NEW DELHI: Union Finance Minister Nirmala Sitharaman is presenting her speech in the Union Budget for 2025, marking her eighth consecutive budget. Among the expected changes, it has announced major revision in income tax rates or slabs aimed at easing the financial pressure on the middle class. This budget is particularly significant, as it is the Narendra Modi government's first full-year budget in its third term and comes amid global uncertainties and a slowdown in India’s economic growth.

What’s expected from Budget 2025?

This year’s budget is expected to focus heavily on bolstering India’s manufacturing sector, supporting the ‘Viksit Bharat’ vision for an advanced nation by 2047. Efforts to reduce the tax burden on the middle class and stimulate consumption are also announced. Also, the budget aims to maintain fiscal prudence, while encouraging investment in manufacturing, infrastructure, and job creation. It is also expected to include reforms related to customs duties, skill development, and enhancements in the agricultural value chain.
Key Budget Proposals

Credit Cards: The Finance Minister announced customized credit cards for micro-enterprises. Introduction of the customized credit cards with a limit of Rs.5.00 lakh for micro-enterprises will facilitate easy access to working capital for SMEs, which permits lenders to extend pre-approved credit lines to the sector.

Promotion of Innovation: The government will allocate Rs 20,000 crore to foster innovation in collaboration with the private sector, aiming to boost technological advancements and create new business opportunities.

Fiscal Deficit: The fiscal deficit for 2025 is set at 4.8 percent of GDP. Sitharaman emphasized the need for sustainable fiscal management, ensuring that central government debt continues to decrease as a percentage of GDP. The revised expenditure estimate for the year stands at Rs 47.16 lakh crore, including Rs 10.1 lakh crore for capital expenditure.

Insurance Sector Reforms: The government has proposed raising the Foreign Direct Investment (FDI) limit in the insurance sector from 74 percent to 100 percent, a significant move aimed at attracting more international capital.

New Income Tax Bill: A major reform in the pipeline is the introduction of a new Income Tax Bill, which is expected to be tabled next week, promising to simplify the tax system.

Nuclear Energy Mission: A Rs 20,000 crore investment has been earmarked for a Nuclear Energy Mission, focused on research and development of small modular reactors, signaling the government's commitment to advancing energy solutions.

India Post Transformation: The government plans to transform India Post into a large logistics network, with a focus on utilizing the vast network of 1.5 lakh rural post offices to support the logistics sector.

Support for MSMEs and Rural Economy: The government intends to increase investment and turnover limits for Micro, Small, and Medium Enterprises (MSMEs), recognizing their significant role in India’s exports. Additionally, the National Cooperative Development Corporation will receive support for lending operations to boost the rural economy.

Budget 2025 represents a major step in addressing economic challenges and setting a roadmap for growth and innovation in the coming years.