As India steps into 2025 with high economic aspirations, Finance Minister Nirmala Sitharaman presented the first full budget of the Modi 3.0 government on 1st February. The budget, packed with strategic reforms and bold measures, aims to fuel private investments, uplift household sentiment, and strengthen the middle class. Sitharaman, in her eighth consecutive budget presentation, outlined fiscal strategies, tax reforms, and transformative announcements to set the stage for India’s growth journey.
With a focus on uplifting the poor, empowering youth, strengthening the farming community, and promoting women’s welfare, the budget emphasizes MSME growth, manufacturing, exports, and rural prosperity. The government’s commitment to driving inclusive and sustainable growth is clear in the targeted areas of development.
Key Highlights
Tax Relief for the Middle Class:
The new tax regime offers significant relief, including no income tax on earnings up to Rs 12 lakh, factoring in a standard deduction of Rs 75,000. The revised tax slabs are as follows:
Taxpayers will benefit as follows:
The TDS system will be rationalized, reducing the compliance burden, while taxpayers can now claim the annual value of self-occupied homes as nil for two properties without conditions.
PM Dhan Dhanya Krishi Yojana for Farmers’ Welfare
The government announced the PM Dhan Dhanya Krishi Yojana, aimed at supporting agri-districts. The program will target 100 districts with low productivity and underdeveloped parameters, merging existing schemes in collaboration with state governments.
Key Schemes for Bihar’s Development
New initiatives for Bihar include the formation of a Makhana Board to assist farmers, the establishment of the National Institute of Food Technology, and the expansion of Patna airport and greenfield airports.
Credit Guarantee for MSMEs
The budget raises the investment limit for MSMEs and expands credit guarantee covers, providing Rs 1.5 lakh crore in additional credit over the next five years. A new scheme will benefit 5 lakh women entrepreneurs from SC/ST communities.
Insurance Coverage for Gig Workers
Gig workers will be provided ID cards through the E-shram portal and healthcare coverage under PM Jan Arogya Yojana. The government aims to support nearly 1 crore gig workers.
Interest-Free Loans for State Infrastructure
The government will provide Rs 1.5 lakh crore in interest-free loans to States for infrastructure development, alongside a Rs 10 lakh crore capital infusion through asset monetisation from 2025-30.
Extension of Jal Jeevan Mission
By 2028, 15 crore rural households will have access to tap water as part of the extended Jal Jeevan Mission.
Exemption on Life-Saving Drugs
36 life-saving drugs will be fully exempted from customs duty, easing access to essential medicines.
Boost for Skilling and Schools
The government is setting up 50,000 Atal Tinkering Labs in schools and ensuring broadband connectivity for rural government schools and health centres.
Startup Funding and Support
A Deep Tech Fund will be introduced to support startups, and loans ranging from Rs 10 crore to Rs 20 crore will be available with a 1% guarantee fee.
Higher Education Expansion
The budget allocates funds for expanding infrastructure at IITs and increasing medical seats, with the aim of adding 75,000 seats over five years.
Sectors Poised for Growth Following Budget Announcements
Healthcare: A significant allocation of Rs 98,311 crore is made for healthcare, with a focus on expanding medical care and infrastructure, including the setting up of daycare cancer centres and new medical seats. The ‘Heal in India’ initiative aims to boost medical tourism.
Defence: The defence sector sees an allocation of Rs 6.81 trillion, with a focus on self-reliance and modernisation through domestic procurement, R&D projects, and the acquisition of submarines.
Agriculture: With Rs 1.52 trillion allocated to agriculture, the government aims to improve productivity in underperforming districts, expand Kisan Credit Cards, and support cotton and Makhana farmers.
Shipping and Maritime: A Rs 25,000 crore Maritime Development Fund will support long-term maritime projects, while a revamped shipbuilding policy and infrastructure status for large vessels will enhance India’s shipbuilding industry.
Education: The education sector will see investments in AI research, new medical and IIT seats, and skill development initiatives aimed at enhancing employability and innovation.
Taxation Reforms
Budget 2025 introduces crucial tax reforms to ease compliance. Key highlights include the simplification of tax slabs, green investment incentives, and business tax reforms to support startups and small businesses. Tax credits will also encourage investments in renewable energy and electric vehicles.
Potential Impact on the Indian Stock Market
The Union Budget for 2025 can have significant impacts on the Indian stock market, as it will shape the government’s fiscal policies, tax reforms, and infrastructure investments. Investors should position themselves in sectors like healthcare, defence, agriculture, and shipping & maritime, which are expected to gain the most in a positive budget scenario. For instance, if the budget includes increased spending on infrastructure, construction and related sectors might benefit.
In short, the Indian stock market is likely to react strongly based on the budget’s key announcements, with investor sentiment playing a crucial role in determining the immediate and longer-term effects.
Conclusion
The 2025 Union Budget is a transformative blueprint for India’s economic growth, focusing on fiscal reforms, job creation, and infrastructure development. With significant investments in healthcare, education, agriculture, and defence, the government’s vision is to build a resilient and inclusive economy. The strategic measures outlined will not only address current challenges but also position India as a global leader in innovation, sustainability, and economic empowerment.
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