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Union Budget 2025: The Union Budget 2025 has some positive features, pitched for an economic growth from 6.3% to 6.8%. The waves created by price rise, as well as wage deprivation through turmoil in economic activity, will spare the middle classes ever since Finance Minister Nirmala Sitharaman kept an eye on fiscal prudence. The vectors placed in the Economic Survey of last Friday underscore the existing belief that the Union Budget 2025 is overly optimistic. Expectations referring to the turnaround of investment reforms in a country that has somehow learned to live without any real major structural engineering or deregulation that obviates growth potential loom large.
The annual budget strongly emphasizes the need to rid ourselves of the older mindset of "policy paralysis," thereby enhancing the government focus on economic revival. But apart from resolving things, and taking into account the ongoing scourge of the COVID19 pandemic and war issues, the union budget 2025 seems a calculated move by the government.
Among the bills lined up for presentation during the Budget session were the Indian Railways, Indian Railways Board Merger Act, Waqf and Banking Regulation Amendment Act, Finance Bill 2025, and close to a dozen others.
This Union Budget 2025, the most critical step in the process of reshaping India's economic landscape while shows support for middle-class families and promotes sustainable growth in the face of current global economic challenges.
A Must Read: Union Budget 2025 Implications for School and Higher Education in India
Notable Highlights of the Union Budget 2025 for Economic Prosperity
The details are tabulated below:
Significant Expectations Before the Budget Announcement
The period leading up to the Budget announcement saw some major expectations from the stakeholders waiting for the 2025 Budget, which were related to the wants and needs of the middle class, educational institutions, and health care.
Middle-Class Tax Relief
High prices, static wages, and a plethora of challenges seemed to have formed a trenchant expectation for relief to the middle class in taxation. Expectations had arisen for some changes in income tax slabs and exemptions so that the financial pressure could slightly be alleviated.
Education with more investments in educational infrastructure
Education with more investments in educational infrastructure was also something on the call of many; be it a digitized form with greater accessibility and resource investment into schools and reforms in learning results, in line with what post-pandemic may mean towards digital learning.
Support for health care
With increasing demand for health-care personnel, stakeholders were expecting financial injections for the expansion of medical education and health-care facilities as a measure for attending to public health concerns and erecting a strong health-care system.
Innovation and Skill-building emphasis
There was optimism that youth would find support for innovation and skill development under schemes." This also expected the making of workers for future manufacturing jobs along with cementing alignment with the Make in India initiative.
Enhancing Broadband and Digital Initiatives
As much digital connectivity helped in education and healthcare, investments in enhanced broadband connectivity in the rural and underserved areas were awaited for equitable access to digital resources.
Sustainable Economic Growth
Economists expected structural reforms and policy initiatives to spur sustainable economic growth. A large number of stakeholders wanted India to maintain its growth trajectory when uncertainty regarding the global economy seemed to be looming.
Legislative Reforms
Expectations for landmark new legislation such as banking and railway reforms pointed towards a yearning for regulatory arrangements that would aid investment and economic activity.
Major Announcements
The following were the major announcements:
Target Group Focus
- Focus on benefiting Gareeb, youth, and nari (women)
Takeaway: Commitment to empowering disadvantaged groups, resulting in greater social equality and empowerment.
Agriculture Initiatives
- Prime Minister Dhan-Dhaanya Krishi Yojana for development of agri districts.
Takeaway: Addressing underemployment to benefit 1.7 crore farmers. - Setting up of a National Mission on High Yielding Seeds
Takeaway: Increases agricultural output and resilience with better seed technology. - Launch of a 6-year Mission for Aatmanirbharta in Pulses in Tur, Urad, and Masoor, Setting up of a Makhana Board in Bihar for improvement in production and marketing.
akeaway: Focus on self-reliance in major pulses, cutting dependence on imports. - Setting up of a Makhana Board in Bihar.
Takeaway: Facilitates makhana production and marketing, boosting local agriculture and economy.
Logistics Transformation
- India Post will be upgraded to a large public logistics entity, with 1.5 lakh rural post offices.
Takeaway: Corporates supporting rural logistics boost services that connect the poorest rural micro-entrepreneurs to other parts of the country using transport links, thus advancing economic activity.
Educational Development
- The establishment of 50,000 Atal Tinkering Labs within government schools will occur over the next five years.
