New Delhi, Feb. 2 -- Union Budget 2025-26 is a targeted roadmap for economic expansion, social welfare, and fiscal prudence, aligning with the Modi 3.0 Government's vision of 'Viksit Bharat'. With a sharp focus on agriculture, MSMEs, investment, and exports, the Budget attempts to balance growth with financial discipline. Key structural reforms, an emphasis on financial inclusion, and a push for private sector-led innovation define its contours. There are some significant allocations too, such as Rs.5 lakh crore for agriculture and Rs.10 lakh crore for MSME credit, which underscore the Government's intent to strengthen the backbone of the Indian economy. The agricultural sector, often considered the lifeline of India's economy, has received a major boost. The allocation of Rs.5 lakh crore is expected to fund modernisation initiatives, irrigation projects, and sustainable farming practices. Additionally, incentives for agri-tech start-ups and digitisation of land records indicate a progressive approach towards enhancing productivity and transparency. Schemes promoting organic farming and natural fertilisers reflect the Government's commitment to sustainable agricultural practices, aligning with global environmental concerns. However, the challenge remains in ensuring last-mile delivery and implementation, particularly for marginal farmers who struggle with access to credit and technology. Investments in research and development, particularly the Rs.20,000-crore R&D fund and the Deep Tech Fund for AI and semiconductors, signal a forward-looking approach. As India aspires to be a global technology leader, these initiatives are timely. The push towards self-reliance in semiconductor manufacturing aligns with the broader geopolitical strategy of reducing dependence on imports. AI, machine learning, and deep tech solutions are expected to revolutionise industries such as healthcare, education, and fintech, enhancing India's position in the global digital economy. However, fostering a skilled workforce to sustain this rapid technological shift will be a key determinant of success. Infrastructure remains a cornerstone, with a Rs.1-lakh-crore urban fund and an ambitious 100-GW nuclear energy target by 2047. These projects indicate the Government's vision of long-term energy security and urban development. With rapid urbanisation, the demand for sustainable and smart city solutions has never been higher. Investments in metro expansions, high-speed rail, and electric mobility are likely to complement the Government's push for a greener economy. At the same time, challenges such as land acquisition bottlenecks and execution delays need to be addressed effectively to achieve tangible outcomes.
The introduction of BharatTradeNet for digital trade infrastructure and a Rs.25,000-crore Maritime Development Fund underlines the Government's efforts to bolster exports and logistics. These measures are expected to enhance India's competitiveness in global trade and streamline supply chain efficiencies. Port modernisation and expansion of inland waterways could significantly reduce logistics costs, boosting manufacturing and export-led growth. Furthermore, trade agreements with key global partners will play a crucial role in leveraging these infrastructural enhancements to maximise economic benefits. On the social welfare front, the Government has widened the safety net for gig workers and women entrepreneurs. With a growing gig economy, ensuring social security for platform workers has been a longstanding demand. Measures such as health insurance, provident fund benefits, and skill development programs could go a long way in formalising this segment. Additionally, schemes supporting women-led businesses are expected to encourage greater participation of women in economic activities, fostering financial independence and inclusivity. The policy shift towards an open-door policy for 100 per cent FDI in insurance is another bold reform. While it aims to attract global insurers and capital inflows, ensuring regulatory stability and consumer protection remains critical. The move is expected to increase insurance penetration in India, particularly in rural and semi-urban areas, which continue to remain underserved. On the taxation front, the Government has introduced a progressive yet populist regime, raising the tax-free income slab to Rs.12 lakh while maintaining rates between 5 per cent and 30 per cent. This revision is expected to provide relief to the middle class and stimulate consumption. Simultaneously, GST simplification and exemptions on life-saving drugs reflect an effort to make indirect taxation more efficient and responsive to public needs. However, the challenge of revenue mobilisation persists, particularly in balancing tax reliefs with sustained public spending commitments. Fiscal prudence remains a key concern, with the fiscal deficit pegged at 4.4 per cent of the GDP and Rs.11.54 lakh crore in market borrowings. While the Government has reiterated its commitment to fiscal consolidation, higher borrowing levels could exert pressure on interest rates, potentially affecting private sector investment. Striking a balance between stimulus-driven growth and fiscal discipline will be critical in maintaining macroeconomic stability.
The budget's impact varies across sectors, with clear winners including infrastructure, MSMEs, banking, technology, exports, and renewable energy. The banking sector is expected to benefit from increased credit flows to MSMEs, while the technology sector stands to gain from innovation-driven funding. However, industries such as luxury goods, healthcare, fertilisers, real estate, and oil & gas face headwinds due to limited Government spending or unfavourable policies. For instance, the healthcare sector, which has long advocated for increased public health expenditure, has expressed concerns over the lack of significant allocations to strengthen healthcare infrastructure. The stock market is expected to react positively, particularly in the banking, infrastructure, and automobile sectors, given the budget's emphasis on credit expansion and capital expenditure. However, challenges remain in the form of execution risks, high borrowing costs, and uncertain rural demand. The success of these initiatives hinges on the Government's ability to mobilise private sector participation and ensure effective policy implementation. Overall, the budget is ambitious and growth-oriented, with a strong emphasis on investment and reform. While it lays a solid foundation for economic acceleration, its success will hinge on the Government's ability to implement policies effectively and mobilise private sector participation. The push for innovation, infrastructure, and financial inclusion is commendable. However, without effective execution, the intended benefits may not reach the grassroots. The Government's commitment to structural reforms is evident, yet balancing fiscal discipline with expansionary policies remains a tightrope walk. As India strides towards becoming a global economic powerhouse, this budget provides the necessary thrust but still demands relentless monitoring and follow-throughs to translate grand vision into ground reality.
Published by HT Digital Content Services with permission from Millennium Post.