The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, marks a significant step towards achieving the government’s vision of a Viksit Bharat (Developed India) by 2047. With a strong emphasis on inclusive growth, innovation, and sustainability, the budget introduces several strategic initiatives aimed at transforming key sectors of the economy. Here are the major takeaways from this year’s budget:
Focus on Farmers: Boosting Agricultural Productivity
The budget places a strong emphasis on agriculture, a sector that employs nearly half of India’s workforce. Under the Prime Minister Krishi Yojana, the government plans to launch an agricultural district program targeting 100 districts with low productivity, moderate crop intensity, and below-average credit parameters. This initiative aims to enhance agricultural productivity through crop diversification, sustainable farming practices, improved irrigation facilities, and better post-harvest storage infrastructure. The program is expected to benefit 1.7 crore farmers, ensuring food security and increasing rural incomes.
Additionally, the budget expands the scope of the Kisan Credit Card (KCC) scheme, which will continue to provide short-term loans to 7.7 crore farmers, fishermen, and dairy farmers. The loan limit under the modified interest subvention scheme has been increased from ₹3,000 to ₹5,000, offering greater financial support to farmers for agricultural production.
Focus on MSMEs: Empowering the Backbone of the Economy
Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India’s economy, contributing 36% to manufacturing and 45% to exports. Recognizing their importance, the budget introduces measures to empower MSMEs, including increasing the investment and turnover limits by 2.5 times and 2 times, respectively. This move is expected to help MSMEs scale up, innovate, and generate more employment opportunities.
The budget also enhances the credit guarantee cover for micro and small enterprises, raising the guarantee limit from ₹5 crore to ₹10 crore. This is expected to unlock an additional ₹1.5 lakh crore in credit over the next five years, providing much-needed financial support to small businesses.
India’s Energy Transition: A Push for Clean Energy
In line with India’s commitment to clean energy, the budget announces a Nuclear Energy Mission with a goal of developing at least 100 GW of nuclear power by 2047. To facilitate private sector participation, amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will be introduced. Additionally, a dedicated research and development initiative for Small Modular Reactors (SMRs) will be launched with an outlay of ₹20,000 crore. The government aims to operationalize at least five indigenously developed SMRs by 2033, marking a significant step towards achieving energy security and reducing carbon emissions.
Center of Excellence in AI for Education: Bridging the Digital Divide
The budget introduces a Center of Excellence in Artificial Intelligence (AI) for Education, with an outlay of ₹500 crore. This initiative aims to leverage AI to enhance the quality of education, bridge the digital divide, and prepare students for the future workforce. The center will focus on developing AI-driven tools and platforms for personalized learning, teacher training, and curriculum development. This move aligns with the government’s broader vision of transforming India into a global hub for innovation and technology.
Speaking on this, Anitha Sarathy , India Head of People & Culture at Encora, said, “The announcement of three Centres of Excellence on AI for education with an outlay of ₹500 crore and the focus on expanding Global Capability Centers (GCCs) to Tier-2 cities is a significant step toward India’s digital and economic transformation. The investment in AI-driven education will foster a future-ready workforce, equipping talent with the skills required for global innovation. Additionally, the push for GCCs in Tier-2 cities will unlock new talent pools, drive economic growth, and position India as a strategic hub for high-value capabilities.
As a global digital transformation leader on an expansion track in India, we welcome these initiatives and remain committed to leveraging India’s rich talent ecosystem to shape the cloud-led, data-led, AI-led future, while contributing to the country’s vision of becoming a global digital powerhouse.”
India Post as a Publicly Held Logistics Player: Catalyzing The Economy
In a significant move, the budget proposes transforming India Post into a large public logistics organization. With 1.5 lakh rural post offices and a vast network of 2.4 lakh dark bucks (rural logistics hubs), India Post will play a pivotal role in catalyzing the rural economy. The organization will support new entrepreneurs, women, self-help groups, MSMEs, and larger businesses by providing efficient logistics services. This initiative is expected to boost rural connectivity, create employment opportunities, and enhance the overall efficiency of the logistics sector.
Rise of Competitive Cooperative Federalism: Promoting Investment-Friendly Policies
To promote competitive cooperative federalism, the budget introduces an Investment Friendliness Index for states. This index will assess the ease of doing business and investment climate across states, encouraging them to adopt more business-friendly policies. Additionally, the Jan Vishwas Act 2023 has decriminalized over 1,080 legal provisions, fostering a more conducive regulatory environment for businesses. These measures aim to enhance the responsiveness and growth of the financial sector, ensuring a balanced and inclusive development across states.
Relief for Healthcare Patients: Expanding Access to Life-Saving Drugs
The budget provides significant relief to patients by exempting patient assistance programs run by pharmaceutical companies from Basic Customs Duty (BCD), provided the medicines are supplied free of cost. Additionally, 36 life-saving drugs for cancer, rare diseases, and chronic conditions have been added to the list of medicines fully exempt from customs duty. Six life-saving medicines will also benefit from a concessional customs duty of 5%. These measures aim to reduce the financial burden on patients and improve access to essential medicines.
Relief for Middle-Class Taxpayers: Simplifying the Tax Regime
The budget introduces significant reforms aimed at easing the tax burden on the middle class. The new Income Tax Bill, set to be introduced next week, promises to simplify the tax regime by reducing the volume of the current law by half. The bill will be clear, direct, and easy to understand, reducing confusion and litigation. Key announcements include:
- Doubling the limit for tax deduction on interest income for senior citizens from ₹50,000 to ₹1 lakh.
- Increasing the annual limit for TDS on rent from ₹2.40 lakh to ₹6 lakh, benefiting small taxpayers.
- Rationalizing TDS rates and thresholds to reduce compliance burdens.
- A significant revision in income tax slabs, with income up to ₹12 lakh now being tax-free under the new regime
- The Section 87A rebate has been increased from ₹25,000 to ₹60,000, further reducing tax liability for individuals earning up to ₹12 lakh annually
These measures are expected to provide much-needed relief to middle-class taxpayers, fostering voluntary compliance and reducing the overall tax burden.
Looking to the Future
The Union Budget 2025 is a forward-looking document that addresses the needs of various sectors while keeping the long-term goal of Viksit Bharat in mind. By focusing on agriculture, MSMEs, clean energy, education, logistics, healthcare, and tax reforms, the budget lays a strong foundation for sustainable and inclusive growth. As India continues to navigate global economic challenges, these strategic initiatives will play a crucial role in driving the country towards a prosperous future.