Takeaway: Thereby encouraging innovation and imbibing the ideas of STEM education into students, nurturing a culture of creativeness. - Establishing further 10,000 medical seats within institutes totaling 75,000 medical seats within the next 5 years.
Takeaway: Increases the access to medical education, thereby filling the gaps of healthcare staff. - Financial Supports to famers. Increase in Kisan Credit Card coverage should allow at least 7.7 crore farmers to be able to borrow up to ₹5 lakh.
Takeaway: Farmers are now able to borrow money from banks, which will help them invest in their areas of farming activity.
MSME Financing
- Term loans of up to ₹20 crore for Micro, Small, and Medium Enterprises (MSMEs).
Takeaway: Facilitates growth and expansion of MSMEs, the key to employment generation. - Customized credit cards for micro enterprises enrolled on the Udyam portal.
Takeaway : Facilitates financial access for small businesses, encouraging entrepreneurship
Infrastructure and Transport
- Launch of the revised UDAN scheme with 120 new destinations.
Takeaway: Increases regional air travel, boosting tourism and economic growth - A new Fund of Funds with an additional ₹10,0000
Takeaway: Offers financial assistance to different sectors, promoting investment. - Greenfield airports to be encouraged in Bihar.
Takeaway: Upscales transportation infrastructure, boosting local economic development.
Housing Development
- SWAMIH Fund has set a target of delivering 40,000 housing units by 2025.
Takeaway: The fund caters to the existing housing shortage and works toward the affordable housing solution.
Tax reforms
- New Income tax bill introduction.
Takeaway : to simplify and make better compliance. - Jan vishwas Bill
Takeaway: Promotes trust in the business ecosystem by eliminating bureaucratic obstacles - FDI percentage cap for the insurance sector to be increased to 100 per cent from 74 per cent.
Takeaway: Promotes foreign investment, boosting growth in the insurance industry. - Credit Enhancement Facility by NaBFID
Takeaway: Enhances access to finance for infrastructure projects and businesses. - PSB’s to create ‘Grameen Credit Score’ framework
Takeaway: Boosts access to credit for rural citizens, promoting financial inclusion.
Direct, Indirect taxes
- Reforms in Personal Income-tax with special emphasis on middle class
Takeaway: Offers substantial tax relief, enhancing disposable income of middle class. - Substantial relief is anticipated under the new tax regime
Takeaway: Promotes compliance and lowers the tax burden for individuals.
Impact Analysis
The impact analysis has been done below:
Economic Impact
- Above-Average Public Investment: The Union Budget will make substantial investments into infrastructure development, which will accelerate economic growth and generate employment in construction and allied activities.
- Fiscal Responsibility: Fiscal measures to enhance prudence in consideration of diverse sections encourage investor sentiment and attract domestic and foreign investments.
- Support to Startups and MSMEs: Fiscal measures aiding startups and Micro, Small and Medium Enterprises (MSMEs) through ease of credit will directly lead to innovation and employment generation.
Social Impact
- Reduced Income Inequality: Fiscal measures for welfare schemes, subsidies, and social security can reduce income inequality to a great extent and benefit the marginalized section of the society.
- Healthcare and education: Budgetary expenditure increases in the education and healthcare areas improve access, quality, and infrastructure to enhance the well-being of society.
- Empowerment through skills and skills development: Focused skill development programs may create jobs for youth, enhancing their socio-economic conditions.
Political impact
- Strengthening of government Integrity: A budget that fulfills pressing social needs, such as health, education, or jobs, is likely to make the government look good and earn some credit from few voters.
- Electoral Strategy: Public sector investments may be tactical moves to woo important voters just prior to elections.
- Public Interest: Measures of fiscal policy ensure the instrument of public scrutiny, encourage conducive citizen participation in policymaking.
National Impact
- Sustainable Development Goals (SDGs): If expenditures on the budget are aligned with this SDG, India will stand to be recognized as a responsible global partner avowedly committed to sustainable development and environmental sustainability.
- The status of world economies: A formidable budget could enable India to champion its cause on an international economic platform, thereby having rippling consequences through trade relations and partnerships.
- Technology and research advancement: Investment in technology and research through the budget can spur more innovative activity in this field, establishing India as a hub for technological innovation and education.
