Defence budget allocation increased, but FY25 target missed
The Ministry of Defence’s total allocation has seen a 6.2% rise compared to the revised budget estimate for 2024–25. However, the budget estimate for FY25-26 has fallen short of expectations. The allocation for 2025-26 is set at Rs 6.81 lakh crore, up from the revised estimate of Rs 6.41 lakh crore for FY24-25, which had previously been increased from the original budget estimate of Rs 6.21 lakh crore.
Capital expenditure on defence services
The capex for defence services in Budget 2025-26 has been pegged at Rs 1.8 lakh crore, while the revised FY24-25 estimate has seen a reduction of 7%, standing at Rs 1.59 lakh crore. This is down from the budgeted initially of Rs 1.72 lakh crore.
Pressure on bond yields
Market reactions to the gross market borrowing estimate, which is slightly higher than expected, suggest a potential rise in bond yields. Shrisha Acharya from Anand Rathi Global Finance notes that the gross borrowing estimate stands at INR 14.8 trillion, compared to the market expectation of INR 13.5-14.2 trillion. Net market borrowings are expected to be INR 11.54 trillion, surpassing the anticipated INR 11 trillion. The fiscal deficit for FY25 is estimated at 4.8%, slightly below the budgeted 4.9%, with FY26 projected at 4.4%. States will be permitted to borrow an additional 0.5% for sectoral reforms.
Custom duty cut on LPG
In a bid to enhance the urea supply, Finance Minister Nirmala Sitharaman has announced that a new plant with an annual capacity of 12.7 lakh metric tons will be established in Assam.
Renewable sector allocation increased
The renewable energy sector sees a boost with an 11.8% increase in the allocation for 2025–26, which stands at Rs 35,460 crore. This is up from the revised FY24-25 estimate of Rs 31,701.46 crore. The allocation reflects the government’s growing commitment to renewable energy and its role in India’s sustainable development.
PM Surya ghar muft bijli yojana: Increased allocation
The PM Surya Ghar Muft Bijli Yojana is a big step to give free power links to homes. For the year FY25-26, it has been given Rs 20,000 crore. This is a large jump from the new amount set for FY24-25, which was Rs 11,100 crore. This shows that the government cares a lot about making energy easy for people in rural and poor places.
Income tax revision: Big relief for middle-class taxpayers
One of the most anticipated announcements in Budget 2025 was the revision of income tax slabs. The Finance Minister, Nirmala Sitharaman, said big news today. She shared that people will not pay any tax on money earned up to Rs 12 lakh. This new plan is set to help many middle-class folks. It will cut down the tax they have to pay, giving them some much-needed help.
Revised income tax slabs:
- 0-4 lakh: NIL
- 4-8 lakh: 5%
- 8-12 lakh: 10%
- 12-16 lakh: 15%
- 16-20 lakh: 20%
- 20-24 lakh: 25%
- Above 24 lakh: 30%
Income tax exemption limits over the years
The income tax exemption limits have steadily increased over the years, demonstrating the government’s progressive stance on taxation.
- 2005: Rs 1 lakh
- 2012: Rs 2 lakh
- 2014: Rs 2.5 lakh
- 2019: Rs 5 lakh
- 2023: Rs 7 lakh
- 2025: Rs 12 lakh
These revisions are expected to help the salaried middle class, with particular attention to reducing the complexities surrounding tax provisions and promoting a more transparent, easy-to-understand tax structure.
Expenditure on major sectors
Key sectors received substantial allocations in Budget 2025-26, including:
- Defence: Rs 4.91 lakh crore
- Rural Development: Rs 2.66 lakh crore
- Home Affairs: Rs 2.33 lakh crore
- Agriculture & Allied Activities: Rs 1.71 lakh crore
- Education: Rs 1.28 lakh crore
- Health: Rs 98,311 crore
- Urban Development: Rs 96,777 crore
- IT & Telecom: Rs 95,298 crore
- Energy: Rs 81,174 crore
- Commerce & Industry: Rs 65,553 crore
- Social Welfare: Rs 60,052 crore
- Scientific Departments: Rs 55,679 crore
Capital expenditure in FY26
Capital expenditure for the financial year 2025-26 has been raised to Rs 11.2 lakh crore, slightly up from the FY25 target of Rs 11.11 lakh croreunderscoringng the government’s focus on long-term infrastructure development.
Conclusion: A progressive budget for key sectors
Union Budget 2025 has made significant strides in enhancing various sectors, from defence and energy to income tax relief and education. The government’s focus on infrastructure, rural development, and renewable energy is expected to fuel growth. At the same time, the revision of income tax slabs will provide much-needed relief to middle-class taxpayers. As India continues its path towards economic growth, these budgetary measures play a crucial role in shaping a sustainable and inclusive future.
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