Written by The Union Budget 2025 has emerged as one of the most transformative and people-centric budgets in recent years. At a time when the Indian economy is recognised as the fastest-growing among major global economies, despite a projected growth rate of 6.3% for FY 2024–25, this budget offers a unique opportunity to strengthen the country’s macroeconomic fundamentals and push forward the vision of Viksit Bharat 2047. While it brings fresh hope and strategic direction across multiple sectors, there are also certain gaps that require attention.
Relief for the Middle Class and Boosting Consumption
A major highlight of the Union Budget 2025 is the significant relief in personal income tax. Individuals earning up to ₹12 lakh annually are now exempt from income tax, while the highest slab of 30% now applies only to those earning above ₹24 lakh. This change ensures higher disposable income in the hands of the middle class and salaried individuals. As outlined in the Finance Minister’s budget speech, a taxpayer earning ₹12 lakh annually saves ₹80,000 in taxes under the new regime.
This increased liquidity is expected to revitalise private consumption, long a cornerstone of India’s GDP growth. After a decline in consumption trends during FY24 and early FY25, Q3 of FY25 showed signs of revival. With these tax reforms, the budget 2025 aims to restore consumption growth momentum, especially among lower- and middle-income groups, who exhibit a higher marginal propensity to consume.
Public Investment and Capital Expenditure
Another commendable aspect of the budget is the focus on capital expenditure. Although there may be only a marginal increase of 0.9% over last year’s allocation, in reality, when adding grants for capital asset creation, the total effective capital expenditure has risen by over 17%. This is crucial because capital expenditure has a multiplier effect of nearly 2, significantly higher than the 0.9 multiplier of revenue expenditure.
Despite the slowdown during the election quarter, post-July capital expenditure saw a resurgence, suggesting that the government has managed to balance fiscal prudence with long-term investments in infrastructure and development. The budget also outlines plans to invest in maritime infrastructure through ship-building and a Maritime Development Fund, although a more robust strategy for the coastal economy and the blue economy would have been a welcome addition.
Agriculture, Human Capital, and MSMEs
The Union Budget 2025 makes bold claims in agricultural reforms and skilling, though not without critique. Agriculture continues to struggle with low productivity and market inefficiencies. While marine fisheries were addressed, a broader push towards blue economy opportunities—like tourism and climate-based agricultural solutions, was largely overlooked.
Human capital development, however, received considerable attention. With new initiatives such as National Centres of Excellence for Skilling and AI in education, the budget acknowledges the need to equip India’s youth for the future of work. Simultaneously, MSMEs—who account for 45% of Indian exports—have been offered new schemes aimed at improving global competitiveness, though their success in integrating into global value chains remains uncertain.
Conclusion
In sum, the budget 2025 is an ambitious attempt to promote growth while maintaining fiscal discipline and social equity. It pushes for increased household spending, infrastructure development, and skilling for future needs. That said, climate adaptation financing and deeper reforms in sectors like agriculture and the blue economy remain key areas to be addressed in the future.
To explore detailed insights and gain a deeper understanding of the Union Budget 2025, readers are encouraged to visit the source article or official government portals for more information.
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