The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, projects ambitious economic plans while signaling a shift towards private sector-led development. Key initiatives include the Prime Minister Dhan Dhanya Krishi Yojana, Mission Cotton Board, Makhana Board, National Mission on High Yield Seeds, and Atmanirbhar Pulses. However, the fine print suggests an increasing reliance on private investment, raising concerns over fiscal sustainability.
One of the most striking aspects of this budget is the government's reduced financial involvement in crucial projects. The Nuclear Energy Mission for Vikshit Bharat will be heavily dependent on private players, and the Rs. 25,000 crore Maritime Fund will see only a 49% contribution from the Centre, leaving the remaining to states, private investors, and financial institutions. The Manufacturing Mission relies entirely on credit availability, while infrastructure and tourism development projects will require state collaboration.
Despite announcing more IIT and medical college seats, there is little clarity on funding for elementary education, teacher recruitment, or classroom expansion. The new Income Tax Bill, to be introduced in Parliament next week, promises reforms but remains vague on details.
The much-publicized tax exemption up to Rs. 12 lakh is not as straightforward as it appears. Excluding standard deductions, the exemption applies only to Rs. 4 lakh, with remaining income taxable at 5% and 10%. Meaningful tax relief is conditional on investments under various heads.
A major concern is the rising fiscal deficit. Out of every rupee earned, 20% is allocated to debt repayment, 6% to major subsidies, and 16% to central schemes. On the revenue side, 24% comes from borrowing, and 9% from non-tax receipts, implying that a significant portion of income is non-revenue based. The government will borrow nearly Rs. 16 trillion to meet its Rs. 48.21 trillion expenditure, as net revenue receipts are expected to be Rs. 31.47 trillion.
This budget, while promoting growth through ambitious programs, raises pressing questions about financial viability, debt management, and the risks of private sector over-dependence.

High borrowings, private sector reliance, fiscal gaps

Union Budget 2025-26: Growth or Fiscal Strain?

High borrowings, private sector reliance, fiscal gaps

15:00 IST