Abhishek Writes

Budget 2025-26: Beyond Numbers, Towards Understanding!

When I was a kid, I always wondered—what exactly is a Budget? Why does everyone talk about it like it’s such a big deal? What’s its importance for common people like you and me? And more importantly, how can I, or anyone else, really understand it without getting lost in complicated numbers and technical jargon?

Today, let’s dive deep into this fascinating world of economics and unravel the mystery behind the Budget 2025-26. We’ll break it down in simple terms, explore how it impacts our daily lives, from the price of groceries to taxes and jobs, and see why it’s more than just a government report—it’s a blueprint that shapes the country’s future and, in turn, our own.

What is Budget?

The Budget is the government’s official announcement to Parliament and the nation, detailing its financial blueprint for the upcoming fiscal year. It outlines how the government plans to generate income, allocate expenditures, and manage borrowing, providing a clear picture of the country’s economic priorities and strategies.

Why is it important?

  • For the Economy: It influences economic growth, inflation, employment, and overall financial stability.
  • For Common People: It affects daily life by determining tax rates, subsidies, prices of goods, and public services.
  • For Businesses: It guides investment decisions, as policies can impact industries, interest rates, and market conditions.

What does the Budget include?

The Budget broadly includes the government’s plans for income, spending, and borrowing for the upcoming financial year. It outlines:

  1. Revenue (Income):
    How the government plans to generate money through taxes (like income tax, GST, customs duties) and non-tax sources (like dividends from public sector enterprises and interest on loans).
  2. Expenditure (Spending):
    How the government will allocate funds for various needs, including infrastructure development, public services like healthcare and education, defense, welfare schemes, subsidies, and salaries.
  3. Borrowing and Fiscal Deficit:
    If the government’s spending exceeds its income, the Budget explains how it plans to borrow money to cover the gap, including loans from domestic or international sources.
  4. Policy and Economic Goals:
    Key reforms, new initiatives, and economic targets, such as boosting growth, reducing unemployment, or controlling inflation.

Types of Budget?

Balanced Budget

  • In a balanced budget, the government’s revenue equals its expenditure. This means the government neither borrows money nor accumulates debt. It reflects fiscal discipline and financial stability.

Surplus Budget

  • A surplus budget occurs when the government’s revenue exceeds its expenditure. The excess funds are often used for saving or paying off national debt. It indicates a healthy economy and efficient resource management.

Deficit Budget

  • A deficit budget happens when the government’s expenditure exceeds its revenue, leading to a fiscal deficit. The government borrows money to cover the gap, usually to stimulate the economy during a downturn or to fund large development projects.

How the Government Generates Its Income?

How the ₹100 is typically collected from different sources.

How the Government Spends Money?

How the ₹100 is typically spend on different things.

Key Focus Areas of Budget 2025-26:

The Union Budget 2025-26 unfolds with a fresh blueprint aimed at driving economic momentum while ensuring inclusive growth. Here’s a unique lens into the main areas where the government is channeling its energy and resources:

1. Empowering the Middle Class Through Tax Relief
The budget delivers a tax makeover designed to empower the middle class. By raising the tax exemption limit and introducing broader tax cuts, it fuels disposable income, encouraging consumption and personal savings, which in turn boosts the economy from the ground up.

2. Revolutionizing Agriculture with High-Yield Programs
Recognizing the backbone of India’s economy, this budget seeds transformative change in the agricultural sector. A bold initiative is set to reach 17 million farmers, pushing high-yield crop programs that promise increased productivity, higher incomes, and long-term food security.

3. Fueling Innovation: Startups and MSMEs in the Spotlight
India’s entrepreneurial spirit gets a boost with fresh funding and incentives for startups and small enterprises. The budget lays out frameworks to foster innovation hubs, streamline funding access, and simplify compliance—making it easier for businesses to grow and thrive.

