Union Budget 2025 Explained: Key Announcements, Expert Reactions, And Economic Implications

Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025 in Parliament today, outlining major financial policies, economic strategies, and sector-specific allocations. The budget, being the last full-fledged budget before the 2026 general elections, is crucial for shaping India’s economic trajectory.

Key Highlights of the Union Budget 2025

1. Economic Growth & Fiscal Deficit: The government has projected a GDP growth rate of 7.2% for FY 2025-26 while maintaining a fiscal deficit target of 5.4%. Sitharaman emphasized the need for fiscal prudence while boosting capital expenditure.
2. Tax Reforms: The government has not introduced major changes in the personal income tax structure but has increased the rebate limit under the new tax regime. Corporate tax rates remain unchanged, with incentives for startups and MSMEs.
3. Infrastructure Boost: The budget allocates ₹12 lakh crore for infrastructure projects, focusing on roads, highways, railways, and airports. A special ₹1 lakh crore fund has been announced to support sustainable urban development.
4. Agriculture & Rural Development: The government has increased the minimum support price (MSP) for key crops and allocated ₹1.71 lakh crore for agriculture and allied activities. The Ministry of Rural Development has been allocated ₹2.66 lakh crore, the second-largest allocation after the defence sector. Additionally, a new rural employment scheme aims to create 1 crore jobs over the next two years.
5. Healthcare & Education: The health sector receives a ₹98,311 crore  allocation, with a focus on medical research, AI-based healthcare solutions, and public health infrastructure. In education, the government announced a ₹1.29 lakh crore budget, emphasizing digital learning and skill development programs.
6. Renewable Energy & Sustainability: A ₹1,500 crore fund has been announced for renewable energy projects, focusing on solar, wind, and green hydrogen initiatives to achieve net-zero emissions by 2070.
7. Social Welfare & Women Empowerment: The government has introduced a new scheme to support women entrepreneurs, with ₹50,000 crore allocated for skill training and financial assistance.
8. Defense & National Security: India’s defense budget has been increased to ₹6.8 lakh crore, with a focus on indigenous manufacturing under the ‘Make in India’ initiative.
9. Digital & AI Development: The government has allocated ₹500 crore to boost AI research and digital infrastructure, aiming to position India as a global leader in technology and innovation.
10. Stock Market & Economic Outlook: Markets reacted positively to the budget, with the Sensex gaining 500 points post-announcement. Experts view the budget as growth-oriented, though concerns remain about inflation control and revenue generation.

Expert Reactions

Positive Reactions:

• Raghuram Rajan, former RBI Governor, praised the budget for its focus on fiscal consolidation and capital investment.
• Narayana Murthy, Infosys co-founder, welcomed the government’s emphasis on AI and digital infrastructure.

Criticism:

• P. Chidambaram, former Finance Minister, criticized the lack of relief for the middle class and job creation measures.
• Congress Leader Rahul Gandhi called the budget “pro-corporate” and lacking concrete steps for farmers.

The Union Budget 2025 balances economic growth with fiscal discipline, focusing on infrastructure, digital innovation, and social welfare. While experts see it as a forward-looking budget, concerns about inflation, employment, and middle-class relief remain. The real impact will unfold in the coming months as the government implements its plans.

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