Introduction

Imagine Ramesh, a school teacher in Patna, waking up to the news of the Union Budget 2025-26. Like many of us, he wonders how this financial blueprint will impact his daily life—from the taxes he pays to the quality of roads he travels on, the education his children receive, and the healthcare available to his family.

This blog will break down the budget’s key aspects in a simple, conversational manner, helping you understand its implications for the common man.

1. Overview of the Union Budget 2025-26

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, aims to stimulate balanced growth across various sectors. The budget focuses on inclusive development, boosting private sector investments, and enhancing the spending power of India’s middle class. The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, focuses on:

Economic Growth & Fiscal Discipline	Nominal GDP growth is projected at 10.1% for FY 2025-26. Fiscal deficit target set at 4.4% of GDP, down from 5.8% in the previous year. Total budget expenditure: ₹50.65 trillion.
Key Priorities	Enhancing middle-class spending power. Boosting private and public investment. Strengthening infrastructure, healthcare, and education.

📌 Source: Reuters, National Portal of India

2. Fiscal Deficit

The government is committed to reducing the fiscal deficit while maintaining economic momentum. The fiscal deficit is the difference between the government’s total revenue and total expenditure.

Fiscal deficit target: 4.4% of GDP	Reduced from 5.8% in the previous fiscal year. Indicates a disciplined approach to managing public debt. Lower fiscal deficit helps control inflation.
How it Affects the Common Man	Encourages foreign investment, leading to job creation. Ensures government spending remains efficient.
Measures to Reduce Fiscal Deficit	Revenue Generation: The government plans to increase revenue through improved tax compliance and divestment of public sector enterprises. Expenditure Management: Rationalising subsidies and optimising public expenditure to ensure efficient use of resources. Long-term Fiscal Policies: Implementing structural reforms to sustain fiscal discipline and promote economic stability.

📌 Source: Reuters, National Portal of India

3. Tax Reforms—Relief for the Middle Class

Income Tax Changes

• New Tax Regime: Individuals earning up to ₹12.75 lakh annually will not have to pay income tax. This change aims to increase disposable income and boost consumer spending. The government has revised the tax slabs under the new regime, which are broadly as follows:

– Rs 0 – 4 lakh: 0% – Rs 4 – 8 lakh: 5% – Rs 8 – 12 lakh: 10% – Rs 12 – 16 lakh: 15% – Rs 16 – 20 lakh: 20% – Rs 20 – 24 lakh: 25% – More than Rs 24 lakh: 30%

• The government has proposed to increase the tax rebate for income of up to Rs 12 lakh (Rs 12.75 lakh with standard deduction) from Rs 7 lakh earlier. Those earning up to Rs 12.75 lakh will pay Rs 0 tax. However, for those earning above Rs 12.75 lakh, taxes will be applicable as per the revised rates. Also, to be noted: the basic exemption limit has been increased from Rs 3 lakh to Rs 4 lakh.
• Impact on Middle-Class and New Investors: The new tax regime simplifies the tax process and provides relief to middle-class families, encouraging savings and investments.

Corporate Tax Reforms

• Reduction in Corporate Tax Rates: Lower corporate tax rates to attract foreign investments and support domestic businesses.
• Incentives for Startups and MSMEs: Special tax incentives for startups and MSMEs to foster innovation and entrepreneurship.

To put more money in the hands of taxpayers, the government has introduced key tax reforms:

Income Tax Changes	New exemption threshold: ₹1.28 million (₹12.8 lakh), up from ₹700,000. Reduced tax rates for higher income brackets. More savings for the middle class.
How it Affects the Common Man	More disposable income, leading to increased savings & investments. Encourages consumption, boosting economic activity.

📌 Source: Reuters, National Portal of India

4. Infrastructure Development—Union Budget

The budget prioritises infrastructure spending to boost economic growth and job creation.

Investment in Transport & Connectivity

Major funding was allocated for roads, highways, and railways. Modified UDAN Scheme: Enhancing regional connectivity to 120 new destinations under the UDAN scheme.Improved public transport for urban and rural areas. Role of Private Investment: Encouraging private sector participation in infrastructure projects to leverage expertise and efficiency. Success Stories and Future Opportunities: Highlighting successful PPP projects and potential areas for future investments.

Housing & Smart Cities

Strengthening urban infrastructure under the Smart Cities Mission. Schemes for Affordable Housing: Introduction of new schemes to provide affordable housing options for urban residents. Impact on Real Estate Market: Boosting the real estate market by increasing demand for residential properties.

📌 Source: India’s Union Budget FY 2025-26: Key Takeaways – Invest India

5. Urban Development—Building Sustainable Cities

With rapid urbanisation, the government has allocated substantial funds to improve city infrastructure.

Key Initiatives

Public Transport Improvements: New metro and electric bus services in Tier-1 and Tier-2 cities. Sewage & Waste Management: Modernisation of urban waste treatment plants. Water Supply Enhancement: Expansion of clean drinking water pipelines to underserved areas. ₹1 Lakh Crore Fund: Establishment of a ₹1 lakh crore Urban Challenge Fund to develop cities as growth hubs. Smart City Initiatives: Promoting smart city projects to enhance urban living standards and attract investments.

