15 Highlights from India’s Union Budget 2025 – Understanding the different aspects of the budget in a simplified manner

India's Union Budget 2025 has been announced, by Hon'ble Finance Minister Smt. Nirmala Sitharaman on February 1st, 2025. The purpose of this article is to look at the top 15 budget highlights from the budget 2025 in a simplified manner.

Here are the 15 important highlights from the Union Budget 2025:

1. Salaried Tax Payers

?

• Announcement: No Income Tax for Salaries up to ?12.75 Lakhs Per Annum (LPA)
• What are the details: For salaries up to ?12.75 LPA the Tax liability will be Zero (with ?75,000 as standard deductions) which means 'Zero Tax' to be paid for people with salaries below ?12 Lakhs. For salaries above ?12.75 LPA standard tax slabs will come into play with the lowest tax calculated at 5% for income between ?4-8 LPA and the highest at 30% (earlier 35%) for the portion of income above ?24 LPA. Please consult a Tax expert to understand more on this. Tax filing period extended from two to four years.
• Why are they significant: It's a huge relief for the salaried professionals and a big boost for the 31% and growing middle class segment of India. Less tax also means more disposable incomes creating an opportunity to initiate a consumption-driven economy like many other successful economies across the world. More consumer purchasing power will help to increase collective consumption which means sectors such as FMCG, Travel & Tourism, Aviation, Insurance, Banking & Investment, Real Estate etc. will be more promising resulting in a boost in the economy. Less than ~7% of India’s population files taxes (6.68% in 2023-24) and with the extension of the tax filing period to 4 years it is expected that this percentage will improve since it will encourage voluntary tax filing and compliance. The 'Zero Tax up to ?12.75 LPA' under the new tax regime is expected to impact over 1 Crore salaried people in India. And, that's highly significant.

?

2. Start-ups and Innovation

?

• Announcement: Start-up focused deep tech Fund of Funds ?10,000 Crores, Increased loan guarantee cover to increase to ?20 Crores, Scheme for Women and First-time entrepreneurs from the SC/ST background, National Geospatial Mission and 2nd Gene Bank creation.
• What are the details: A start-up focused fund of ?10,000 Crores will be created. The loan guarantee cover for new start-ups will be increased from ?10 Crores to ?20 Crores. 5 Lakh Women and First-time entrepreneurs from the SC/ST background to get boost through a loan of up to ?2 Crores with a payment duration of up to 5 years. The entrepreneurs will also be provided training on business management and entrepreneurship under the Online Capacity Building programs. Street vendors will also get credit cards with loan limit of up to ?30,000 under PM SVANidhi Scheme.
• Why are they significant: The deep Tech Fund of Funds of ?10,000 Crore will support start-ups in AI, biotechnology, space technology. Under the National Geospatial Mission land records, urban planning and infra design will get modernized. The creation of 2nd Gene Bank for crops germplasm to store 10 Lakh plant varieties would enhance future food security for India. Special mention to the deep tech start-ups as 25 of them will get support under the IndiaAI Mission.

?

3. MSMEs and Manufacturing

?

• Announcement: More companies under MSME schemes, Increase in Credit Guarantee Coverage to ?10 Crores, Exporter MSMEs to get loans up to ?20 Crores, 10 Lakh MSME Credit Cards
• What are the details: The budget revised the MSME definition by making enterprises with turnover from ?10 Crores to ?500 Crores to come under the new MSME classification. The 1 Crore registered MSMEs (micro, small, and medium enterprises) in India employing nearly 7.5 Crore people contributes ~36% to manufacturing and ~45% to exports. Investment criteria also has been increased by 2.5x across the entire MSME classification. For registered MSMEs 10 Lakh Credit Cards with limit of ?5 Lakhs will be issued in the first year.
• Why are they significant: MSMEs are define either by investment or by turnover. In the 2025 budget both of these have seen a major boost by 2.5x and 2x respectively. MSMEs in India plays a major role in driving our economy by establishing manufacturing prowess and increasing export potential. By bringing more enterprises under the MSME umbrella the whole ecosystem could get benefitted. With easy access to capital through loans and credit guarantee schemes MSMEs can focus on achieving higher efficiencies of scale, technological upgradation, confidence to grow and generate employment. Special incentives will be given for green manufacturing such as EV batteries, electrolyzers, wind turbines and solar PV cells.

?

4. AI, Energy, and Environment

?

