Budget 2025-26: Everything You Need to Know
- Share.Market
- 7 min read
- 04 Feb 2025
The Union Budget 2025-26 is a blueprint for India’s growth, aiming for ‘Viksit Bharat’ which aims at poverty elimination, quality education, accessible healthcare, full employment, increased women’s participation & agricultural excellence by strengthening key sectors, creating jobs, and boosting investments.
In this article, we break down the key takeaways from the budget speech.
Fiscal Policy Estimates
Fiscal policy shows how much money the government will receive & spend in a financial year. For FY 2025-26, the government has presented a balanced fiscal plan to support economic growth:
- Total revenue (excluding borrowings): Rs. 34.96 lakh crore (FY 2025-26) vs Rs. 31.47 lakh crore (FY 2024-25)
- Net tax receipts: Rs. 28.37 lakh crore (FY 2025-26) vs Rs. 25.57 lakh crore (FY 2024-25)
- Total expenditure: Rs. 50.65 lakh crore (FY 2025-26) vs Rs. 47.16 lakh crore (FY 2024-25)
- Fiscal deficit: Revised estimate for FY 2024-25 at 4.8% of GDP, expected to reduce to 4.4% in FY 2025-26.
Reduction in fiscal deficits means improved government financial performance and reduction in government borrowings to finance the deficit. This can make loans cheaper for everyone and good for long-term growth.
The Four Engines Driving Growth
The Budget 2025-26 focuses on four engines to drive economic growth:
- Agriculture
- MSME (Micro, Small & Medium Enterprises)
- Investment
- Exports
Development measures focus on Garib (Poor), Youth, Anndata (farmers) & Nari (women), ensuring inclusivity and economic empowerment.
1. Agriculture
Agriculture continues to be the backbone of India’s economy, contributing to 16% of the GDP. It is also the primary source of livelihood for ~55% of our population.
Key announcements for this pillar:
- Prime Minister Dhan-Dhaanya Krishi Yojana: focuses on 100 districts with low productivity, moderate crop intensity and below-average credit availability. This programme will help 1.7 crore farmers with better credit access, agricultural productivity, crop diversification, post-harvest storage and irrigation infrastructure.
- Aatmanirbhata in Pulses: A 6-year plan focused on Tur, Urad, and Masoor, ensuring higher yields, climate-resistant seeds, higher productivity and government procurement guarantees.
- Rural Migration: To create opportunities for under-employed agricultural communities, a comprehensive rural development programme focusing on 100 agri-districts will be launched.
- Makhana Board in Bihar: Boosting production, value addition, and marketing to strengthen Bihar’s economy. It will also provide training support to makhana farmers.
- Cotton, Fishers and Seeds: A 5-year Mission for Cotton Productivity to enhance yield and sustainability in extra-long staple cotton varieties. Fisheries, high yielding seeds and fruits and vegetables also served as focus areas in the Budget.
- Kisan Credit Card (KCC) Expansion: Loan limit increased from ₹3 lakh to ₹5 lakh, benefiting 7.7 crore farmers, fishermen, and dairy farmers.
Impact on the Economy
- Boost to Agri-Tech Startups: Businesses that use technology to improve agricultural practices will thrive due to increased demand for precision farming, AI-driven solutions, and smart irrigation technologies.
- Growth in Agri-Processing Industries: More investments in food processing and storage facilities.
- Stocks to Watch: Kaveri seeds, Agri-tech India, Mangalam seeds, Naturite Agro Prod
Note: The lists of stock provided above are purely for educational purposes. These are not stock recommendations. Consult your financial advisor or do your research before investing.
2. MSMEs: The Backbone of India’s Economy
India has around 5.7 crore registered Micro, Small, and Medium Enterprises (MSMEs), contributing 30% to India’s GDP. These MSMEs have helped India move towards becoming a global manufacturing hub, and are responsible for 45% of our exports. To help them achieve higher efficiencies of scale, the government has introduced:
- Enhanced Credit Guarantee Cover: Loans up to ₹10 crore for MSMEs, with special benefits for exporters.
- Customized Credit Cards for Micro Enterprises registered on Udyam portal: Rs. 5 lakh credit limit to support working capital needs.
- Fund of Funds for Startups: A new FoF with government contribution of Rs. 10,000 crore for startups
- New Scheme for First-time Entrepreneurs: Rs. 2 crore term loans for 5 lakh women, SC/ST first time entrepreneurs over five years.
Schemes will also be launched for the footwear, leather and toy industry to boost production and exports. These schemes will strengthen ‘Make in India’ and position India as a global manufacturing hub.