📌 Source: India’s Union Budget FY 2025-26: Key Takeaways – Invest India

6. Health—Strengthening Medical Infrastructure

The government has announced major reforms to improve healthcare accessibility.

Healthcare Investments	Establishment of new medical facilities & AIIMS hospitals. More funding for Ayushman Bharat to cover medical expenses for lower-income groups. Building New Hospitals and Clinics: Increasing the number of healthcare facilities to improve access to medical services. Training Healthcare Professionals: Investing in the training and development of healthcare professionals to ensure quality care.
Affordable Healthcare Initiatives	Day Care Cancer Centres for easier cancer treatment access. Customs duty exemptions on cancer drugs, making treatment more affordable. Expansion of PM Jan Arogya Yojana: Extending healthcare coverage to gig workers and other vulnerable groups. Healthcare for Gig Workers: Providing identity cards and registration on the e-SHRAM portal for gig workers.

📌 Source: Reuters

7. Education—Skill Development for the Youth

A skilled workforce is crucial for India’s future, and this budget includes significant educational initiatives.

Key Education Policies

Increased funding for schools and higher education institutions. Expansion of online education platforms. Atal Tinkering Labs: Establishment of 50,000 labs in government schools. This promotes STEM education and innovation, creating a skilled workforce for the future. Higher Education Reforms: New universities and research centres. Investing in education can lead to long-term economic growth and innovation.

Skill Development Programs

Internship programs for students and fresh graduates. Special incentives for companies hiring apprentices.

📌 Source: India’s Union Budget FY 2025-26: Key Takeaways – Invest India

8. Agriculture—Boosting Farm Output & Income

Recognising agriculture as a key sector, the government has introduced farmer-friendly policies.

Financial Support for Farmers	Increased subsidies for seeds, fertilisers, and irrigation. Launch of a National Manufacturing Mission for agricultural products.
Prime Minister Dhan-Dhaanya Krishi Yojana	Benefits for Farmers: The scheme aims to benefit 1.7 crore farmers by enhancing agricultural productivity and adopting sustainable practices. Focus on Low Productivity Districts: Targeting 100 districts with low agricultural productivity for development.
Crop-Specific Missions	Pulses and Cotton Missions were launched to enhance productivity. Investments in farm mechanisation and modern techniques.
Sustainable Agriculture	Crop Diversification: Encouraging farmers to diversify crops to reduce dependency on a single crop. Post-Harvest Storage and Irrigation: Improving storage facilities and irrigation systems to reduce post-harvest losses.

📌 Source: Reuters

9. Defence—Strengthening National Security

Although specific allocations weren’t detailed, the defence budget remains a key area of focus.

Strategic Investment in Defence	Increased Funding: Allocating more funds for defence to modernise the armed forces and enhance national security. Increased spending on indigenous weapon systems. Strengthening India’s border security & cyber defence capabilities. Collaboration with Private Sector: Partnering with private companies to boost defence manufacturing.
Impact on Economy	Boost for domestic defence manufacturing under Make in India. Job creation in defence technology & R&D sectors.

📌 Source: India’s Union Budget FY 2025-26: Key Takeaways – Invest India

10. Other announcements in Union Budget

• The government has revised the classification of MSMEs (Micro, Small, and Medium Enterprises). Based on their investment, the changes are:
  
  Micro — Rs 2.5 crore (vs 1 crore currently)
  Small — Rs 25 crore (vs 10 crore)
  Medium — Rs 125 crore (vs 50 crore)
• The government will set up a new Fund of Funds for startups with an investment of Rs 10,000 crore. This fund will then give money to Alternative Investment Funds directly investing in startups. The central government launched the Fund of Funds Scheme for Startups in 2016, with an initial investment of Rs 10,000 crore.
• Infra-related ministries will develop 3-year plans for projects that can be implemented under the Public-Private Partnership model. The government has also proposed Rs 1.5 lakh crore for capital expenditure via 50-year interest-free loans to states.
• To develop 100 GW of nuclear energy by 2047, the government proposed operationalising at least 5 Small Modular Reactors (SMRs) by 2033. A Rs 20,000 crore investment will establish a Nuclear Energy Mission for the development of SMRs.
• A Maritime Development Fund with a capital of Rs 25,000 crore will be set up. The government will contribute up to 49% of the fund.
• An increase in the foreign direct investment (FDI) limit for the insurance sector from 74% to 100% has been made.

11. Conclusion—What This Union Budget Means for You

For individuals, the Union Budget 2025-26 brings:

   •     Lower taxes, leading to higher savings.

   •     Improved infrastructure, making daily commuting easier.

   •     Better healthcare access at affordable rates.

   •     Enhanced educational opportunities for the youth.

   •     Support for farmers, ensuring a stronger agricultural sector.

This union budget aims to uplift the common man while driving India toward a self-reliant, prosperous future. 🚀