• Announcement: ?2,000 crores for the flagship IndiaAI Mission, ?20,000 Crore for setting up Small Modular Reactors (SMRs). 5 new National Center of Excellence, ?500 Crore to be invested in 3 Center for Excellence in AI, 10,000 new PM Fellowship
• What are the details: Budget has allocated ?2,000 crores for the flagship IndiaAI Mission to create self-sufficiency in the AI space. India will establish at least 5 indigenously developed SMRs and make them operational by 2033 to meet the growing need of energy. Initiatives will also be driven towards establishing 5 new National Center of Excellence for research and skill development. An investment of ?500 Crores will be towards opening 3 new Center for Excellence (CoE) in AI. 10,000 new fellowship will be given under the PM Research Fellowship program. IndiaAI Mission will focus on establishing 20 AI curation units across various central ministries, set up 80 IndiaAI Labs nationwide, and support 3 industry-led projects.
• Why are they significant: This shows that India recognizes and is seriously looking at emerging technology and ready to implement effective measures in developing specific to create a large talent pool which can play a vital role in the ever evolving technology space and contribute to the growth of the world at large. The budget also talks about 'Small Modular Reactors' which is specifically targeted towards “Nuclear Energy Expansion” which will prove to be highly beneficial for accelerating groundbreaking work in the emerging technology space especially AI and Data due to their need of high energy input. Although the investment of ?500 Cores in developing CoEs for AI seems very low considering the importance of AI innovations in the present world; however, it is a constructive step nevertheless and could potentially trigger a ripple effect in the system towards establishing India as an Artificial Intelligence hub and encourage more AI innovations in the country in the coming years. A long-term energy goal of generating 100 GW nuclear energy by 2047 has been set which provides a long-term sustainability perspective.

?

5. Agriculture and Farmers

• Announcement: Kisan Credit Card (KCC) Limit increased to ?5 Lakhs, PM Dhana-Dhanya Krishi Yojana?
• What are the details: The KCC limit which used to be ?3 Lakhs has been increased to ?5 Lakhs. The "PM Dhana-Dhanya Krishi Yojana" is expected to be benefit 1.7 Crore Farmers of India. Focus will be on increasing agricultural production across 100 districts in India with special importance given to Dairy, Pulses, Vegetables, Fish farming and harvesting, Urea production, and Cotton production and marketing. Increase in KCC limit will provide additional access to funds for farmers especially the 86% of India's Small and Marginal Farmers (SMFs). The PM Dhana-Dhanya Krishi Yojana is focused at substantial policy reforms that would boost India's agricultural productivity and rural consumption.
• Why are they significant: Agriculture plays a very important role in India's economy contributing ~18% of Gross Value Added (GVA) and employing over ~45% of population in India. The future of agriculture production entails growth through not just through production alone but food processing as well to diversify and expand the potential of the produced goods.? As per Economic Survey 2024, Government of India is targeting a 50% increase in agricultural GDP contribution by 2030. This budget has directed a constructive step towards that goal.

?

6. Infrastructure and Digitalization

?

• Announcement:? ?1 Lakh Crores Fund allocation, 50 Year interest free loan for states, ?1.5 Lakh Crores for Capital infrastructure projects, Extension of Jal Jeevan Mission, Focusing on PPP pipeline, Gyan Bharatam Mission
• What are the details:? Urban Challenge Fund of ?1 Lakh Crores has been allocated to focus on developing cities as growth hubs, redevelopment and water and sanitation related projects. States can avail 50-year interest free loans for developing capital infrastructures such as airports, railways, subways, power plants, road, bridges, refineries etc. Under the Gyan Bharatam Mission India will set up a National Digital Repository of Indian Knowledge Systems. Under this a whopping 1 Crore manuscript, predominantly in Indian languages, will be digitalized for conservation of India's manuscript heritage.
• Why are they significant: Focusing on capital infrastructure development will further boost the infrastructure growth in India which would essentially improve connectivity, accessibility, adaptability, promote sustainability, improve quality of life at large and generate long-term economic value. The Jal Jeevan Mission extension would help deal with the issue of water scarcity across certain pockets of India. Govt. will also sell assets to fund new projects under the Asset Monetization Plan (?10 Lakh Crores between 2025-30). Developing a PPP pipeline would encourage more participation from the private enterprises in the development process. Special mention goes to the development of Greenfield Airports in Bihar which could potentially create more growth channels for the state. The Gyan Bharatam Mission will help preserve India’s rich cultural heritage by making manuscripts digitalized and potentially accessible.

?

7. Toys and Leather industry

?