Impact on the Economy
- Increased Employment: More MSMEs getting funded means more job opportunities.
- Higher Manufacturing Output: Improved credit availability will help MSMEs scale.
- Stocks to Watch: Ujjivan Small Finance Bank Ltd, Bajaj Finance, Axis Bank
Note: The lists of stock provided above are purely for educational purposes. These are not stock recommendations. Consult your financial advisor or do your research before investing.
3. Investment: the Heart of Economic Growth
Investment is at the heart of economic growth, and the budget prioritises investments in people, economy and innovation.
Investing in people
- Saksham Anganwadi and Poshan 2.0: Nutritional support to 8 crore children, 1 crore pregnant women and lactating mothers, and 20 lakh adolescent girls in aspirational districts and the north-east region.
- Education policies: 50,000 Atal Tinkering Labs will be set up in government schools in next 5 years to nudge curiosity and innovation. A Bharatiya Bhasha Pustak Scheme will also be implemented to provide digital-form Indian language books to help students understand their subjects better.
- PM SVANidhi: Loans and Rs. 30,000 UPI-linked credit cards for street vendors.
- Social security scheme for gig workers: E-Shram portal registration and PM Jan Arogya Yojana health benefits for 1 crore gig-workers.
Investing in the economy
- Infrastructure Push: Rs. 10 lakh crore allocated for roads, railways, and logistics corridors.
- Urban Challenge Fund: Rs. 1 lakh crore fund to redevelop cities.
- Rs. 20,000 crore Nuclear Energy Mission for Small Modular Reactors (SMRs).
- UDAN – Regional Connectivity Scheme: Enhanced regional connectivity to 120 new destinations and carry 4 crore passengers in the next 10 years.
- Infrastructure Boost in Bihar: Greenfield airports will be facilitated in Bihar and the capacity of Patna airport will be expanded. Financial support will also be provided for the Western Koshi Canal ERM Project over 50,000 hectares of land in Mithilanchal, Bihar.
Investing in innovation
- PM Research Fellowship: In the next five years, the government will provide 10,000 fellowships for technological research in IITs and IISc.
- National Geo-spatial Mission: to develop foundational geospatial infrastructure and data.
- Gyan Bharatam Mission: For documentation and conservation of our manuscript heritage with academic institutions, museums, libraries and private collectors will be undertaken to cover more than 1 crore manuscripts.
- FDI in Insurance: Increased to 100% (for companies which invest the entire premium in India), encouraging global insurers to invest in India.
Impact on the Economy
- Infrastructure Boom: More job creation and better logistics efficiency.
- Growth in Financial Services: Higher FDI in insurance will lead to expansion and better products.
- Stocks to Watch: Bajaj Finserv, Angle One, DLF
Note: The lists of stock provided above are purely for educational purposes. These are not stock recommendations. Consult your financial advisor or do your research before investing.
4. Exports: Make in India, for the World
India’s export sector received a significant boost with multiple policies aimed at integrating domestic firms with global supply chains.
- Export Promotion Mission: A joint initiative by the Commerce, MSME, and Finance ministries to simplify trade and credit access.
- BharatTradeNet: A digital public infrastructure for seamless international trade documentation and financing.
- National Framework for GCC: For promoting Global Capability Centres in emerging tier 2 cities.
Impact on the Economy
- Higher Forex Reserves: Boosted exports will improve India’s balance of trade.
- Global Competitiveness: Encouraging MSMEs to integrate into global supply chains.
- Stocks to Watch: Bajaj Auto, Eicher Motors, Bata India
Note: The lists of stock provided above are purely for educational purposes. These are not stock recommendations. Consult your financial advisor or do your research before investing.
Additional Budget Highlights
Taxation & Middle-Class Empowerment
- Higher income tax exemptions, putting more money in people’s pockets
- New pension sector regulations to boost private retirement savings.
Sectoral Boosts
- EV & Renewable Energy: Tax benefits extended to battery manufacturers.
- Healthcare Expansion: Increased government spending on public healthcare initiatives.
Budget 2025-26 sets a growth trajectory for India, focusing on agriculture, MSMEs, investments, and exports. With tax benefits for the middle class and spending in key sectors, the budget is expected to fuel economic expansion, create jobs, and attract global investors.
India’s economy is on a strong footing, and if executed well, the initiatives in this budget will help transform the country into a $5 trillion economy in the coming years.
Sources:
- Union Budget 2025-26 Key Highlights – https://www.indiabudget.gov.in/doc/bh1.pdf
- Budget speech- https://www.indiabudget.gov.in/doc/budget_speech.pdf