Challenges & Criticism
Finance Minister Nirmala Sitharaman's recent Union Budget has been greeted with a wave of opposition criticism on a combination of political posturing and economic analysis that seems more opportunistic than constructive. Here is an analytical perspective on the reaction of the opponent, accentuating a few probable weaknesses in their argumentation.
Opposition Criticism of the 2025 Union Budget are as follows:
1. Election-Oriented Charges
Opposition political leaders, including the Samajwadi Party and DMK leaders, termed the Budget as election-oriented, meant to appease the Delhi voter on the eve of the elections and thereby influence the elections for the Bihar Assembly. Such criticism is likely to be damaging to their credibility because all political parties tend to make their proposals election-centric. Instead of simply calling the Budget election-centric, a more useful criticism would be to come up with alternative fiscal plans or improved explanations for the long term consequences of such proposals.
2. Misinterpretation of Tax Cuts
Opposition critics, such as Rashtriya Janata Dal MP Manoj K. Jha, called the announced income tax reductions as misleading, stating that they were an effort to mislead voters. Instead of raising loose concerns about the government's intentions, the opposition could offer specific criticism or data-based observations about the proposed tax reforms and the likely imbalances therefrom, particularly because there is a new income tax bill on the horizon.
3. Overlooking Broader Issues
The Communist Party of India (Marxist) raised concerns such as stagnant agriculture and unemployment, but this view does not account for how government initiatives—lacking as they are—may still try to address these long-standing issues. Admitting any good developments while offering alternatives may be more believable in their arguments. Being simply obsessed with negative points without a vision for positive alternatives may weaken their criticism.
4. Lack of Appreciation for Existing Initiatives
While politicians such as Akhilesh Yadav criticized the Budget in public as unrealistic, they did not accord adequate appreciation to any of the government's infrastructure initiatives that could actually benefit various sectors, including rural economies. A sober evaluation appreciating performances here and there would only add to the gravity of the opponent's aspirations and intentions.
5. Charges of Regional Disparities
Trinamool Congress leaders spoke of West Bengal being underfunded, suggestive of regional bias in the budgetary allocations. Such charges would have been better replaced by the opposition members engaging in a constructive discussion of fair distribution and searching for resolution to bridge state with central funding processes.
Major Risks and Shortcomings
The major risks and shortcomings can be understood in following ways:
1. Tax Cuts: - The proposed cuts in income tax may lead to lesser earnings for the government, which in turn will affect the delivery of essential public services and government welfare schemes, if at all growth keeps pace with the cuts. The impression that the budget is drawn primarily with political objectives (particularly with an eye on elections) in mind could erode public confidence in the budget-making process and create suspicion about its motives.
2. Neglect of Structural Issues: - Most of the structural problems confronting the economy—such as unemployment, rural distress, and stagnant agriculture—remain untouched. There has been a huge failure in being attentive to this problem, which could only lead to greater disparity and increase other forces of economic unrest.
3. Inflationary Pressure: The increase in disposable income deemed possible through tax cuts, without a corresponding increase in supply, can lead to inflation, which shrinks the purchasing power of consumers and can hurt low-income groups.
4. Regional Disparity: If certain states or regions are favored in this budget, economic disparities can only get more magnified. Neglected states may grow slowly concerning economic prospects, thus facing social unrest.
Major Shortcomings
1.Failure in Articulating a National Economic Strategy: - A clearly articulated strategy for the resolution of long-term economic problems lacks definition in the budget, being primarily held by ad hoc patches that trigger no sustainable growth.
2.Vague Statements: - Elements of new programs or reforms are generally vague with particulars, creating degree of uncertainty for investors and consumers in regard to investments and consumption patterns.
3.Public Infrastructure: It is not anything less than a sin nowadays for an important sector like health or even education not to be funded properly since it halts the progress and innovation in these particular sectors on the ground post-pandemic.
4.Underperformance in Other Section: Even if there is promise in throwing world-class infrastructure projects into the basket, the actual allocations will not be sufficient to transform the infrastructure landscape, especially in cities challenged with high population growth.
5. Short Term Approach in Economic Planning: - Key long-term political goals will be compromised in preference to short-term political goals, which in turn will weaken long-term investments in green technology, digital infrastructure, and skill development for future competitiveness.
All in all, the Union Budget 2025 propounds very far-reaching reforms that will jump-start economic growth and foster inclusive development. While the proposals look a million bucks, the execution and assessment will need to be done with care.