• Announcement:? India to become Global hub for toys, New leather scheme
• What are the details:? India will take measures to establish itself as a global hub for manufacturing toys. New leather scheme will be introduced which will create 22 Lakhs new jobs and generate a cumulative annual turnover of ?4 Lakh Crores. To encourage more production 7 out of 15 tariff rates will be eliminated. Encourage more 'Make in India' products. Provide credit limit of up to ?5 Lakhs for the expansion of existing manufacturing.
• Why are they significant: Ranked 61st in the global toy importers list, India imported toys worth $60 million in 2023-2024. Although there has been a significant ~50% drop in imports and ~230% jump in exports over the last 8 years, India still spends a substantial amount in importing toys. Initiating new measure to increase domestic toy production will result in lesser imports and higher exports. From an economic standpoint that's a growth booster. To reduce import of toys, India has also increased the customs duty on imported toys to 70% which will further encourage local producers to ramp up their production.

?

8. Insurance

?

• Announcement:? 100% FDI for Insurance
• What are the details:? This is a big move. FDI in insurance has been increased from 74% to 100%. With this increase more international insurance players will be able to enter India and invest in India. This will help increase insurance coverage to a larger population in India including rural India.
• Why are they significant: This might prove to be highly beneficial for India since on an average only ~4% of India's population is covered under insurance. More international players coming to India will increase market competition resulting in more comprehensive insurance packages at affordable prices. Domestic insurance players with deep local geographic knowledge will look at maximizing their reach into the semi-urban and rural markets which will in-turn ensure more coverage for our population. Increased market penetration and increased opportunities will naturally result in more new players entering this space and boosting creation of employment in the insurance sector.

?

9. Healthcare

?

• Announcement:? 200 new Cancer Day-care Centers in District hospitals, "Heal in India", Broadband for PHCs
• What are the details:?? All the district hospitals to have Cancer Day-care Centers out of which 200 such centers will be created in 2025-26 itself. Private sector partnership will be encouraged to promote India as global healthcare hub.
• Why are they significant: This is a significant move towards establishing critical illness care system in India. With the widespread healthcare ecosystem, it is an uphill task to create focused services towards critical care. So, this is certainly a welcome step which would benefit a significant portion of the 1.4 million cancer patients in India who are from the T2, T3 or rural India. Installing broadband internet connectivity in all rural Primary Health Centres (PHCs) under BharatNet will ease communication and service delivery. And, by promoting "Heal in India" India's medical tourism (mentioned later as well) will get a significant boost as well.

?

10. Education

• Announcement: Increasing seats in 6 IITs, Establish a new IIT in Patna, Bihar, Establish Atala Tinkering Labs, Medical college seats to be increased to 75,000 in the next 5 years, Broadband connectivity in Govt. schools
• What are the details: India has a total of 23 IITs which produces nearly ~25,000 graduates every year. As per the new budget the number of seats across 23 IITs to be increased by 6,500 seats. A new IIT is to be established in Patna Bihar with focus on doubling the number of IITs in India. 50,000 Atal Tinkering Labs will be established across Schools in India. And, it's not just about IITs or schools alone. Even the medical colleges will see a significant jump in number of seats with the focus on increasing UG & PG medical seats by 10,000 by next year and increase to 75,000 in 5 years. The Govt. schools will undergo modernization through implementation of broadband internet connection in all Govt. schools.
• Why are they significant: India enjoys a strong demographic dividend with 64% of the population between 15 to 59 years of age. And, a focus on enhancing education and skills will further enhance the power of this position. Increase in IITs will contribute to more qualified engineers and available resources across IT, Manufacturing, Automobiles Aviation, Infrastructure, Robotics, AI etc. With the boost in Global Capability Centers (GCCs) in India there is significant need for skilled professionals across domains. On the other hand, establishing the Atal tinkering labs in schools in India will encourage grass-root science education and innovation especially in robotics and AI creating a more holistic growth for the young minds. Increase in medical seats will renew the interest of students in the medical field resulting in more qualified doctors in India. With healthcare becoming a prime concern post COVID this step is highly significant in increasing the number of medical professionals in India.

?

11. Gig Workers

?

• Announcement: e-Shram registration, ID Card and Health insurance for Gig workers
• What are the details: NITI Aayog estimated that the number of Gig workers will triple reaching a whopping total of 23.5 million Gig workers by 2030. As per the new policies gig workers in India can register themselves on the e-Shram portal and avail special ID Cards to access benefits under the PM Jan Arogya Yojana (PMJAY). As a side note, PMJAY is the world's largest health assurance scheme, that aims at providing a health cover of ?5 lakhs per family per year for secondary and tertiary care.
• Why are they significant: Gig workers play a very vital role in accelerating India's booming economy and if estimates are to be believed it is only going to increase further. Since gig workers are in the informal sector as a result of being outside the standard employment practice most often they do not get the privileges that comes with regular employment. Although, many organizations have adopted friendly employment policies there's still a lot that needs to be done in this space. The budget looks into the gig workers including platform-based workers who make a living by earning money through providing certain specific services, such as food delivery & ecommerce delivery services. Under the Ayushman Bharat initiative now 1 crore gig workers in India will get health insurance cover. It shows that the Govt. recognizes and supports the growing importance and benefit of 'Gig economy".

