Future-Ready Growth

THE UNION BUDGET for 2025-26 reflects a carefully calibrated strategy to address long-standing challenges while laying the foundation for sustainable growth and resilience. It focuses on critical areas like middle-class relief, fiscal discipline, entrepreneurship, regulatory reforms, agriculture, and inclusive development. The government's vision for an economically secure, innovation-driven, and inclusive India takes centrestage, reflecting a balance between immediate needs and long-term priorities.

MIDDLE-CLASS TAX RELIEF

For millions of middle-class families, the Budget delivers signifi­cant relief through tax reductions and targeted measures. Under the revised tax structure, salaried individuals earning up to ₹12.75 lakh annually will not face any taxation, leading to substantial increases in disposable incomes. This landmark step provides much-needed breathing room to a segment that has faced the brunt of inflation, high taxes, and stagnant income growth.

Beyond tax relief, the Budget introduces new welfare measures targeting middle-class households. These include expanded access to affordable housing schemes, health in­surance benefits, and subsidies for education and skill devel­opment. The inclusion of middle-income families in such programmes underscores the government's commitment to strengthening economic security for this demographic, which serves as the backbone of India's growth engine.

A thriving middle class is vital to India's future. Over the next decade, target­ed support in the form of tax rationalisation, enhanced welfare coverage, and skill devel­opment programmes will ensure that this segment becomes a driving force behind robust domestic consumption, greater savings, and entrepreneurial activity.

FISCAL DISCIPLINE

The Budget strikes a fine balance between fiscal discipline and economic stimulus. By reducing the fiscal deficit to 4.4 per cent of GDP, down from 4.8 per cent in the previous year, the government demonstrates its com­mitment to prudent financial management. Borrowings have been contained at similar levels, which will help ease pressure on credit markets, maintain private sector liquidity, and create a favourable environment for investment.

Capital expenditure emerges as a major focus area, with an allocation of ₹11.21 lakh crore for infrastructure development. Projects such as highways, railways, airports, and urban infra­structure receive a significant share of this spending, ensuring long-term economic benefits. While the Budget prioritises com­pleting ongoing infrastructure projects, there is scope for an even larger investment push to accelerate economic growth further.

The emphasis on renewable energy infrastructure is particu­larly noteworthy. Enhanced funding for solar and wind energy projects, alongside subsidies for electric vehicle (EV) adoption, aligns with India's climate commitments and strengthens its position as a leader in green energy innovation.

EMPOWERING ENTREPRENEURSHIP

The Micro, Small, and Medium Enterprises (MSME) sector and startups, which collectively form the backbone of India's economy, are significant beneficiaries of the Budget. Enhancements to the Credit Guarantee Scheme and an increase in the Mudra loan limit provide much-needed access to affordable capital, enabling small businesses to expand and thrive.

Startups receive a renewed focus, with an incremental ₹10,000 crore allocation for the Startup India fund, bringing the total contribution to ₹20,000 crore. However, given the scale of India's startup ecosystem, a larger allocation—closer to ₹50,000 crore—would better meet the capital requirements of emerging deep-tech and innovation-driven ventures. The government's support for electron­ics manufacturing, along with tax incen­tives for startups incorporated by March 31, 2030, bolsters India's ambitions to become a global technology hub.

Empowering women entrepreneurs is crucial for an inclusive startup ecosystem. The government must consider a ₹5,000 crore fund, managed by SIDBI, earmarked to support ventures led by women. This fund will provide much-needed finan­cial backing and foster a culture of inno­vation and leadership among women in high-growth sectors.

Additionally, the deployment of India Post's extensive net­work to support direct-to-consumer (D2C) businesses and the tourism sector's development through Mudra loans for home­stays underline the government's commitment to fostering entrepreneurship in diverse sectors.

Innovation in Frontier Technologies: One of the standout features of this Budget is its focus on deep and frontier technolo­gies. From artificial intelligence (AI) and blockchain to quantum computing and advanced manufacturing, the government has outlined plans to establish dedicated research hubs and provide incentives for technology-driven innovation. A ₹5,000 crore fund dedicated to deep-tech startups signals the government's recog­nition of the transformative potential of these technologies in areas such as healthcare, agriculture, defence, and logistics. The government must consider expanding this fund to ₹10,000 crore to bolster India's deep-tech capabilities.

Further, the government should establish a ₹35,000 crore Strategic Startups Fund to be disbursed over five years. This fund will prioritise strategic sectors such as EVs, robotics, green energy solutions, and space technology. By nurturing startups in these strategic domains, India can secure its position as a global leader in innovation and address critical economic and environmental challenges.

The government's support extends to skill development in emerging technologies, ensuring that India's workforce is equipped to meet the demands of a rapidly evolving global economy. Partnerships with academic institutions, private enterprises, and global technology leaders will be instrumental in driving this initiative.

