Union Budget 2025: Key Highlights, Pros & Cons – GD Topic

The Union Budget 2025-26 was presented in Parliament by Finance Minister Nirmala Sitharaman on February 1, 2025.  The theme of Union Budget 2025 is “Sabka Vikas”. Union Budget 2025 identified four engines for boosting the economy, supporting the middle class, and driving industrial growth. Check details below. Given the importance of this topic, MBAUniverse.com presents GD Topic titled “Union Budget 2025: Key Highlights, Pros, Cons”. 

Union Budget 2025: Key Highlights   

• No income tax on an average monthly income of up to Rs 1 lakh to boost middle-class household savings and consumption.
• Salaried class to pay nil income tax up to ₹12.75 lakh per annum in the new tax regime.
• Union Budget recognises four engines of development – Agriculture, MSMEs, Investment, and Exports.
• FY-25 estimated to end with a fiscal deficit of 4.8%, with a target to bring it down to 4.4% in FY-26.
• ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ to cover 100 low agricultural productivity districts, benefitting 1.7 crore farmers.
• "Mission for Aatmanirbharta in Pulses" with a special focus on Tur, Urad, and Masoor to be launched.
• Loans up to Rs. 5 lakhs through KCC under the modified interest subvention scheme.
• Significant enhancement of credit with guarantee cover to MSMEs from ₹5 crore to ₹10 crore.
• A National Manufacturing Mission covering small, medium, and large industries for furthering “Make in India.”
• 50,000 Atal Tinkering Labs in government schools in the next five years.
• Centre of Excellence in Artificial Intelligence for Education, with a total outlay of ₹500 crore.
• PM SVANIDHI with enhanced loans from banks, and UPI-linked credit cards with a ₹30,000 limit.
• Gig workers to get identity cards, registration on the e-Shram portal, and healthcare under PM Jan Arogya Yojana.
• ₹1 lakh crore Urban Challenge Fund for ‘Cities as Growth Hubs.’
• Nuclear Energy Mission for R&D of Small Modular Reactors with an outlay of ₹20,000 crore.
• Modified UDAN scheme to enhance regional connectivity to 120 new destinations.
• ₹15,000 crore SWAMIH Fund to be established for the expeditious completion of another 1 lakh stressed housing units.
• ₹20,000 crore allocated for private sector-driven research development and innovation initiatives.
• Gyan Bharatam Mission for survey and conservation of manuscripts to cover more than one crore manuscripts.
• FDI limit enhanced for insurance from 74 to 100 per cent.
• Jan Vishwas Bill 2.0 to be introduced for decriminalising more than 100 provisions in various laws.

Union Budget 2025 identified four engines for boosting the economy, supporting the middle class, and driving industrial growth. Read details below. 

Union Budget 2025: 1st Engine - Agriculture

Budget announced ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ in partnership with states covering 100 districts to increase productivity, adopt crop diversification, augment post-harvest storage, improve irrigation facilities, and facilitate availability of long-term and short-term credit. A comprehensive multi-sectoral ‘Rural Prosperity and Resilience’ programme will be launched in partnership with states to address underemployment in agriculture through skilling, investment, technology, and invigorating the rural economy. Union Finance Minister announced that Government will launch a 6-year “Mission for Aatmanirbharta in Pulses” with special focus on Tur, Urad and Masoor. The Budget has outlined measures to Comprehensive Programme for Vegetables & Fruits, National Mission on High Yielding Seeds, and a five year Mission for Cotton Productivity amongst other measures to promote agriculture and allied activities in a major way.

Union Budget 2025: 2nd Engine - MSMEs

Finance Minister described MSMEs as the second power engine for development as they constitute for 45% of our exports. To help MSMEs achieve higher efficiencies of scale, technological upgradation and better access to capital, the investment and turnover limits for classification of all MSMEs enhanced to 2.5 and 2 times, respectively. Further, steps to enhance credit availability with guarantee cover have also been announced.

The Finance Minister also announced the launch of a new scheme for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs. This will provide term loans up to Rs. 2 crore during the next 5 years.