?

12. Railways

?

• Announcement: ?2.52 Lakh Crores Budgeted for Railways, 100% electrification, Kavach 4.0
• What are the details: A budget of ?2.52 Lakh Crores has been allotted for Railways. The focus will be on connecting more trains to the electricity grid and increase railway safety. To reduce railway accidents, the “Kavach 4.0” system will be implemented with full force which is an Automatic Train Protection (ATP) system developed by Indian Railways and approved by Research Design and Standard Organization (RDSO) to prevent train accidents.
• Why are they significant: While there has been several studies and reports analyzing the viability of 100% electrification of Railways in India I would not go into that territory rather focus largely on the aspects of the budget alone. Going by the budget presented it is but evident that the Govt. is still heading towards the 100% electrification goal. On the other hand, the “Kavach” system does seem to have a significant advantage since in 2023-24 alone we had 40 train accidents in India which has seen drastic reduction over the years yet this is an important area of concern. Public safety is paramount and the budget 2025 shows a constructive step towards ensuring that.

?

13. Tourism and Hospitality

?

• Announcement: ?20,000 Crores allotted in total, Top 50 selected travel destinations to be developed
• What are the details: The budget announced ?20,000 Crores allocation to boost the tourism industry of which ?2,541.06 crore allocated to The Ministry of Tourism for tourism infrastructure development under the Swadesh Darshan scheme. This Ministry will start working with states in creating 50 tourist destinations in a “challenge mode” to build infrastructure and boost connectivity. The overall focus will be on promoting India as key tourist destination for spiritual and cultural tourism under the Pilgrimage Rejuvenation and Spiritual Heritage Augmentation Drive (PRASHAD) scheme and medical tourism under the “Heal in India” initiative. To address the growing need for skilled manpower in the sector, ?60 crores has been allocated for training and skill development programs as well. The focus will also be on boosting public-private partnerships, capacity building, and relaxing visa norms. Govt. will promote homestays by extending Mudra loans and encourage entrepreneurship in the tourism sector.
• Why are they significant: The tourism sector contributes about ~6.5% to India’s GDP and provide roughly 4.3 Crore jobs. The tourism sector is a key sector for “employment-led” growth. Promoting India as a preferred travel destination by aiming at enhancing infrastructure, promoting domestic and international travel, developing pilgrimage and heritage sites, initiating performance-linked incentives and ensuring the safety of tourists will increase tourist footfall and boost the tourism and hospitality sector creating more employment opportunities and increasing contribution to the GDP. Developing 50 tourist destinations will contribute not just at the national level but at the local level as well by encouraging and building a local ecosystem of suppliers. Special focus will be given to promote India’s diverse tourist destinations, especially Bihar, Odisha, the Northeast region and Jammu & Kashmir. The proposed 'modified' UDAN extended to enhance regional connectivity covering 120 new destinations will boost travel pan-India to not only mainstream destinations but also remote and hill destinations. The modifications in shipbuilding are likely to boost cruise tourism.

?

14. TDS and TCS

• Announcement: TDS and TCS have been reduced and Tax compliance eased
• What are the details: The budget proposed a reduction in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) and introduced certain reforms that will provide relief especially to small businesses and individual taxpayers. The reforms are designed to simplify the process and reduce unnecessary disputes. TDS rates range from 0.1 percent to 30 percent and has 33 sections under the Income-Tax Act. The budget aims to simplify this and provide ease of tax compliance.
• Why are they significant: The current TDS structure has often led to complexity creating confusion and blocking working capital for businesses. To address these concerns, the budget 2025 has proposed significant changes, including a reduction in TDS rates. The proposed reforms are expected to benefit smaller taxpayers, reducing the burden of tax compliance. Exemptions from prosecution for delayed TCS payments, and the issue of overlapping TCS and TDS obligations have also been addressed in this budget. These much needed reforms could prove to be significant and make the system highly efficient and taxpayer-friendly.

?

15. Consumer Durables and Electric Vehicles

?