4. Building Connectivity: Infrastructure at the Core
From skies to streets, the budget doubles down on infrastructure development. The revamped UDAN scheme is set to expand regional connectivity to 120 new destinations, focusing on underserved areas. This not only strengthens travel and trade but also bridges the urban-rural divide.

5. Green Energy, Bright Future: The Nuclear Energy Mission
In a bold move towards sustainable energy, the government announces its Nuclear Energy Mission, targeting 100 GW of nuclear power by 2047. This futuristic vision diversifies India’s energy portfolio, pushing for cleaner alternatives to meet growing demands.

6. Fiscal Discipline Meets Growth Ambitions
While investing in development, the government remains grounded in fiscal prudence. The fiscal deficit target is set at 4.4% of GDP, balancing the need for growth with responsible financial management, ensuring long-term economic stability.

Budget 2025-26: No Tax on Income Up to ₹12 Lakh – A Big Win for the Middle Class!

In a historic move, the Union Budget 2025-26 has brought a massive tax relief that’s sure to put a smile on every middle-class earner’s face. If your annual income is up to ₹12 lakh—you won’t have to pay a single rupee in taxes!

Pg. 46 of Budget Speech 2025-26.

🔹 What Does This Mean?

The government has increased the tax exemption limit to ₹12 lakh, meaning anyone earning below this threshold won’t have to worry about income tax. On top of that, a standard deduction of ₹75,000 has been introduced, effectively making ₹12.75 lakh completely tax-free for salaried individuals.

Individuals will get the Tax Rebate while filing their Income Tax.

🔹What is a Tax Rebate?

A tax rebate is a refund or deduction applied to your total tax liability. It doesn’t reduce your income, but it lowers the final tax amount after all calculations. Think of it as a reward for earning within a certain limit or fulfilling specific conditions.

🔹 Why Is This a Big Deal?

  • More Money in Your Pocket: With no taxes up to ₹12 lakh, people will have more cash to save, invest, or spend on their dreams. This will increase Purchasing Power(PPP) of individuals.
  • Boost for the Economy: As people spend more, it’s expected to give a solid push to the market, fueling growth in multiple sectors.
  • Relief for Small Business Owners: Freelancers, entrepreneurs, and small business owners will also enjoy this benefit, giving them more flexibility to grow their ventures.

🔹 What’s the Bigger Picture?

This isn’t just a tax cut—it’s the government’s way of empowering the middle class, encouraging people to save more, spend smart, and invest in the future. By putting more money back into people’s hands, the budget is aimed at driving economic growth from the ground up.

Expenditure on Various Sectors:

All the figures are in crore and data may vary.
All the figures are in crore and data may vary.

1. Defence Spending Cut

The defence budget has seen a major decline from ₹5,94,000 crore in 2024 to ₹4,91,732 crore in 2025, indicating a reduction of over ₹1 lakh crore. This might signal a shift in priorities, possibly reallocating funds to other sectors.

2. Significant Rise in Rural Development

Rural Development has received a substantial boost, increasing from ₹1,60,000 crore in 2024 to ₹2,66,817 crore in 2025, a rise of nearly 67%. This suggests a stronger focus on rural infrastructure, employment, and welfare programs.

3. Increased Allocation to Home Affairs and Agriculture

  • Home Affairs funding has gone up from ₹1,85,000 crore to ₹2,33,211 crore, highlighting the government’s emphasis on internal security and law enforcement.
  • Agriculture and Allied Activities have seen a rise from ₹1,52,000 crore to ₹1,71,437 crore, likely supporting farmers and agrarian reforms.

4. Growth in Social Sectors (Education & Health)

  • Education spending has increased from ₹1,12,000 crore to ₹1,28,650 crore, indicating more focus on educational infrastructure and skill development.
  • Health has seen an allocation boost from ₹86,175 crore to ₹98,311 crore, which could support healthcare reforms and infrastructure.