Smt. Sitharaman announced that the Government will also implement a scheme to make India a global hub for toys representing the 'Made in India' brand. She added that the Government will set up a National Manufacturing Mission covering small, medium and large industries for furthering “Make in India”.

Union Budget 2025: 3rd Engine - Investments

Defining Investment as the third engine of growth, the Union Minister prioritized investment in people, economy and innovation. Under the investment in people, she announced that 50,000 Atal Tinkering Labs will be set up in Government schools in next 5 years. Five National Centres of Excellence for skilling will be set up with global expertise and partnerships to equip our youth with the skills required for “Make for India, Make for the World” manufacturing. A Centre of Excellence in Artificial Intelligence for education will be set up with a total outlay of 500 crore. Under the investment in Innovation, an allocation of ₹20,000 crore is announced to implement private sector driven Research, Development and Innovation initiative.

Union Budget 2025: 4th Engine - Exports

Smt. Sitharaman defined Exports as the fourth engine of growth and said that jointly driven by the Ministries of Commerce, MSME, and Finance; Export Promotion Mission will help MSMEs tap into the export market. She added that a digital public infrastructure, ‘BharatTradeNet’ (BTN) for international trade was proposed as a unified platform for trade documentation and financing solutions.

The Finance Minister mentioned that support will be provided to develop domestic manufacturing capacities for our economy’s integration with global supply chains. She also announced that government will support the domestic electronic equipment industry for leveraging the opportunities related to Industry 4.0. A National Framework has also been proposed for promoting Global Capability Centres in emerging tier 2 cities. The government will facilitate upgradation of infrastructure and warehousing for air cargo including high value perishable horticulture produce.

Union Budget 2025: Pros and Cons 

• Budget 2025 offers significant tax relief and incentives for consumption, benefiting FMCG, retail, and auto companies. 
• FY-25 estimated to end with a fiscal deficit of 4.8%, with a target to bring it down to 4.4% in FY-26. This is a big pro from the Budget 2025. Check ‘Trends in Deficit’ Image Below. 
• However, reduced capex raises concerns about long-term economic growth, impacting infrastructure and capital goods sector. 

In conclusion, Budget 2025 offers significant tax relief and incentives for consumption. However, reduced capex raises concerns about long-term economic growth. 

Read key highlights of previous year budgets.

Union Budget 2024-2025: Schemes And Initiatives To Facilitate Employment, Skilling And Other Opportunities For Youth; Many Changes In Tax Laws

Key Highlights

• India’s Inflation Continues To Be Low, Stable And Moving Towards The 4 Per Cent Target
• Pm’s Package Of 5 Schemes And Initiatives With An Outlay Of  ₹ 2 Lakh Crore To Facilitate Employment, Skilling And Other Opportunities For 4.1 Crore Youth In  5 Years
• For Pursuit Of ‘Viksit Bharat’, The Budget Envisages Sustained Efforts On 9 Priorities For Generating Ample Opportunities For All
• Budget 2024-25 Focuses On Employment, Skilling, Msme’s And Middle Class
• 1,000 Industrial Training Institutes Will Be Upgraded
• Government Will Formulate A Plan, Purvodaya, For The All-Round Development Of The Eastern Region Covering Bihar, Jharkhand, West Bengal, Odisha And Andhra Pradesh
• Government To Launch A Comprehensive Scheme For Providing Internship Opportunities In 500 Top Companies To 1 Crore Youth In 5 Years
• Emphasis On Expanding The Space Economy By 5 Times In The Next 10 Years With A Venture Capital Fund Of  ₹ 1,000 Crore
• Angel Tax Abolished For All Class Of Investors To Boost Start-Ups And Investments
• Corporate Tax On Foreign Companies Reduced From 40 To 35 Per Cent To Invite Investments

Budget Day is an eagerly anticipated event in India, with both businesses and the general public waiting to understand the schemes and initiatives that could benefit them. This year, due to the elections, Budget 2024 has been announced later than usual i.e. February 1. The FM announced the Final Budget on 23rd July 2024. Here is a summary for the Latest GD Topics 2024 - UNION BUDGET 2024-2025.

The focus of the budget remains on four major groups: 'Garib' (Poor), 'Mahilayen' (Women), 'Yuva' (Youth), and 'Annadata' (Farmers) .

