On February 1, 2025, Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2025-2026, marking a pivotal moment in India’s economic trajectory. This union budget 2025, the first full financial year budget of Prime Minister Narendra Modi’s third term, aims to stimulate economic growth, enhance infrastructure, and promote social welfare.
Allocation of Expenditure in Union Budget 2025
| Sector | Budget Allocation (₹ Crore) | % of Total Budget | Key Announcements |
| Defence | 594,000 | 13% | Modernization of equipment, domestic manufacturing, OROP scheme |
| Infrastructure | 1,121,000 | 24.5% | Highways, railways, inland waterways, and urban transport |
| Health | 295,000 | 6.5% | Ayushman Bharat expansion, AIIMS upgrade, telemedicine |
| Education | 168,000 | 3.7% | Digital learning hubs, new IITs and IIMs, skill development |
| Agriculture & Rural Development | 380,000 | 8.3% | PM Kisan Yojana, irrigation projects, rural infrastructure |
| Social Welfare | 450,000 | 9.8% | Women’s welfare, pension scheme, social security for informal workers |
| Renewable Energy | 150,000 | 3.3% | National Green Hydrogen Mission, solar and wind energy |
| Research & Development | 200,000 | 4.4% | PM Research Fellowship, innovation in AI, biotechnology |
| Tax Relief and Reforms | 180,000 | 3.9% | Increased tax exemptions, simplified tax filing process |
| Housing | 275,000 | 6.0% | PM Awas Yojana, affordable housing, rental housing for migrants |
| Tourism & Culture | 100,000 | 2.2% | Development of tourist sites, PRASAD scheme, heritage preservation |
| Financial Sector & Banking | 120,000 | 2.6% | Recapitalization of public sector banks, FDI incentives |
| Employment & MSME Support | 150,000 | 3.3% | Credit Guarantee Scheme, MSME funding, gig economy support |
| Environment and Climate Change | 100,000 | 2.2% | Afforestation, biodiversity conservation, pollution control |
| Technology and Digital Infrastructure | 200,000 | 4.4% | BharatNet expansion, Digital India 2.0, blockchain adoption |
| Transport and Logistics | 250,000 | 5.5% | National Highway expansion, railway electrification |
| Others (including Judiciary, Law & Order) | 230,000 | 5.0% | Strengthening law enforcement, judicial infrastructure |
➡️ Total Budget Allocation: ₹50,65,345 crore (₹50 lakh crore)
Key Highlights of the Union Budget 2025
1. Taxation Reforms union budget 2025
- Zero Income Tax up to ₹12 Lakh: Under the new tax regime, individuals with an annual income up to ₹12 lakh are exempt from income tax. This move is expected to increase disposable income, thereby boosting consumption and savings.
- Revised Income Tax Slabs: The tax slabs have been restructured to provide relief to taxpayers. The new tax rates are as follows:
| Income Range (₹) | Tax Rate (%) |
| Up to 4 lakh | Nil |
| 4 lakh to 8 lakh | 5 |
| 8 lakh to 12 lakh | 10 |
| 12 lakh to 16 lakh | 15 |
| 16 lakh to 20 lakh | 20 |
| 20 lakh to 24 lakh | 25 |
| Above 24 lakh | 30 |
- Standard Deduction Increase: The standard deduction has been raised from ₹50,000 to ₹75,000, further reducing the tax burden on salaried individuals.
2. Focus on Agriculture union budget 2025
- Prime Minister Dhan-Dhaanya Krishi Yojana: A new scheme aimed at enhancing agricultural productivity and ensuring food security
- Enhanced Credit through Kisan Credit Card (KCC): The government plans to facilitate short-term loans up to ₹5 lakh for 7.7 crore farmers, fishermen, and dairy farmers, aiming to reduce their financial burden and promote agricultural activities.
- Mission for Self-Reliance in Pulses: A six-year mission focusing on pulses like Tur, Urad, and Masoor to reduce dependency on imports and achieve self-sufficiency.
- Establishment of a Makhana Board in Bihar: To promote the cultivation and marketing of Makhana, benefiting local farmers and boosting the regional economy.
3. Investment in Science and Innovation union budget 2025
- Research, Development & Innovation Initiative: An allocation of ₹20,000 crore has been made to implement a private sector-driven research, development, and innovation initiative, encouraging technological advancements and fostering a culture of innovation.
- PM Research Fellowship: Ten thousand fellowships will be provided for technological research in premier institutions like IITs and IISc, aiming to nurture young talent and promote cutting-edge research.
