Budget 2025: Who benefits and who doesn’t

Finance minister Nirmala Sitharaman presented the second Budget of Modi 3.0 government in the backdrop of a loudly protesting Opposition. India is facing faltering growth, persistent inflation, depressed wages and capital formation, and slowing consumption. There are loud calls for decisive policy to boost consumption, create jobs, and preserve India’s status as the fastest growing large economy. How did Budget 2025 fare?

What the Budget Contains

Tax Relief for Middle Class

The finance minister exempted income up to ₹12 lakh a year from income tax, and lowered tax slabs on higher incomes for individual taxpayers.

She also significantly increased tax exemption limits for senior citizens.

Small taxpayers also get more relaxed rules for filing updated tax returns and on the valuation of self-occupied homes

Fiscal Consolidation On Track

Fiscal deficit for FY25 is projected to be 4.8%, slightly better than previous estimates; the FM expects it to fall further to 4.4%

But, this year’s tax proposal will lead to a revenue loss of ₹1 trillion in direct tax receipts and ₹2,600 crore in indirect tax receipts

Capital expenditure for the fiscal year is lower than previously estimated at ₹10.18 trillion

Also Read: Budget 2025 | A ₹1 trillion largesse for India's middle class

Improving Agricultural Productivity

The new PM Dhan Dhanya Krishi Yojana will boost creation of better quality jobs including those in food processing and better margin ‘superfoods’ such as Makhana

Focus on self-sufficiency in pulses and edible oilseeds should boost area under coverage for these, improving incomes

Greater access to credit and infrastructure such as irrigation will give farmers in vulnerable districts some relief from annual losses as extreme weather conditions become more frequent

Boosting Local Manufacturing

MSMEs and startups in 27 focus sectors get additional access to credit, along with more equity funding options from fund-of-funds

The government will invest in more clean-tech manufacturing industries including solar PV cells, EV batteries, and wind turbines

The government announced several schemes for upskilling workers in AI and other technical fields to provide a tech-ready workforce for local manufacturing and high-tech jobs.

Also read | In 10 charts: Budget 2025 report card on railways, roads, education and health

Focus on Reforms and Investments

The finance minister emphasized simplification in tax laws and compliance, and decriminalising more sections of the Bharatiya Nyaya Samhita (Indian Penal Code).

A high-level committee will review all non-financial regulation and suggest reforms within a year

Schemes include a Central KYC registry, simplified rules for company mergers, and a state investment friendliness index starting this year

What’s Cheaper

Cancer and lifesaving drugs

Solar PV cells and lithium ion batteries

Lithium ion batteries for EVs and mobiles

Telecom equipment

What’s Dearer

Imported touch-display panels

Knitted fabrics

Budget Numbers That Matter

In ₹ trillion

FY25 (Revised estimates)

Total receipts (excluding borrowings) - 31.47

Net tax receipts - 25.57

Total expenditure - 47.16

Capital expenditure - 10.18

Fiscal deficit (%) - 4.8

Gross market borrowing 

FY25 - ₹12.44 (as of 27 January 2025)

FY26 - ₹14.82

FY26 (Budget estimates)

Total receipts (excluding borrowings) - 34.96

Net tax receipts - 28.37

Total expenditure - 50.65

Capital expenditure - 11.2

Fiscal deficit (%) - 4.4

Also read | In 10 charts: Budget 2025 report card on railways, roads, education and health

Market Gainers 

Hindustan Unilever (4.34%) - Income tax relief will boost consumption

Tata Motors (1.97%) - Incentives announced to make EV battery production cheaper

Indigo (3.53%) - UDAN scheme to boost domestic aviation

Market Losers

Ambuja Cement (-2.73%) - Lower than expected capital expenditure for FY25

HDFC Life Insurance (-2.56%) - Higher competition in insurance with hike in FDI limits

Key Announcements

For farmers

The Budget will convert some existing schemes to the PM Dhan Dhanya Krishi Yojana to cover 100 districts with the lowest productivity and underperforming credit parameters. Farmers will get more credit via Kisan Credit Cards. The government will focus on self-sufficiency in edible oilseeds, and is setting up a Makhana Board to promote its cultivation, processing, and marketing.

Impact

These schemes should help ease underemployment and low productivity in Indian agriculture, especially in poorer areas and among vulnerable rural workers, including marginal and small landholders and landless labourers. Oilseed self-sufficiency can help bring down our reliance on exports while promoting Makhana can boost our premium agri exports.

For MSMEs

The Budget has increased investment and turnover limits for MSMEs, doubled their credit guarantee cover to ₹10 crore, and enhanced credit card limits for micro enterprises. The government will also set up a National Manufacturing Mission for SMEs with a growth roadmap to guide central ministries and states. Special schemes will be rolled out to encourage small manufacturers in leather, footwear, and toys industries.

Impact

These schemes will give MSMEs and startups access to more credit and private investment. Enhanced investment and turnover limits will allow them to grow larger while continuing to receive the benefits of their MSME classification. This should help boost job creation in the long-term.

For the youth

The Budget will enhance capacity in the five new IITs set up after 2014 to educate 6,500 more students and add 10,000 seats in medical colleges and hospitals in the next year. It will also set up five new National Centres of Excellence, roll out a multisectoral program focused on rural youth, and start skill-development programs in the tourism industry. 1 crore gig workers will be registered under the e-Shram portal and receive government health insurance.

Impact

These schemes will help give more students access to quality education and upskill them for more complex jobs, even as the government pushes private sector companies to focus on job creation in focus areas such as capital goods and electronics manufacturing. Gig work for online platforms can attract more job seekers with social security benefits.

For Startups and Tech Companies

The Budget has doubled credit guarantee cover for registered startups and will receive some extended tax benefits. India will set up a new Fund of Funds with ₹10,000 crore from the central government. IITs and IISc will offer 10,000 fellowships for tech research and another National Centre for Excellence in AI will be set up at a ₹500 crore cost. The government will spend ₹20,000 crore for private sector R&D and will consider setting up a separate Deep Tech Funds of Funds.

Impact

Startups will get access to more equity and debt funding options, while investment in tech upskilling will help provide higher quality tech workers to these companies. A focus on core technology can boost growth for Deep Tech startups previously forced to seek support overseas.

For Foreign Corporates

FDI limit in the insurance sector is now at 100% on the condition that the premiums earned must be invested in the country. India will also set up a National Framework to promote Global Capability Centres (GCCs) in emerging tier 2 cities. Sovereign Wealth Funds and Pension Funds now have until 2030 to invest in India’s infrastructure sector.

For Consumers

Income up to ₹12 lakh is now exempt from income tax, and for up to ₹12.75 lakh to account for compulsory deductibles. Tax deduction limits for senior citizens have been doubled and annual limit on TDS for rent has been raised to ₹6 lakh. There will be now tax collected on foreign money transfers for education coming from loans taken for this purpose. The UDAN scheme will develop airports in 120 more domestic destinations in the next 10 years. Also, several life-saving drugs will be completely exempt from basic customs duty. The government will introduce a new income tax bill next week.

Impact

The steep cut in income tax and TDS limits will boost consumption, especially for urban, middle-class households who have been cutting back on discretionary spends. Life-saving drugs will bring down rising healthcare costs. The government expects air traffic to bump up by 4 crore passengers over the next decade.

Also read | Budget 2025 math: How the government plans to cut fiscal deficit this year