Priority 1: Productivity and Resilience in Agriculture:
Measures include releasing new 109 high-yielding crop varieties, promoting natural farming among 1 crore farmers, establishing 10,000 need-based bio-input bio-input centres, and enhancing production, storage, and marketing of pulses and oilseeds (achieve‘atmanirbharta’ for oil seeds).

Priority 2: Employment & Skilling:
The budget introduces schemes like Employment Linked Incentive and initiatives to boost skilling with a focus on skilling 20 lakh youth over a 5-year period and upgrading 1,000 Industrial Training Institutes. 

Priority 3: Inclusive Human Resource Development and Social Justice:
Enhanced support for economic activities among marginalised groups, including tribal communities and women entrepreneurs, is emphasized. 

The government's Purvodaya initiative aims to comprehensively develop the eastern region of India- including Bihar, Jharkhand, West Bengal, Odisha, and Andhra Pradesh, focusing on human resource development, infrastructure enhancement, and economic growth to advance towards a developed nation.

Priority 4: Manufacturing & Services:
The budget emphasises support for MSMEs, focusing on labour-intensive manufacturing, with a new self-financing guarantee fund offering up to Rs 100 crore per applicant. 

Public sector banks will enhance their internal assessment capabilities for MSME credit. Additionally, Mudra loan limits will increase to Rs 20 lakh for previous 'Tarun' category borrowers. 

Priority 5: Urban Development:
PM Awas Yojana Urban 2.0, has been allocated Rs 10 lakh crore to address housing needs of 1 crore urban poor and middle-class families, with Rs 2.2 lakh crore in central assistance over 5 years. 

The government will also collaborate with State Governments and Multilateral Development Banks to promote water supply, sewage treatment, and solid waste management in 100 large cities through bankable projects. 

Priority 7: Infrastructure:
Government will try to maintain strong fiscal support for infrastructure over the next 5 years on this line Rs 11,11,111 crore for capital expenditure has been allocated this year, which is 3.4% of our GDP.

Priority 8: Innovation, Research & Development:
The government will establish the Anusandhan National Research Fund to support basic research and prototype development, allocating Rs 1 lakh crore to spur private sector-driven research and innovation at a commercial scale. 

Minister of Finance and Corporate Affairs Smt Nirmala Sitharaman, while presenting the Union Budget 2024-25 in Parliament said that India’s inflation continues to be low, stable and moving towards the 4 per cent target. Core inflation (non-food, non-fuel) currently is 3.1 per cent and steps are being taken to ensure supplies of perishable goods reach market adequately

Union Interim Budget 2024 – Prudence & Propriety or Lost Opportunity? – MBAUniverse.com Analysis

Indian Finance Minister Nirmala Sitharaman introduced the Interim Budget 2024 in Parliament on February 1, placing significant emphasis on India's macroeconomic growth and fiscal consolidation. As 2024 marks an election year, with Lok Sabha Elections anticipated in April-May, the finance minister chose to present an Interim Budget or a “Vote on Account” in February, rather than a complete Annual Budget. The anticipation is for the unveiling of the new full Budget in July 2024, post the establishment of the new government. However, some experts believe that since there are several months to go before the new government is formed, Interim Budget 2024 could have done a lot more to push the economy and business.

Given the paramount importance of the Government Budget for the Economy and Business, the analysis of Budget 2024 emerges as a crucial GD Topic for MBA Admission and other entrance exams. For a thorough exploration of Budget 2024 GD Topic, refer to this analysis on MBAUniverse.com. 