- Gene Bank for Crops Germplasm: The establishment of a second gene bank, housing 10 lakh germplasm lines, to ensure future food and nutritional security by preserving genetic diversity.
4. Export Promotion and Industry Incentives union budget 2025
- Incentivizing Electronics and EVs: Exemptions will be granted for open cells used in LED/LCD TVs, looms for textiles, and capital goods for lithium-ion batteries used in mobile phones and electric vehicles, promoting domestic manufacturing and reducing import dependency.
- Promotion of Maintenance, Repair, and Overhaul (MRO): A 10-year exemption will be granted on goods used for shipbuilding and ships meant for breaking. Additionally, the time limit for the export of railway goods imported for repairs will be extended, boosting the MRO industry.
- Trade Facilitation Measures: The government has set a time limit for the finalization of provisional assessments and introduced provisions for the voluntary declaration of material facts after clearance and duty payment, with interest but without penalty. The Import General Customs Rules (IGCR) have been amended to extend the time limit to one year and allow for the filing of quarterly statements instead of monthly ones, simplifying compliance for businesses.
- Leather Goods Industry Support: Wet blue leather will be fully exempted from basic customs duties, aiming to promote domestic consumption and enhance exports to other nations, thereby supporting the leather industry’s growth.
5. Infrastructure and Development union budget 2025
- Increased Capital Expenditure: The government plans a slight increase in capital spending to offset revenue losses, targeting an 11.21 trillion rupees expenditure in 2025-26. This investment aims to boost infrastructure development and stimulate economic growth.
- Support for the Gig Economy: The government will support the gig economy by issuing identity cards to gig workers, enhancing their access to healthcare and welfare. This initiative aims to provide social security to a significant segment of the workforce.
- Investments in Startups and Innovation: Investments will be made in startups, innovation, manufacturing, and the energy sector, fostering entrepreneurship and technological advancements.
6. Social Welfare Initiatives
- Unified Pension Scheme: The government has allocated 70 billion rupees to fund the new Unified Pension Scheme for federal employees, which will begin on April 1, 2025. This scheme aims to provide a secure post-retirement life for government employees.
7. Healthcare and Medical Infrastructure union budget 2025
- Health Budget Increase:
The health sector saw a 15% increase in budget allocation compared to the previous year, aiming to strengthen public healthcare infrastructure and improve access to medical services. This includes funding for new AIIMS (All India Institute of Medical Sciences) and upgrading district hospitals. - Mission Ayushman Bharat Expansion:
Under the Ayushman Bharat scheme, the government announced the inclusion of senior citizens above 70 years for free health check-ups and insurance cover of up to ₹10 lakh. The expansion of Ayushman Bharat Digital Mission aims to create a central health repository for seamless access to patient records. - Pharmaceutical Sector Boost:
The government allocated ₹3,000 crore for research and development in the pharmaceutical sector, including incentives for the production of essential medicines and active pharmaceutical ingredients (APIs) to reduce dependence on imports. - Telemedicine and Health Tech:
₹1,500 crore has been allocated for setting up telemedicine centers in rural areas, aiming to provide remote healthcare access and specialist consultations through digital platforms.
8. Education and Skill Development
- Digital India for Education:
The budget announced a significant boost to the Digital India initiative in the education sector. The government plans to set up 100 digital learning hubs across the country and expand the existing PM eVidya program to cover all state boards and regional languages. - Skill Development Mission:
The government allocated ₹5,000 crore for the Skill India program, which includes new training centers focused on future skills like AI, blockchain, and cybersecurity. 1.5 million youth are expected to benefit from the training in the next two years. - Higher Education Infrastructure:
The budget provided ₹10,000 crore to establish five new IITs and seven new IIMs. Additionally, the budget increased research grants for public universities by 20%. - Scholarships and Financial Aid:
The government expanded the National Scholarship Scheme to cover students from low-income backgrounds pursuing higher education in STEM fields, providing up to ₹2 lakh per year.
9. Defense and National Security
- Increased Defense Spending:
The defense budget was increased by 13% to ₹5.94 trillion, focusing on modernizing equipment, enhancing border security, and developing indigenous defense manufacturing. - ‘Make in India’ for Defense:
₹1.2 trillion has been earmarked for domestic defense production, including the manufacturing of fighter jets, submarines, and missile systems under the Atmanirbhar Bharat initiative. - Cybersecurity and Intelligence:
The budget allocated ₹5,000 crore for strengthening national cybersecurity infrastructure, including setting up a national-level Cyber Defense Command to counter cyber threats. - Welfare of Armed Forces:
₹1,000 crore has been allocated to improve healthcare, housing, and pension schemes for retired defense personnel under the One Rank One Pension (OROP) scheme.