5. IT and Telecom Boom

One of the most dramatic increases is in IT and Telecom, from a modest ₹16,549 crore in 2024 to ₹95,298 crore in 2025, nearly a six-fold increase. This suggests major investments in digital infrastructure, connectivity, and technological advancements.

6. Energy and Urban Development Get Big Push

  • Energy funding has surged from ₹15,322 crore to ₹81,174 crore, which might indicate new renewable energy initiatives or power sector reforms.
  • Urban Development has seen a boost from ₹76,549 crore to ₹96,777 crore, likely addressing urban infrastructure and smart city projects.

7. Social Welfare Sees a Fivefold Increase

Social Welfare has jumped massively from ₹12,000 crore in 2024 to ₹60,052 crore in 2025, suggesting an expansion in welfare schemes for marginalized communities.

8. Boost for Commerce, Industry, and Science

  • Commerce and Industry has received more funds, increasing from ₹48,000 crore to ₹65,553 crore, which might support business growth and industrial policies.
  • Scientific Departments funding has also increased from ₹50,000 crore to ₹55,679 crore, potentially indicating research and innovation support.

The Five key priorities of the Government:

1. Rural Development and Social Welfare

  • Massive increase in Rural Development (₹2,66,817 crore from ₹1,60,000 crore).
  • Social Welfare funding has jumped fivefold (₹60,052 crore from ₹12,000 crore).
  • This suggests a strong push towards rural employment, housing, agriculture, and poverty alleviation programs like MNREGA and direct benefit transfers.

2. Digital & Technological Advancements

  • IT and Telecom budget skyrocketed from ₹16,549 crore to ₹95,298 crore.
  • The government likely aims to enhance 5G expansion, AI, digital payments, and cybersecurity.
  • This aligns with India’s vision of becoming a global digital leader.

3. Healthcare & Education Reforms

  • Healthcare gets ₹98,311 crore(approx.) (from ₹86,175 crore), ensuring better infrastructure, affordable medicines, and insurance schemes.
  • Education sees a boost to ₹1,28,650 crore, focusing on higher education, vocational training, and digital learning under initiatives like NEP 2020.

4. Urban Development & Infrastructure Growth

  • Urban Development allocation rises to ₹96,777 crore.
  • This indicates more smart cities, metro projects, housing schemes, and urban transport improvements.
  • The Energy budget also sees a massive increase, suggesting green energy and sustainable projects.

5. Economic & Industrial Growth

  • Commerce and Industry funding grows from ₹48,000 crore to ₹65,553 crore.
  • This could indicate Make in India 2.0, MSME support, startup funding, and ease of doing business reforms.
  • More industrial and trade policies to boost exports and manufacturing.

Now lets understand basic needs allocation in Budget 2025-26:

1. Education –

Education sees a boost to ₹1,28,650 crore, focusing on higher education, vocational training, and digital learning under initiatives like NEP 2020.

Breakdown of Education Allocation:

  • School Education: The Department of School Education and Literacy has received ₹78,572 crore, marking an increase of ₹5,074 crore (about 7%) from last year.
  • Higher Education: The allocation for higher education stands at ₹50,067 crore.

Key Initiatives Announced:

  • Infrastructure Development: The budget includes plans to add 10,000 additional medical seats and enhance infrastructure in five Indian Institutes of Technology (IITs).
  • Digital Initiatives: Launch of the Bharatiya Bhasha Pushtak scheme to provide digital versions of Indian language books.
  • Atal Tinkering Labs: A proposal to set up 50,000 labs over the next five years to encourage scientific innovation among students.

2. Health Care –

Healthcare gets ₹98,311 crore(approx.) (from ₹86,175 crore), ensuring better infrastructure, affordable medicines, and insurance schemes.