GD Topic for MBA Admission – Union Interim Budget 2024

1. Taxation Adjustments: In virtually every budget, the finance minister customarily extends a few incentives to individuals subject to income tax. However, Sitharaman refrained from altering this aspect in the most recent budget. As she articulated, “I…propose to maintain the existing tax rates for direct taxes.” Personal income tax stands as one category of direct tax, with corporate income tax representing the other. This signifies a more consistent income tax regime, which is deemed favorable.
2. Gross Domestic Product Outlook: The budget has outlined a nominal gross domestic product (GDP) of ₹327.7 trillion for 2024-25, reflecting a surge of 10.5% from ₹296.6 trillion in 2023-24, the current fiscal year. GDP serves as a metric for measuring the size of an economy within a specific year. All major budgetary figures are also expressed as a percentage of the GDP. The nominal GDP is predicted to elevate by 8.9% in 2023-24.
3. Fiscal Deficit Overview: At its core, the budget serves as a reflection of the government’s financial accounts. In 2023-24, the fiscal deficit is anticipated to be ₹17.35 trillion or 5.8% of the GDP. Fiscal deficit denotes the variance between government earnings and expenditures. For 2024-25, it is forecasted to decline to ₹16.85 trillion or 5.1%, aligning with the government’s objective of reducing the deficit to less than 4.5% by 2025-26.
4. Government’s Financial Obligations: The government finances its fiscal deficit mainly through borrowing and inflows from the small savings scheme. The sum invested in these schemes at any given time, among other factors, constitutes the government’s liabilities. As of March 2024, the debt and liabilities are projected to reach ₹168.72 trillion or 56.9% of the GDP. By March 2025, this is expected to reach ₹183.67 trillion or 56%. What does this imply? The government’s gross borrowing in 2024-25 is estimated at ₹14.13 trillion, lower than the ₹15.43 trillion expected borrowing in 2023-24. Additionally, funds derived from small savings schemes, post redemptions by investors in 2024-25, are projected at ₹4.66 trillion compared to ₹4.71 trillion in 2023-24. This translates to reduced government borrowings in 2024-25, easing the availability of funds for private sector borrowing.
5. Direct Tax Collections: 2024-25 will mark only the third instance since 1991-92 when personal income tax collections are predicted to surpass corporate income tax. The years 2020-21 and 2023-24 are the only other instances of this occurrence. Anticipated personal income taxes are set at ₹11.56 trillion, or 3.5% of the GDP, in contrast to corporate taxes of ₹10.43 trillion or 3.2%. Corporates continue to reap the benefits of the rate cut implemented in 2019.
6. Goods and Services Tax Scenario: In 2024-25, the government envisions collecting a total goods and services tax (GST) of ₹10.68 trillion or 3.3% of the GDP. This encompasses central GST, integrated GST, and GST compensation cess. This represents a slight uptick from 3.2% in 2023-24. As articulated by the finance minister in her address, “the average monthly gross GST collection has nearly doubled to ₹1.66 trillion, this year.” The monthly GST collections include the share of state governments as well.
7. Capital Expenditure Projections: Over the last four years, there has been a threefold increase in asset-creating capital expenditure. In 2024-25, the central government anticipates expending ₹11.11 trillion, equivalent to 3.4% of the GDP, as capital expenditure. This reflects an approximate 17% surge from the expected capital expenditure of ₹9.5 trillion in 2023-24. The capital expenditure anticipated for 2023-24 is poised to be over 28% higher than that of 2022-23.
8. Taxation Demands Discourse: The finance minister addressed the issue of 'a substantial number of minor, unverified, unreconciled, or disputed direct tax demands,' some dating as far back as 1962. In her speech, she proposed to ‘withdraw such outstanding direct tax demands up to ₹25,000 concerning the period up to the financial year 2009-10 and up to ₹10,000 for financial years 2010-11 to 2014-15’. Any measure that simplifies the lives of income taxpayers is always a welcome initiative.
9. Major Initiatives: The finance minister unveiled plans to assist middle-class citizens in acquiring or constructing their homes, enhance home construction under the PM Awas Yojana, and extend healthcare coverage under the Ayushman Bharat scheme to all Asha and Anganwadi workers. Furthermore, the announcement of rooftop solarization aims to empower one crore households to receive up to 300 units of free electricity every month.

Conclusion

As India strides into a crucial election year, the Interim Budget 2024 sets the stage for economic resilience and progress. The fiscal projections, taxation strategies, and targeted initiatives for housing, healthcare, and renewable energy signify the government's commitment to a stable and flourishing economy. The upcoming months hold the promise of further financial insights and policies as the nation navigates through the democratic process and charts its course towards sustained growth. 

However, some experts believe that since there are several months to go before the new government is formed, Interim Budget 2024 could have done a lot more to push the economy and business. 

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