10. Environment and Sustainability
- National Green Hydrogen Mission:
The budget allocated ₹25,000 crore for the National Green Hydrogen Mission to promote hydrogen production, storage, and transportation, aiming to make India a global leader in green energy. - Electric Vehicle (EV) Incentives:
Subsidies for EV buyers have been increased under the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme. Tax exemptions on EV components were also announced to reduce production costs. - Renewable Energy Investment:
The government allocated ₹15,000 crore for setting up solar power plants and ₹10,000 crore for expanding wind energy infrastructure. - Afforestation and Biodiversity:
A fund of ₹5,000 crore has been created to support large-scale afforestation and biodiversity conservation programs, including incentives for farmers to grow medicinal plants and forest-based crops.
11. Real Estate and Housing
- Affordable Housing Scheme:
The budget allocated ₹2.75 trillion to the PM Awas Yojana to build 30 lakh affordable houses for urban and rural populations. - Interest Subsidy on Home Loans:
A new interest subsidy of 2% has been announced for home loans under ₹50 lakh to boost the real estate sector and increase home ownership. - Rental Housing for Migrants:
₹10,000 crore has been set aside for constructing rental housing complexes in major cities to accommodate migrant workers and low-income families.
12. Tourism and Culture
- Boost to Religious and Heritage Tourism:
₹5,000 crore has been allocated for developing infrastructure at major pilgrimage sites under the PRASAD (Pilgrimage Rejuvenation and Spiritual Augmentation Drive) scheme. - ‘Dekho Apna Desh’ Campaign:
The budget increased funding for the Dekho Apna Desh campaign, encouraging domestic tourism by providing financial incentives for travel within India. - Development of Iconic Tourist Sites:
₹2,000 crore has been earmarked for improving infrastructure at 50 iconic tourist sites to enhance visitor experience and attract international tourists.
13. Employment and Labor Welfare
- Boost for MSMEs:
The government has allocated ₹50,000 crore for providing low-interest loans to Micro, Small, and Medium Enterprises (MSMEs) under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. - Women’s Employment:
The budget announced a 50% reservation for women in government-funded skill training programs and introduced a ₹5,000 crore fund to promote women entrepreneurs. - Social Security for Informal Workers:
₹20,000 crore has been allocated for providing health insurance and retirement benefits to informal sector workers, including gig and platform workers.
14. Technology and Digital Infrastructure
- Expansion of BharatNet:
The government announced an investment of ₹20,000 crore for expanding BharatNet to provide high-speed internet to 100,000 additional villages. - Digital India 2.0:
A new initiative under Digital India 2.0 will provide free Wi-Fi in public places and create a National AI Hub to support research and development in artificial intelligence. - Blockchain for Governance:
A pilot program for using blockchain technology in land record management and government tenders will be implemented to enhance transparency and reduce corruption.
15. Transport and Logistics
- National Highway Expansion:
₹1.5 trillion has been allocated for building 5,000 km of new highways and upgrading existing roads under the Bharatmala Pariyojana. - Railway Modernization:
₹2 trillion will be spent on modernizing railway infrastructure, including electrification of tracks, installing modern signaling systems, and introducing new high-speed trains. - Inland Waterways:
₹8,000 crore has been allocated for developing inland waterways to reduce logistics costs and promote environmentally sustainable transport.
16. Fiscal and Economic Outlook
- GDP Growth Target:
The government has set a GDP growth target of 7.2% for FY 2025-26, backed by increased capital investment and policy reforms. - Fiscal Deficit Target:
The fiscal deficit for FY 2025-26 is projected at 5.1% of GDP, with a target to reduce it to 4.5% by FY 2027-28 through increased revenue generation and better expenditure management. - FDI (Foreign Direct Investment):
The budget introduced new incentives to attract FDI in key sectors like manufacturing, renewable energy, and digital infrastructure.
Budget Document
- Annual Financial Statement (AFS)
- Finance Bill
- Expenditure Budget
- Receipt Budget
- Expenditure Profile
- Budget at a Glance
- Key Features of Budget 2025-2026
Interesting Facts About Budget of India
Historical Facts
- 🏛️ The first Union Budget of India was presented on 26 November 1947 by R.K. Shanmukham Chetty.