Key Highlights of the Healthcare Allocation:

  • National Health Mission (NHM): Received an allocation of ₹37,226.37 crore, up from ₹32,294.07 crore, reflecting a 15.3% increase aimed at strengthening rural healthcare services.
  • Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY): Allocated ₹9,405 crore, which is a 28.8% increase from last year’s ₹7,299 crore.
  • Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM): Funding increased by 31.3% from ₹3,200 crore to ₹4,200 crore.
  • Human Resources for Health and Medical Education: This segment saw a substantial rise of 661.4%, with funding increasing from ₹220 crore to ₹1,675 crore.

3. Urban Development & Infrastructure Growth –

Key Allocations for Infrastructure:

  1. Total Capital Expenditure: Approximately ₹11.2 lakh crore has been earmarked for capital expenditure, which constitutes about 3.1% of GDP.
  2. Urban Challenge Fund: An allocation of ₹1 lakh crore has been established to support urban development initiatives, focusing on transforming cities into growth hubs and enhancing water and sanitation infrastructure.
  3. Interest-Free Loans for State Infrastructure: The budget includes ₹1.5 lakh crore in interest-free loans to states aimed at improving their infrastructure capabilities.
  4. Asset Monetization Plan: The government plans to recycle ₹10 lakh crore into new infrastructure developments through an Asset Monetization Plan spanning from 2025 to 2030.
  5. Plug-and-Play Industrial Parks: A new scheme has been allocated ₹2,500 crore to establish plug-and-play industrial parks, aimed at boosting industrial development.
  6. Nuclear Energy Mission: An outlay of ₹20,000 crore is designated for the development of small modular reactors, supporting India’s transition towards clean energy.

4. Things That May Become Cheaper –

  • Electronics & Digital Services
  • Electric Vehicles (EVs) & Renewable Energy
  • Agricultural Products & Rural Goods
  • Medicines & Healthcare
  • Housing & Infrastructure Materials

5. Things That May Become Costlier –

  • Luxury Goods & Imported Items
  • Petrol & Diesel
  • Online Services & Digital Subscriptions
  • Alcohol & Tobacco
  • Luxury Air Travel & Tourism

Capital Expenditure(Capex):

Capital Expenditure (Capex) is the money the government spends on building long-term assets like roads, railways, airports, power plants, and schools. It helps in the overall growth of the economy by creating infrastructure, jobs, and boosting productivity.

Key Features of Capex

  • Used for Development – Spent on building new projects or upgrading existing infrastructure.
  • Long-term Impact – Unlike daily expenses, Capex benefits the country for many years.
  • Boosts Economic Growth – Creates jobs and improves business conditions.

Examples of Capex Spending in the Budget

  • Building Highways, Bridges, and Metro Rail
  • Expanding Railways & Airports
  • Investing in Renewable Energy & Power Projects
  • Developing Smart Cities & Digital Infrastructure

In the Union Budget for the fiscal year 2025-26, the Government of India has allocated ₹11.21 lakh crore towards capital expenditure, accounting for 3.1% of the Gross Domestic Product (GDP).

This allocation represents a 10% increase compared to the revised estimate of ₹10.18 lakh crore for the previous fiscal year, 2024-25.

The enhanced capital expenditure underscores the government’s commitment to infrastructure development and long-term economic growth. Key areas of focus include:

  • Infrastructure Investment: Significant funds are earmarked for the development of roads, railways, and urban infrastructure projects.
  • Long-term Interest-Free Loans to States: An allocation of ₹1.5 lakh crore has been made to provide long-term, interest-free loans to states, encouraging them to invest in their respective infrastructure projects.

Conclusion

The Union Budget 2025-26 reflects a strategic balance between economic growth and social development, focusing on infrastructure, digital transformation, and welfare initiatives. As the government aims for long-term progress, its execution will determine the true impact on industries, employment, and the everyday lives of citizens. This is how you and I interpret the budget—through its impact on growth, development, and daily lives, beyond just numbers and allocations.

(Note: The Data may Vary, Also Subscribe to the Newsletter for more updates.)