• Announcement: Electronic items and Electric Vehicles will become cheaper
• What are the details: Electronic goods, LCD-LED TVs, Electric Vehicles (EVs), Mobile phones, Foot wear, Furniture etc., will be cheaper. However, interactive panel display will be expensive.
• Why are they significant: Electronic goods being more affordable will increase ownership and consumption at a large scale. More Mobile phone consumption will drive internet and 5G usage in India making more and more Indians getting connected to the internet. For businesses this will open up more opportunities to reach their target customers. One the of the most important aspect is the price of EVs getting cheaper. Now, that’s a huge welcome news for many EV enthusiasts including myself. This will certainly encourage more people to buy and own EVs giving a huge boost to the whole EV industry.

?

A few additional noteworthy inclusions

• ?6.81 Lakh Crore has been allotted for the Defense sector including ?1.8 Lakh crore which will be used for buying fighter jets, helicopters, warships, submarines and other essentials to modernize the military.
• Maritime Development Fund of ?25,000 allocated for supporting shipbuilding and port upgrades.
• Bharat Trade Net, a digital public infrastructure for trade documentation & financing could prove to be real game changer in streamlining global trade and boosting export.
• National Framework for Global Capability Centers (GCCs) for promoting IT and R&D hubs in T2 cities.
• Supporting Industry 4.0 & electronics manufacturing by integrating with global supply chains.

Some final thoughts

The Union Budget 2025-26 has managed to tick some right boxes by focusing on India's middleclass, Start-ups, MSMEs, skill development, agriculture, insurance, AI, EV, infrastructure, tourism and digital learning etc. However, a little more emphasis and provisioning more investment on emerging technologies such as AI, CleanTech/GreenTech, Sustainability, Robotics, Cloud, Data, Cryptocurrency, Web3 would have been instrumental in giving a more significant boost since technology evolution is happening faster than ever making the need for countries to build their own capabilities in specific globally relevant domains more essential than ever before as well. Also, the budget could have given more push on investments in healthcare digitalization and creating an interconnected network of hospitals with better infrastructure, patient record management and creating visibility especially in the semi-urban and rural areas.

Revamping India's education system at the grass-root level making modern learning pedagogies more accessible transitioning from a lesson focused learning system to a more skill focused one for the vast student population of India is a need of the hour. We can play a bigger role only when our children are getting ready to build the world of tomorrow. And, for that we might want to start early in their learning journey to create a lasting impact. The budget does talk about some of the transformation in healthcare and education that I am talking about here but as a country that is as diverse as we are, we will need more focus and comprehensive growth-driven initiatives for both short-term and long-term results. ?

So, does this budget cover it all? Well, the budget in its entirety has covered a broad landscape; however, it does seems to lack depth in certain areas. Having said that it also implies progress and sets motion in the right direction. At least that is what the industry experts are corroborating. One thing is for sure though, this budget is indeed a welcome change especially because it moves away from the all-so-familiar ‘price up’ and ‘price down’ structures. It rather focuses on developing a “consumer-driven” economy and boosting long-term growth initiatives. As a country, India needs to play a vital role in the growth of the world. And, for that to happen we need to look at more comprehensive growth prospects and accelerate growth at diverse demographic and economic level. This budget from that point of view seemed to lay significant focus on value and growth.

In the context of economic development, I would like to mention that as per estimate during the period 2025-26 India's economy is projected to grow between 6.3% and 6.8% and Fiscal deficit to reduce from 4.8% to 4.4%. Overall response to the Union Budget 2025 seems positive so far with industry leaders from diverse sectors such as Logistics, Healthcare, Technology, Education, Banking etc. coming forward and appreciating the several provisions in the budget as pro-development. However, there’re always areas that need more push in the years to come which I am sure will be addressed in the consecutive budgets. With strategic value-driven orientation and focused execution of the several initiatives could deliver tremendous value in the long-term. Hence, this budget holds immense promise and takes constructive steps towards a more holistic reform in the days to come. And, that I believe needs to be appreciated in an unbiased manner.

I have tried to cover as much ground and make this article comprehensive while still keeping it as specific as possible. Please note that, this is an individual analysis to throw some light on the aspects and probable implications of the Union Budget 2025. Some reference data, stats and figures from the public domain have been used for comparison purpose, hence the accuracy of those are subjective. However, ample care has been taken in using data points from only trustworthy data sources to the best of my knowledge. The purpose of this article is to create awareness and add value in some way. However, if incase as a matter of oversight I have missed mentioning anything important or if you have any interesting insights to share regarding the Indian Budget 2025 then please add that in the comment section for everyone’s benefit.

I am happy to share this article on the “15 Highlights from India’s Union Budget 2025” with you. I hope you found this article useful. Please like and share. If you have any request or input, please feel free to reach out, I would love to connect with you.

#indiabudget2025 #unionbudget2025 #budget2025 #budgethighlights #budgetsnapshots

Authored by - Sandipan Banik