Special Features of Union Budget 2025-26

 What is the budget? 

1. Budget is a financial statement of the estimated receipts and expenditure of the government in a financial year. Under article 112 of our constitution, the government has been mandated to present an annual financial statement before the Parliament. No money can be spent without the approval of Parliament. The budget involves the process of collecting, classifying, analysing facts and figures and thereafter, pooling of allocation of different departments and ministers according to its needs. The budget is a blueprint of economic policy of the government. 

2. Budget has three major components. These are receipts, expenditures and deficit indicators. The receipts (income) have three components. These are revenue receipts, non-debt capital receipts and debt creating capital receipts. Revenue receipts are divided into tax and non-tax revenue. Tax revenue consists of direct and indirect taxes. Non-tax revenue consists of dividends and profits earned by PSUs , interest receipts on loans given to state or foreign governments or banks, grants received from foreign governments or international institutions. 

3. Non-debt capital receipts are disinvestment of public sector enterprises , recovery of loans from states, union territory, banks or financial institutions.

4.Debt creating capital receipts are borrowings of the government like government bonds, treasury bills, loans from financial institutions and external borrowings. These funds are used for capital expenditure to develop infrastructure or reduce fiscal deficit. 

Expenditures can be divided into revenue and capital expenditure. Revenue expenditure includes salaries and pensions to government employees, subsidies, interest payments on domestic and external borrowings grants to states and various welfare schemes. 

5. Capital expenditure includes expenditure on infrastructure, acquisition of assets like purchase of machinery, equipment , building , investment in public sector enterprises, loans to states and union territories, procurement of new defence equipment.

How is the Budget prepared?

1. Estimates of revenues and expenditures are formulated by different departments and ministries and presented to the Finance Ministry.  

2. The Finance Ministry consults NITI Ayog, prominent economists, industry tycoons and different stakeholders.

3. After receiving inputs, the Finance Ministry analyse available data. It prepares the draft of the budget which includes resource allocation to different departments, tax proposals, wage and means to mobilise resources to meet the expenditures in the next year. 

4. Thereafter, it is presented before the cabinet for approval. After getting the approval, the Finance Minister presents the budget in Parliament. But before presenting the budget, the Finance Minister presents an economic survey of the present year which gives details about the performance of the government. 

5. The budget is discussed and debated in Parliament. Once approved it is sent to the President for his approval. 

6. The Finance Minister introduces a finance bill and an appropriation bill for levying new taxes and for withdrawal of money from the consolidated fund of India.  

7. If the government fails to pass the budget in the Parliament, it has to resign forthwith. 

Implication of Budget on the Economy

1. Creates aggregate demand in the economy.

2. Provides income distribution among different sections of the society.

3. Leads to economic growth.

4. Gives a true picture of the fiscal health of the economy.

5. Provides social welfare.

6. Promotes direct investment.

7. Controls inflation by rationalising demand and supply.

8. Promotes exports by  giving subsidies to exporters. 

9. Establishes an amicable relationship between the central and state governments by allocating sufficient funds to state governments. 

10. Addresses unemployment inequality and regional disparity. 

11. It is a reflection of fiscal management of the government and economic reforms. 

Special Features of Budget 2025-26

1. Budget focuses on Gyan, the acronym for Garib, Youth, Annadata and Nari. 

2. It aims to stimulate economic growth by enhancing the spending power of the middle class and promoting inclusive development. 

3. Budget raises the income tax exemption threshold  to ₹12 lakh annual income. Thus, it aims at bringing disposable income for investment and so, creating demand in the economy.  

4. The budget proposes ₹11.21 lakh crore for capital expenditure which represents 3.1% of GDP and shows enhanced expenditure of ₹10.18 lakh crore in the previous year.  

5. Budget proposes to start the Dhan Dhanya Krishi Yojana whereby 100 low productivity districts would be selected to enhance agricultural productivity and farmer welfare.  

6. The short term loan limit was enhanced from 3 lakh to 5 lakh, thereby, benefitting 7.5 cr farmers. 

7. The Government will launch a 6 year mission plan to raise the production and productivity of oilseeds to reduce import dependence. Exemptions were granted for open cells used in LED, LCD TVs, capital goods for lithium ion batteries used in mobile phones and electric vehicles and looms for textiles. A ten year exemption was given on goods used for ship building.  

However, the absence of concrete measures to promote agricultural exports is one of the drawbacks of  the budget. 

8. Fiscal deficit is to be reduced to 4.4% of the GDP. However, the target can only be achieved by increasing growth in the tax revenues. Since, significant tax cuts have been announced to give relief to the middle class the government has lost ₹1 lakh cr investable income. This can be compensated only through asset monetisation plans announced in the budget because there is looming less domestic consumption and weakening external demands arising out of protectionist policies adopted by the USA and other developed countries of the world. 

9. The budget reiterates India’s ambition to emerge as a global manufacturing power house. Last year the manufacturing sector underperformed and it accounts for only 17% of GDP. The budget aims at launching the National Manufacturing Mission and improving ease of doing business. However, India cannot compete with countries like China and Germany in innovation because of the absence of concrete measures to boost industrial research and development. 

10. The budget also revised MSME classification, increasing investment limit by 2.5  times and doubling turnover threshold. Thus, investment limits have been raised in the following manner - 

• Micro enterprises from ₹1cr to ₹2.5 cr .

• Small enterprises from ₹10 cr to ₹25 cr.

• Medium enterprises from ₹50 cr to ₹125 cr. 

Similarly, turnover limits have also been revised 

• Micro enterprises from ₹5 cr to ₹10 cr 

• Small enterprises from ₹50 cr to ₹100 cr

• Medium enterprises from ₹250 cr to ₹500 cr

Thus, the revised  investment and turnover limits aim at achieving higher efficiencies of a scale, upgradation and better access to capital. 

11.  Foreign Direct Investment limit in the insurance sector has been raised from 74% to 100%, encouraging more international investment and competition. 

12. One crore Gig workers will receive identity cards and social security benefits including health coverage under the PM Jana Arogya Yojana. 

13. PM Swanidhi Scheme has been revamped to offer higher bank loans, UPI linked 30 thousand credit cards and capacity building initiatives for street vendors. 

14. An additional 10 thousand medical seats will be introduced in the upcoming fiscal year with a target of 75 thousand new seats over the next five years in order to meet the shortage of medical professionals. The budget plans to establish 200 new cancer centres by fiscal year 2026.  

To conclude - the budget focuses upon economic growth, infrastructure development, social welfare, tax reforms and MSMEs support.