The Annual Budget 2025-26 has brought major tax relief, leading to a wave of celebrations across social media. People are rejoicing over increased savings, and financial analysts are calling it a “Consumption-Focused Budget.” Unlike previous budgets that emphasized capital expenditure, this year’s budget aims to boost domestic demand and ensure purchasing power remains strong.
Let’s break down the key highlights of this budget and understand how it impacts different sectors of the economy.
Shift in Budget Focus: From Capital Expenditure to Consumption Growth
Past budgets concentrated on infrastructure, industrial growth, and long-term investment. Since these investments are now well underway, the government is shifting focus toward increasing credit availability across various sectors. This strategy ensures sustained demand, benefiting both individuals and businesses.
But how does this impact the economy? Let’s explore the key areas where this budget aims to drive economic growth.
Key Highlights of the Budget 2025-26
1. Agricultural Credit Expansion
- The Kisan Credit Card (KCC) loan limit has been increased from ₹3 lakh to ₹5 lakh.
- This will benefit 7.7 crore farmers, providing better access to working capital.
- The move is expected to increase rural spending and stimulate economic growth.
2. MSME Credit Expansion
Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in India’s economy:
- Over 1 crore MSMEs employ 7.5 crore people and contribute 36% to manufacturing and 45% to exports.
- The government has proposed two key credit measures:
- Expanding the credit limit for MSMEs from ₹5 crore to ₹10 crore, adding ₹1.5 lakh crore in credit over five years.
- Introducing customized credit cards with a ₹5 lakh limit for micro-enterprises registered on the Udyam portal.
- These measures aim to enhance productivity, generate employment, and boost domestic demand.
3. Credit Expansion for Informal and Small Entrepreneurs
- PM SVANidhi Scheme: This scheme, which has already benefited 68 lakh street vendors, will now offer:
- Higher loan limits from banks.
- UPI-linked credit cards with a ₹30,000 limit.
- Grameen Credit Score: Public Sector Banks will develop a Rural Credit Rating Framework to help self-employed individuals and unbanked rural communities access formal credit.
- These steps will reduce reliance on high-interest informal loans, fostering financial inclusion.
4. Large-Scale Industry Credit Expansion
- The government plans to introduce a Partial Credit Enhancement Facility to support corporate bonds for infrastructure projects.
- This will be facilitated through NaBFID, making it easier for companies to raise funds.
The Economic Rationale: Keynesian Theory & Multiplier Effect
- According to Keynesian Economics, government intervention through spending or easing credit can stimulate aggregate demand in developing economies.
- This triggers the Multiplier Effect, where additional income generation leads to increased consumption.
- The government is now shifting its focus from capital-expenditure-driven growth toward new-age sectors like FMCG, Retail, and DeepTech, aligning with this economic strategy.
Sector-Specific Boosts in the Budget
1. Footwear Industry
- To enhance productivity and competitiveness, the government plans to implement a focused product scheme.
- This initiative will:
- Create 22 lakh jobs.
- Generate ₹4 lakh crore in turnover.
- Achieve exports worth ₹1.1 lakh crore.
2. Nuclear Energy Expansion
- India aims to develop 100 GW of nuclear energy by 2047.
- Amendments to the Atomic Energy Act and Civil Liability for Nuclear Damage Act will encourage private sector participation.
- A ₹20,000 crore Nuclear Energy Mission will fund research on Small Modular Reactors (SMRs), with five indigenously developed SMRs set to be operational by 2033.
3. DeepTech & Innovation
- A ₹20,000 crore allocation will support private-sector-driven R&D initiatives.
- The government will explore a DeepTech Fund of Funds to promote next-generation startups.
4. Support for the Gig Economy
- Gig workers are a key part of India’s growing service economy.
- The government will provide ID cards and registration on the e-Shram portal.
- Over 1 crore gig workers will receive healthcare coverage under PM Jan Arogya Yojana.
The Budget 2025-26 strategically shifts focus to short-term economic momentum while ensuring long-term GDP growth. By expanding credit access and supporting high-potential sectors, the government aims to enhance consumption, generate employment, and drive economic expansion.
With major tax reliefs, higher spending capacity, and increased credit availability, this budget is set to strengthen India’s domestic economy, benefiting individuals, businesses, and industries alike.
Tags: budget 2025, annual budget 2025-26, India budget highlights, tax relief, economic growth, MSME credit, agricultural credit, gig workers, deeptech investment, nuclear energy expansion, Keynesian economics, government spending, GDP growth
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