EASING BUSINESS OPERATIONS

Recognising the need to improve the ease of doing business, the Budget proposes significant regulatory reforms. A newly consti­tuted committee will oversee non-financial regulations while existing financial regulatory bodies will streamline compliance requirements. These measures aim to reduce bureaucratic red tape, ensuring faster approvals and greater operational efficiency for businesses.

One critical area of focus is the simplification of foreign exchange regulations. Outdated laws governing cross-border transactions create unnecessary hurdles for businesses. A more flexible regulatory approach, especially by the Reserve Bank of India (RBI), would enhance India's appeal as a global investment destination.

In addition, the government has announced measures to support gig workers, a growing segment of the workforce. Ini­tiatives such as providing identity cards and access to welfare benefits will ensure social and financial security for gig workers, reflecting a broader commitment to inclusive development.

RURAL DEVELOPMENT

The agricultural sector remains a cornerstone of the Indian economy, and the Budget reflects this through targeted inter­ventions. Increased credit flow, higher allocations for irrigation projects, and measures to address challenges like flooding in the Kosi river basin demonstrate a commitment to strengthen­ing agricultural resilience and productivity.

Special attention has been given to 100 districts with low agricultural productivity. By introducing modern farming techniques, high-yield crop programmes and skill development initiatives for farmers, the government aims to uplift rural economies and reduce disparities in agricultural performance.

Additionally, the Budget launches a Na­tional Manufacturing Mission to support agri-based industries, aligning industrial growth with rural development and ensur­ing that the benefits of economic progress reach the grassroots.

SOCIAL WELFARE

A central theme of the Budget is inclu­sive growth, with enhanced support for underprivileged sectors, women, and the youth. Programmes targeting women entrepreneurs, skill development initia­tives for young workers, and affordable housing schemes reflect the government's commitment to equitable economic progress.

Healthcare receives a major boost with the full exemption of 36 life-saving drugs and medicines from basic customs duty, making essential treatments more accessible and affordable for millions. The Budget also expands funding for primary healthcare centres in rural areas, addressing gaps in medical infrastructure.

ECONOMIC BUOYANCY

India's tax collections remain buoyant, reflecting a resilient economy. Individual income tax collections have grown by a significant 17 per cent CAGR between 2016-17 and 2024-25— 21.7 per cent CAGR in the last three years, driven by increased compliance and economic activity. Corporate tax revenues also remain strong, having grown at 9.3 per cent CAGR in the same period and 11.2 per cent in the last three years, supported by the government's efforts to foster a business-friendly environment.

The total tax-to-GDP ratio was 10 per cent in 2022-23 and has risen to 12 per cent in 2025-26 (Budget Estimate). This buoyancy has given the government the confidence to forego revenues of ₹1 lakh crore by providing direct tax relief. A relief of this mag­nitude may not be given in the next Budget.

The use of technology and digital platforms has played a major part in tax buoyancy. The Budget's measures to strengthen the tax administration system, including the introduction of AI-driven analytics, will improve efficiency and reduce tax evasion. Simpli­fying the tax code further remains a priority to enhance transpar­ency and ease compliance for individuals and businesses.

Taxterrorism, however, continuestoremainasignificantissue. The total tax under dispute in 2012-13 was ₹4,92,637 crore, which grew six-fold to ₹31,10,906 crore in 2023-24. Of this, amounts under dispute totals ₹15,39,732 crore whereas amounts under dispute but those that cannot be collected total ₹15,71,174 crore. There is a need for the government to forego the amounts that cannot be collected and clean up the sheets to provide a better picture and set strict guidelines for tax collection officers. The National Democratic Alliance (NDA) promised to tackle tax ter­rorism in 2014 but has yet to do this in any significant way. It should take up reducing tax terrorism as a major mission in 2025-26, with the finance minister's personal involve­ment to ensure there is a significant clean-up on a monthly basis.

A FUTURISTIC VISION

The Union Budget 2025-26 represents a comprehensive blueprint for a prosperous and resilient India. From middle-class relief and MSME empowerment to investments in infrastructure and frontier technologies, the Budget balances fiscal discipline with strategic growth priorities. Regulatory sim­plifications, targeted agricultural interventions and inclusive welfare measures further underscore a forward-looking approach.

However, certain areas, such as deeper investment in start­ups, higher capex allocations, and streamlined regulatory frame­works present opportunities for further enhancement. As India charts its path towards becoming a $5 trillion economy, this Budget provides the roadmap for sustainable growth, fostering innovation, equity, and resilience.

With its ambitious yet pragmatic vision, the Budget reaffirms India's trajectory as a global economic powerhouse, ensuring that its growth story is inclusive, future-ready, and impactful.