The Aakhya Weekly #133 | The 2025-26 Union Budget Special
In Focus: Brief Insights from the Budget
by Aakhya India Policy Team
Access Aakhya India’s Union Budget 2025-26 Report here, for a detailed analysis.
The Finance Minister began her speech by referring to the Telugu proverb, which emphasises the central role of people in the country’s development. Through this quote, she reinforced the theme of inclusivity and human-centred progress, reflected throughout her Budget speech. The message suggests that economic growth and development are not solely dependent on resources or land, but on the empowerment and wellbeing of the people, which aligns with the government’s broader vision of a Viksit Bharat.
The theme of this Budget focuses on a balanced growth trajectory that emphasises agriculture, MSMEs, investments, and exports as the four engines driving the nation forward, with reforms serving as the fuel. With a clear vision for a Viksit Bharat—zero poverty, quality education, healthcare access, skilled labour, women in economic activities, and a thriving agricultural sector—the government aims to position India as a global leader.
Budget Priorities & Themes
Under the 'Agriculture as the 1st Engine' vision, the government has announced a series of initiatives to drive rural prosperity, enhance agricultural productivity, and ensure self-sufficiency in key commodities. These programs focus on improving irrigation, promoting sustainable practices, enhancing credit availability, boosting research and development, and strengthening value chains. With a special emphasis on pulses, cotton, fruits, vegetables, fisheries, and urea production, these measures aim to empower farmers and improve their incomes while addressing food security and climate resilience.
The Budget prioritises improving India’s Ease of Doing Business, through key reforms designed to reduce regulatory hurdles and streamline processes. Measures include the Investment Friendliness Index for states, regulatory simplifications under the Jan Vishwas Bill 2.0, a revamped Central KYC Registry, BharatTradeNet for trade facilitation, and a Partial Credit Enhancement Facility for infrastructure financing. Simultaneously, there appears to be a strategic focus on Bihar, reflecting the government's political priorities, given that the Bihar State elections are due in October/November 2025. Moreover, the Janata Dal United (JDU) is a key coalition partner for the Bharatiya Janata Party (BJP) as a part of the National Democratic Alliance (NDA) at the centre, and ‘Mahagathbandhan’ coalition in Bihar. In alignment with these interests, the Finance Minister announced several infrastructure projects and other food processing and agriculture-linked schemes. For instance, the government announced the setting up of a Makhana Board and the National Institute of Food Technology, to improve the production, processing, and marketing of Makhana and skill development, entrepreneurship, and employment opportunities, respectively. For building new infrastructure, the government announced a greenfield airport for Bihar and a Western Koshi Canal Project in the Mithilanchal region of the state.
Additionally, the budget focuses on sustainability through targeted measures that foster growth in the clean tech and energy sectors. Tax exemptions discussed earlier on critical materials, such as EV batteries and solar cells, are designed to boost domestic manufacturing capabilities and reduce reliance on imports. In addition to supporting Clean Tech Manufacturing, the proposed Nuclear Energy Mission and reforms in the power sector aim to ensure long-term energy security and sustainable development.
Key Budget Indicators
The Revised Estimate for 2024-25 indicates total receipts (excluding borrowings) of ₹31.47 lakh crore, with net tax receipts at ₹25.57 lakh crore. The total expenditure is estimated at ₹47.16 lakh crore, of which ₹10.18 lakh crore is allocated for capital expenditure. The fiscal deficit for the year is projected to be 4.8% of GDP.
For 2025-26, the Budget Estimates suggest total receipts (excluding borrowings) of ₹34.96 lakh crore, with net tax receipts at ₹28.37 lakh crore. Total expenditures are expected to be ₹50.65 lakh crore, and the fiscal deficit is projected at 4.4% of GDP. To finance this deficit, net market borrowings are estimated at ₹11.54 lakh crore, with gross borrowings expected to reach ₹14.82 lakh crore.
Sector-wise Highlights
Agriculture:
The Prime Minister's Dhan-Dhaanya Krishi Yojana will cover 100 districts and is expected to benefit 1.7 crore farmers.
The National Mission on High-Yielding Seeds aims to ensure pest resistance and climate resilience in managing crops.
The Mission for Cotton Productivity (5 years) will promote extra-long-staple cotton to enhance sustainability and productivity with ₹500 crore allocated to the sector.
A six-year Pulse Mission will focus on Tur, Urad, and Masoor pulses.
The Makhana Board in Bihar will support Makhana production, processing, and marketing through FPOs, with ₹100 crore allocated to develop a sustainable Makhana industry.
A urea plant with an annual capacity of 12.7 lakh metric tonnes will be established in Namrup, Assam, reducing dependency on urea imports.
Technology:
The government will set up 50,000 Atal Tinkering Labs in government schools over five years to encourage scientific temper among students.
A new Centre of Excellence (CoE) will be established in Artificial Intelligence for education, with a total outlay of ₹500 crore, building on previous CoEs in AI for health, agriculture, and sustainable cities.
