By Prerna Lenka, Smriti Bhutani and Aditi Narayanan
The first full budget post the 2024 elections sets India on the path to becoming a Viksit Bharat (Developed India) by 2047, with transformative reforms across six key domains: taxation, power sector, urban development, mining, financial sector and regulatory reforms. This budget highlights the government’s commitment to empowering over 140 crore (1.4 billion) Indians, with a strong focus on micro, small and medium-sized enterprises (MSMEs) and startups fostering sustainable growth and global competitiveness.
The budget reflects a bold push for technological advancement. The allocation for the Ministry of Electronics and Technology (MeitY) has increased by 48.16% from the revised estimate for FY25, primarily aiming to boost electronics manufacturing and semiconductor production. The emphasis on tech innovation, artificial intelligence integration and digitalisation will position India at the forefront of the digital age, propelling a New Age Bharat.
A significant focus on “Make in India” is evident in the reduction or outright exemption of basic customs duties on several goods. These items, which are critical inputs for manufacturing, will promote domestic production and reduce costs for manufacturers, strengthening India’s manufacturing ecosystem and advancing self-reliance.
Education, skilling and innovation take centre stage, with initiatives like the ₹500 crore ($57.67 million) allocation for Centers of Excellence in Artificial Intelligence for education, the addition of 75,000 medical seats, and the expansion of IITs by 6,500 seats. The creation of National Centers of Excellence for Skilling and the introduction of 10,000 PM Research Fellowships aim to bridge skill gaps and equip youth with future-ready capabilities, positioning them as key drivers of growth.
In one of the most anticipated announcements, the Modi government has provided substantial relief to India’s largest working demographic—the middle class—potentially easing discontent in the years ahead. Incomes up to ₹12 lakh ($13.8 thousand) will be tax-exempt, reflecting a strong commitment to the middle class. Under the new tax regime, factoring in the standard deduction of ₹75,000, salaried individuals earning up to ₹12.75 lakh will have no income tax liability. This strategic move aims to significantly enhance disposable income, stimulating demand in critical sectors like retail, real estate and automobiles, while increasing household savings and investments. This decision not only offers direct relief to the middle class but also aims to stimulate consumption by enabling greater spending capacity among this group.
The government’s revisions to the Tax Collected at Source (TCS) under the Liberalised Remittance Scheme aim to ease the financial burden on families, while boosting global student mobility. The proposal for Global Capability Centers in emerging Tier 2 cities like Mysuru, Jaipur and Lucknow, and a ₹20,000 crore ($2.3 billion) Nuclear Energy Mission will further promote India’s position as a global innovation hub.
Budget 2025 also highlights significant policy decisions focused on supporting India Inc, which could shape the nation’s economic trajectory. For MSMEs, the budget enhances credit availability, revises classification criteria, and introduces reforms to ease business expansion. The new income tax bill aims to simplify the tax system, ensuring fairness and reduced litigation.
With a fiscal deficit of 4.4% of GDP for FY26, the government maintains fiscal prudence while forgoing ₹1 lakh crore ($11.6 billion) in direct taxes and ₹2,600 crore ($300 million) in indirect taxes, directly empowering the middle class.
This budget is a defining moment, prioritising education, innovation, and entrepreneurship, and laying a robust foundation for India’s global leadership by 2047.
