed TCS payments will no longer be treated as a criminal offense.

Customs Duty Reforms and Tariff Adjustments

The government has introduced several tariff changes aimed at boosting domestic industries:

• Seven Tariff Rates Removed to simplify the tax structure.
• Customs Duty Reduction: Open-cell customs duty has been reduced to 5%, benefiting the electronics industry.
• Basic Customs Duty (BCD) Exemptions:
  • 36 life-saving drugs added to the BCD exemption list.
  • 12 critical minerals exempted from BCD to support manufacturing.
  • 35 capital goods for EV manufacturing added to the BCD exemption list.
• Increase in BCD on Flat Panel Displays: Raised from 10% to 20% to promote local production.

Infrastructure Development & Fiscal Management

• Capex Allocation: A record Rs 10.18 lakh crore has been allocated for capital expenditure to boost economic growth.
• Fiscal Deficit Projections:
  • FY25: 4.8% of GDP
  • FY26: 4.4% target set for fiscal consolidation.
• Market Borrowing Plan: Gross market borrowing is projected at Rs 14.82 lakh crore for FY26.

Boost for Startups, MSMEs & Industrial Growth

• Credit Guarantee Cover for MSMEs: Increased from Rs 10 crore to Rs 20 crore to empower small businesses.
• Customized Credit Cards: A Rs 5 lakh limit has been introduced for micro SMEs.
• New Fund-of-Funds: A Rs 10,000 crore support fund for startups will be established.
• Manufacturing Hub Initiatives:
  • A National Manufacturing Mission will be launched to strengthen ‘Make in India.’
  • A new urea plant with a capacity of 1.27 lakh tonnes to be established in Assam.
  • Solar PV, Electrolyzers, and Grid-Scale Battery Ecosystem to receive a boost.

Tourism, Innovation, and Digital Transformation

• Top 50 Tourism Destinations: To be developed in collaboration with states.
• Mudra Loans for Homestays: Encouraging local entrepreneurs to boost the tourism industry.
• Medical Tourism Focus: “Heal-in-India” initiative to attract international patients.
• Deep-Tech Fund-of-Funds: Aimed at supporting cutting-edge technological innovation.
• National Geospatial Mission: Enhancing spatial data and mapping capabilities.

Education, Healthcare & Social Welfare

• Broadband Connectivity: All government secondary schools and primary healthcare centers will receive broadband internet.
• Skilling & Vocational Training: Five National Centers of Excellence for skilling will be established.
• Medical College Expansion: 10,000 new medical seats will be added in FY26.
• Day-Care Cancer Centres: 200 centres to be set up by 2025-26.
• Gig Worker Social Security: New scheme offering E-shram registration and insurance benefits.
• Urban Challenge Fund: Rs 1 lakh crore allocated for smart urban development.
• Jal Jeevan Mission: MoUs with states for enhanced water infrastructure.

Agriculture & Rural Development

• Dhan Dhanya Krishi Yojana: Focus on 100 low-productivity districts to improve agricultural output.
• Support for 1.7 Crore Farmers: Through various schemes and subsidies.
• Fisheries Mission: Sustainable harnessing of marine resources in India’s Exclusive Economic Zone (EEZ).
• Kisan Credit Scheme: Loan limit raised from Rs 3 lakh to Rs 5 lakh.
• National Mission on High-Yielding Seeds: To enhance agricultural productivity.
• Cotton Production Boost: A 5-year plan to increase cotton yields.

Energy, Infrastructure & Regional Development

• 100 GW Nuclear Energy Target by 2047
• Nuclear Energy Mission: Rs 20,000 crore allocated for research on small modular reactors.
• Shipbuilding Financial Assistance Policy: Revamped to support India’s maritime sector.
• Maritime Development Fund: Rs 25,000 crore allocated to strengthen the sector.
• Udaan Scheme Expansion: 120 new destinations to be connected.
• Greenfield Airports in Bihar: Funding for new airport infrastructure.
• Western Kosi Canal Project: Financial support allocated for irrigation development in Bihar.

Geopolitical & Economic Challenges

The budget arrives at a time when India faces external economic pressures, including potential tariff threats from the U.S. and global geopolitical uncertainties. Despite this, India remains committed to fiscal responsibility, economic expansion, and global leadership in trade and technology.

The Union Budget 2025 is a bold and progressive step towards making India a $5 trillion economy. With significant tax reliefs, infrastructure expansion, MSME support, and digital transformation, this budget aims to fuel economic growth while ensuring social welfare. The focus on self-reliance, manufacturing, and innovation makes it a landmark budget that sets the stage for India’s long-term prosperity.