While concerns were being expressed about the health of the economy, due to deceleration in GDP growth in the last two quarters, depreciating rupee, continuing inflation, decline in consumption, rising trade deficit, declining forex reserves, it was a real challenge for the Government to spur manufacturing growth, push self reliance in agriculture and address imbalance in agriculture production. It also worked to reduce dependence on foreign countries regarding pulses and edible oils, and also give tax relief to middle income taxpayers. At the same time, it addressed inflationary concerns. Budget 2025-26 has tried to balance all these concerns and take the economy forward.
But, despite all odds, the fiscal health of the country was in a fairly good position, with lower fiscal deficit, booming taxes, both direct and indirect taxes, comfortable NRI remittances and increasing investment announcements in the current fiscal year. This could give space to the Finance Minister, to offer big relief to the small taxpayers and continue with big capex, apart from greater provisions for health, education, agriculture and manufacturing.
Big Relief to Middle Class
Though the Narendra Modi Government had been giving some relief to the middle class in terms of income tax, the narrative had been that the middle class gets a very raw deal in every successive Budget. But in its first full Budget in Modi 3.0, Finance Minister has offered a real big relief to the middle class, by freeing them from paying any tax up to Rs 12 lakhs of annual income, or one lakh rupees monthly income. In case of salaried class, this exemption is 12.75 lakhs, as they get the benefit of standard deduction, of Rs 75,000 from their income. Though, people with income beyond Rs 12 lakh, are not found to be similarly lucky, they also get some relief, though, not as big as people earning up to Rs one lakh monthly income.
Push to Manufacturing
Since the start of Aatmanirbhar Bharat policy, a demand has been picking up to give a big push to domestic manufacturing. Budget 2025-26, has the distinction of giving a big push to manufacturing, especially in the clean tech sector, including Electric Vehicles’ batteries and motors, wind power equipment and other renewable power equipment. MSME Manufacturing Mission, enhanced credit Guarantee for MSME; credit card for micro enterprises, with Rs 5 lakh limit, to address their working capital needs; extension of PLI beyond earlier list; and several other measures to improve manufacturing to insulate the country from Chinese dominance are important initiatives of this Budget. The present endeavour of the Government will go a long way towards the goal of making India a manufacturing hub and that too through the MSME sector.
This Budget has tried to remove obstacles in the clean tech path, by way of push given to lithium batteries, motors for electric vehicles and other clean-tech manufacturing. Therefore, it is giving a push to Aatmanirbhar Bharat and saving the nation from exploitation by foreigners, especially Chinese. National Manufacturing Mission for MSMEs, various schemes for start-ups, encouragement to the toy industry to make India ‘Toy Hub’ of the world, are other main highlights of the Budget.
Encouraging MSMEs
Budget gives a new boost to the MSME sector by giving enhanced credit guarantee cover to MSMEs at all levels, start-ups and export oriented units. Measures for labour intensive sectors, more specifically leather and footwear sector, toys, food processing and others. More specifically, a manufacturing mission has been started covering small, medium, large; all kinds of industries for furthering Make in India.
Boost to Agriculture
The constitution of Makhana Board is an exemplary step towards promoting a wonderful nutritious agricultural product of Bihar and can open new vistas for encouraging agriculture products of different other regions. Recently, the Government had constituted a Turmeric Board also, which had long been demanded by Swadeshi Jagaran Manch, since UPA days, to address concerns of Telangana turmeric farmers. Push to make India self-reliant in pulses, cotton mission and several other schemes for agriculture are worth appreciating. Raising the limit on Kisan Credit Cards too is satisfying, apart from several other measures. Contrary to the rhetoric of the imperative of shifting population from rural to urban areas, it was pleasing to hear from Nirmala Sitharaman in her Budget speech, that the goal is to generate ample opportunities in rural areas so that migration is an option, but not a necessity. With increased income opportunities in rural areas, this may be a possibility, thanks to efforts of the Government.
Bridging the Gap
Our country has been facing a big challenge of eroding relative incomes in rural areas vis-a-vis urban areas. It was satisfying when the Economic Survey reported that the gap between MPCE (Monthly Per Capita Expenditure) in rural and urban populations has narrowed from 84 per cent to 70 per cent. This has been made possible due to increased spending on rural roads, welfare schemes like housing, clean cooking fuel, water, electricity, health care, sanitation and many more. This process needs to be further accelerated. Budget 2025-26 does much more to push rural incomes. Apart from raising the Kisan Credit Card limit, agriculture push, food processing push and many more efforts to raise rural incomes can go a long way to reduce rural urban disparities.
This Budget has the distinction of recognising the gig workers, working with e-commerce platforms, registering them with E-Shrm Platform and granting them the benefit of health cover, apart from encouragement given to labour intensive sectors. For a long time, Bharatiya Mazdoor Sangh and Swadeshi Jagran Manch have been demanding welfare measures for gig workers.