The government will explore setting up a Deep Tech fund of funds to support investments in R&D and next-generation startups.
Infrastructure & Urban Development:
A ₹1 lakh crore Urban Challenge Fund will support urban redevelopment and water & sanitation projects, with 25% of project costs financed by the fund.
A 3-year pipeline of infrastructure projects for PPP mode will be developed by each ministry, with support from the India Infrastructure Project Development Fund (IIPDF).
₹1.5 lakh crore will be allocated to states for 50-year interest-free loans for capital expenditure, with incentives for infrastructure development reforms
The second Asset Monetization Plan for 2025-30 will be announced to reinvest INR 10 lakh crore capital into new projects.
The Shipbuilding Financial Assistance Policy will be revamped to address cost disadvantages, promoting shipbuilding clusters and technology development.
A ₹25,000 crore Maritime Development Fund will be established to support long-term financing in the maritime industry, with contributions from ports and the private sector.
Financial support will be allocated to the Western Koshi Canal project in Mithilanchal, Bihar, to improve irrigation and agricultural productivity across 50,000 hectares.
Financial support will be provided for a greenfield airport in Bihar, alongside expansions at Patna and Bihta airports.
The Jal Jeevan Mission will be extended until 2028 to provide 100% potable water coverage for rural households, focusing on quality and citizen participation.
SWAMIH Fund 2, a ₹15,000 crore blended finance facility, will complete an additional 1 lakh units in stressed housing projects, with contributions from government, banks, and private investors.
Micro, Small, & Medium Enterprises (MSMEs):
The classification criteria for MSMEs will be revised, increasing investment and turnover limits to 2.5 and 2 times, respectively, to support growth and capital access.
Micro Enterprises will see investment limits raised from ₹1 crore to ₹2.5 crore, Small Enterprises from ₹10 crore to ₹25 crore, and Medium Enterprises from ₹50 crore to ₹125 crore.
Customised ₹5 lakh Credit Cards will be issued to 10 lakh micro-enterprises registered on the Udyam portal to manage finances and support growth.
National Geospatial Mission:
The National Geospatial Mission will be launched to develop foundational geospatial infrastructure and data.
Nuclear Energy Mission:
The development of 100 GW of nuclear energy by 2047 will be prioritised, with amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act to encourage private-sector collaboration.
A ₹20,000 crore Nuclear Energy Mission will be launched to develop Small Modular Reactors (SMRs), aiming to have at least 5 indigenously developed SMRs operational by 2033.
Electricity distribution reforms and the augmentation of intra-state transmission capacity will be incentivised to improve electricity companies’ financial health and capacities.
States will be allowed an additional 0.5% borrowing of GSDP, contingent on the successful implementation of electricity distribution reforms.
Exports:
The Export Promotion Mission will facilitate easy access to export credit and help tackle non-tariff barriers in international markets.
BharatTradeNet, a digital public infrastructure for international trade will be set up, serving as a unified platform for trade documentation and financing solutions.
A National Framework for Global Capability Centres (GCC) will guide states in promoting these centres in emerging tier-2 cities.
A warehousing facility for air cargo will be established to store high-value perishable horticulture produce.
Event Watch
Shaping AI for the Global South: AI4India & CPRG at the AI Action Summit Paris 2025
AI4India and the Center of Policy Research and Governance (CPRG) are set to host a pivotal side event at the AI Action Summit Paris 2025, making them the only non-government organizations from India to do so. Co-chaired by Prime Minister Narendra Modi alongside global leaders, the summit underscores India’s expanding influence in shaping AI’s future. Partnering with the Centre for Indo-European Cooperation, the roundtable, "Data for Development: Building AI in the Global South," will convene policymakers, industry leaders, and researchers to address challenges hindering AI maturity in emerging economies.
The discussion will focus on three key themes: Data Sovereignty in the Global South, emphasizing strategic control over data assets; AI’s Role in Driving Economic Growth, exploring AI-driven innovation across sectors; and AI’s Impact on Labor Markets, analyzing its effects on non-skilled and semi-skilled employment. AI4India Co-Founder Shashi Shekhar highlighted the summit’s role in shaping regulatory frameworks that balance innovation and accountability, while Alok Agrawal emphasized the Datadaan initiative, which seeks to democratize access to data for startups and researchers. CPRG Director Dr. Ramanand reaffirmed the commitment to fostering an inclusive and transformative AI ecosystem aligned with Prime Minister Modi’s vision.
As AI reshapes economies and societies, AI4India and CPRG remain dedicated to driving policies and strategies that address the unique needs of the Global South. Their participation at the AI Action Summit Paris 2025 reflects India’s leadership in responsible AI innovation, paving the way for a collaborative, equitable, and data-driven AI future. Click here to learn more about the event and key discussions. Click here to learn more about the event and key discussions.
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