Union Budget Reactions 2025-26: Key Reforms and Their Impact

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, brings forward several initiatives to bolster India’s economic growth. Among the key areas of focus are employment, employability, ease of doing business, and the road ahead, which can shape the future trajectory of the economy. Reforms and initiatives across various sectors have triggered interest across multiple sectors, with employment, employability, and ease of doing business being the central discussion points.

Union Budget 2025 Reactions and Impact

Taxation reforms

• Income Tax Relief: Individuals earning up to ₹12 lakh annually are now exempt from income tax under the new regime. This exemption extends to ₹12.75 lakh for salaried taxpayers, considering a standard deduction of ₹75,000.
• Revised Tax Slabs: The new tax structure is as follows:

• Senior Citizens’ Benefits: The tax deduction limit on interest income for senior citizens has been doubled from ₹50,000 to ₹1 lakh.
• TDS on Rent: The annual threshold for Tax Deducted at Source (TDS) on rent has been increased from ₹2.4 lakh to ₹6 lakh.  

Agriculture and Rural Development

• Prime Minister Dhan-Dhaanya Krishi Yojana: It aims to augment agricultural productivity, and this scheme will be implemented in 100 low-productivity districts.
• Self-Reliance in Pulses: This six-year objective aims at Tur, Urad, and Masoor pulses to attain self-sufficiency and reduce imports.
• Kisan Credit Card (KCC) Enhancement: The loan limit has been given flexibility under the KCC and increased from ₹3 lakh to ₹5 lakh. This is intended to benefit farmers, fishermen, and dairy farmers. 

Infrastructure and Urban Development

• Interest-Free Loans to States: A significant provision of ₹1.5 lakh crore in 50-year interest-free loans to states for capital expenditure and infrastructure projects.
• Urban Challenge Fund: To support the city redevelopment project, FM has granted ₹1 lakh crore fund to enhance urban transformation and improve sanitation.
• Jal Jeevan Mission Extension: To acquire 100% coverage of drinkable tap water in rural households, our government has extended until 2028. 

Technology and Innovation

• Centre of Excellence in Artificial Intelligence: allocation of ₹500 crore funds to create a center concentrating on AI research and its application in education.
• National Geospatial Mission: Launch of a mission to develop foundational geospatial infrastructure and data, supporting urban planning and disaster management.
• Deep Tech Fund of Funds: Funds explored to support next-generation startups in cutting-edge technologies. 

Financial Sector Reforms

• FDI in Insurance: The Foreign Direct Investment limit in the insurance sector has been raised from 74% to 100% for companies investing their entire premium within India. 
• New Income Tax Bill: To create greater clarity and reduce litigation to ease out and simplify tax laws, the new bill will be presented. 

Social Welfare and Employment

• Support for Gig Workers:  Under the Pradhan Mantri Jan Arogya Yojana, Gig workers will now receive identity cards like never before. This will help you register on the e-Shram portal and receive healthcare benefits.
• PM SVANidhi Scheme Revamp: The scheme for street vendors will be enhanced to provide higher loans, UPI-linked credit cards with a ₹30,000 limit, and capacity-building support.

These initiatives reflect the government’s commitment to economic growth, technological advancement, and social welfare. In this article, we examine the key points of the union budget 2025 reaction and evaluate their scope and impact on delivering growth and economic prosperity.

Employment

The income tax relief for salaried employees is one of the most remarkable reforms. Under the new regime, individuals with wages up to ₹12 lakh annually are not taxed at all, while salaried taxpayers will receive a standard deduction of ₹75,000. The reform pursues the objectives of increased disposable income, incentivized consumer spending, and improved job security. The modified tax slabs further ensure the relief; in the process, a rising tax scale is established to relieve the middle-class workers, the main benefactors of the scheme, who can indirectly improve job retention and provision.

Employability: Focus on skill development

One of the reasons why skill development is so crucial for employability is that job markets are now more dynamic than ever. The creation of Centres of Excellence in Artificial Intelligence, with a budget of 500 crores, is a laudable effort to promote innovation and prepare the labour force for future technological shifts. Through technical training and vocational courses, the government hopes to generate a skilled workforce that can fulfil the job requirements of the modern digital economy.

Furthermore, the government’s efforts to strengthen social protections are gaining momentum. The PM SVANidhi Scheme seeks to provide the much-needed financial support to street vendors. At the same time, the expansion of Pradhan Mantri Jan Arogya Yojana to gig workers aims to create a stronger safety net. These measures will enhance economic security for workers in these sectors and improve their long-term employability, ensuring financial stability in an evolving job market. While the government’s objective is appreciable, experts are skeptical about the best implementation. The concerns about the adequacy of the infrastructure and the quality of education programs need assurances which can be provided by setting up systems to ensure accountability for the proper allocation of funds. Also care must be taken to align skills with the demands of the job market.

Ease of doing business: Jan Biswas Bill 2.0

The Union Budget for 2025-26 introduces Jan Vishwas Bill 2.0, a significant step to simplify business processes and create a more inviting environment for companies in India. The bill aims to eliminate around 100 outdated criminal laws that no longer serve any purpose. This proposal builds on the success of the Jan Biswas (Amendment of Provisions) Act, 2023, which decriminalized over 180 legal provisions in a bid to facilitate ease of doing business and thus boost employment generation. 

The bill’s main objective is to ensure that laws that are no longer relevant to the business and technological landscape, especially at the level of the global economy, are eliminated. This shift is expected to reduce the fear of accountability for small mistakes, making the business environment more welcoming. It should drive business growth, reduce legal uncertainties, and support India’s goal of attracting local and foreign investors. If effectively implemented, the Jan Biswas Bill 2.0 will significantly enhance India’s economic competitiveness, simplify business laws, and create a more entrepreneur-friendly atmosphere.

A balanced approach to growth: The road ahead

The Union Budget finances economic recovery; however, execution is key. While the goal is 100% employment, skills acquisition, and business-friendly environments, the secret to success lies in the creation of suitable policies and their local implementation. The long-term objective should be to implement policies that can adapt to changing governments, ensure the necessary industrial regulations, and provide direct benefits to the right people. If executed well, these reforms could emerge as game-changers for India’s economy. 

The post-Union budget 2025 reaction indicates India’s confidence in building a capable and resilient nation that is focused on knowledge-driven workforce planning and innovation-supported private sector development. As an inclusive policy and a mechanism to drive sustainable growth, this budget promised to generate more job opportunities and thus strive to build an inclusive, self-sufficient economy.

References:

• Union Budget 2025 | Ministry of Finance | PWC

• Union Budget 2025: Key tech announcements | Live Mint | Feb 2025

• Union Budget 2025 | The Economic Times | Feb 2025
• Key Highlights of Union Budget | Kanakupillai | Feb 2025