- 💼 The word “budget” is derived from the French word “bougette,” which means a small bag.
- 📜 The concept of the budget was introduced in India by the British in 1860.
- 🗓️ Until 2017, the Union Budget was presented on the last working day of February; from 2017, it is presented on 1 February.
- 💰 The Railway Budget was separated from the Union Budget in 1924 but was merged back in 2017.
Presentation and Procedure
- 🎙️ The Budget is usually presented at 11:00 AM on 1 February.
- 🗳️ The Budget is presented in Parliament by the Finance Minister.
- 🚫 The Budget is kept under strict secrecy before the presentation; even the media and officials are cut off from communication during the process.
- 🔏 The “Halwa Ceremony” marks the beginning of the budget printing process.
- 📅 The Budget is divided into two parts: Part A (policy) and Part B (taxation).
Notable Finance Ministers
- 💼 Morarji Desai holds the record for presenting the most number of budgets — 10 times.
- 👩 Indira Gandhi was the first woman to present the Budget in 1970 as the Prime Minister.
- 👩⚖️ Nirmala Sitharaman became the first full-time woman Finance Minister to present the Budget in 2019.
- 🌟 Jawaharlal Nehru was the first Prime Minister to present the Budget in 1958.
- 🏆 P. Chidambaram holds the record for presenting the highest number of Budgets after Morarji Desai — 9 times.
Record-Breaking Budgets
- 🤑 The 1991 Budget by Manmohan Singh introduced liberalization and ended the license raj.
- 📈 The longest budget speech was given by Nirmala Sitharaman in 2020 — lasting 2 hours 42 minutes.
- 💼 The shortest budget speech was given by Hirubhai M. Patel in 1977 — lasting only 800 words.
- 💲 The highest budget allocation has been for defense and infrastructure in recent years.
- 🌐 The Union Budget 2021 was the first paperless budget presented digitally due to COVID-19.
Economic Reforms and Highlights
- 🚀 The 1991 budget introduced economic liberalization — ending trade barriers.
- 🌍 The 1997 Budget by P. Chidambaram was known as the “Dream Budget” for tax cuts and reforms.
- 📉 The 2000 Budget introduced the concept of Service Tax.
- 🚫 The Goods and Services Tax (GST) was introduced in 2017 — simplifying India’s tax structure.
- 💳 The Direct Benefit Transfer (DBT) scheme was first introduced in the 2013 budget.
Social and Welfare Focus
- 🏡 The 2014 Budget introduced the Pradhan Mantri Jan Dhan Yojana for financial inclusion.
- 🏥 The 2018 Budget introduced the Ayushman Bharat scheme — the world’s largest health insurance program.
- 🚜 The 2021 Budget focused on agriculture infrastructure and rural development.
- 🏫 The 2020 Budget focused on education and skill development.
- 🛡️ The defense sector regularly gets one of the highest allocations in the budget.
Unique Terms and Concepts
- 🏦 Fiscal deficit refers to the difference between the government’s expenditure and revenue.
- 🌡️ Inflation rate plays a crucial role in budget planning.
- 💸 Capital expenditure refers to investments in long-term assets like roads and infrastructure.
- 📑 Revenue expenditure covers government operating expenses like salaries and interest payments.
- 🚨 Vote on Account allows the government to cover expenses before the full budget is passed.
Political and Historical Context
- 🗳️ An interim budget is presented by a government before general elections.
- 🎯 The interim budget is not allowed to introduce major policy changes.
- 🌾 The Green Revolution was supported through budget allocations in the 1960s.
- 🛢️ The oil price shocks in the 1970s affected India’s budget planning.
- 🚀 The defense budget increased significantly after the 1962 Indo-China war.
Miscellaneous Facts
- 🌍 The Indian Budget is influenced by global economic trends.
- 🏆 The 2021 Budget introduced a new Health and Wellbeing allocation.
- 🌆 Smart Cities Mission was announced in the 2015 Budget.
- 🏦 The National Infrastructure Pipeline (NIP) was introduced in the 2020 Budget.
- 💳 The 2016 Budget focused on promoting digital payments after demonetization.
- 🔍 The CAG (Comptroller and Auditor General) audits the budget expenditure.
- 🛡️ The capital gains tax was reintroduced in 2018.
- 🌱 The environmental budget has seen steady increases over the years.
- 🏛️ The budget speech is presented in English and partially in Hindi.
- 🌐 The budget is available online on the Ministry of Finance website after the presentation.
