Decentralization of Government: The Rise of Local Governance and Regional Autonomy

Key Announcements from the Union Budget

Income Tax & Fiscal Policy

 No income tax on an average monthly income of up to ₹1 lakh (₹12 lakh per annum) – Boosts middle-class savings & consumption.

 Salaried class to pay zero tax on income up to ₹12.75 lakh per annum under the new tax regime.
 Fiscal deficit for FY-25 estimated at 4.8%, with a target of 4.4% in FY-26.
 Updated Income Tax Returns (ITR) time limit increased from 2 to 4 years.
 TCS (Tax Collected at Source) payment delays decriminalized.
 TDS (Tax Deducted at Source) on rent threshold increased from ₹2.4 lakh to ₹6 lakh.

Agriculture & Rural Development

 ‘PM Dhan-Dhaanya Krishi Yojana’ to cover 100 low-agricultural productivity districts, benefiting 1.7 crore farmers.
 Mission for Aatmanirbharta in Pulses to focus on Tur, Urad, and Masoor production.
 Loans up to ₹5 lakh through Kisan Credit Card (KCC) under a modified interest subvention scheme.

MSME, Investment & Exports

 Recognizing 4 engines of development: Agriculture, MSMEs, Investment, and Exports.
 Credit guarantee cover for MSMEs increased from ₹5 crore to ₹10 crore.
 A National Manufacturing Mission to boost small, medium, and large industries under Make in India.
 ₹20,000 crore allocated for private sector-driven R&D and innovation initiatives.

Education & Skill Development

 50,000 Atal Tinkering Labs to be set up in government schools over the next 5 years.
 Centre of Excellence in Artificial Intelligence for Education with an outlay of ₹500 crore.
 ‘Gyan Bharatam Mission’ for surveying and conserving over 1 crore manuscripts.

Urban Development & Infrastructure

 ₹1 lakh crore Urban Challenge Fund to develop cities as growth hubs.
 Modified UDAN scheme to improve regional connectivity to 120 new destinations.
 ₹15,000 crore SWAMIH Fund to expedite completion of 1 lakh stressed housing units.

Support for Gig Workers & Street Vendors

 PM SVANIDHI scheme expansion with enhanced loans from banks & UPI-linked credit cards with a ₹30,000 limit.
 Gig workers to get identity cards, registration on e-SHRAM portal, and healthcare under PM Jan Arogya Yojana.

Energy & Technology

 ₹20,000 crore Nuclear Energy Mission for R&D on Small Modular Reactors (SMRs).

Foreign Direct Investment (FDI) & Business Regulations

 FDI limit in insurance increased from 74% to 100%.
 ‘Jan Vishwas Bill 2.0’ to decriminalize over 100 provisions across various laws.

Customs & Duty Revisions

 Basic Customs Duty (BCD) exemption on 36 life-saving drugs & medicines (including those for cancer & rare diseases).
 BCD on IFPD (large display panels) increased to 20%, while on open cells reduced to 5%.
 BCD exemption for 10 years on raw materials & components for shipbuilding.
 Additional capital goods for EV and mobile battery manufacturing exempted from duty.
 BCD reduced from

• 30% to 5% on frozen fish paste
• 15% to 5% on fish hydrolysate

Let me know if you need further refinementsHere is the summary of the Union Budget 25-26 in a structured points format:

Theme & Principles

• Broad principles of Viksit Bharat:

1.    Eradication of poverty.

2.    Universal access to quality school education.

3.    Affordable and comprehensive healthcare for all.

4.    100% skilled labor with meaningful employment.

5.    70% women participation in economic activities.

 

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Key Budget Goals

• Accelerate growth while ensuring inclusivity.
• Encourage private sector investments and boost middle-class spending power.
• Focus on four key groups – Poor (Garib), Youth, Farmers (Annadata), and Women (Nari).
• Major reforms planned in taxation, power, urban development, mining, finance, and regulation.
• Four key growth engines: Agriculture, MSMEs, Investment, and Exports.

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1st Engine: Agriculture

• ‘Prime Minister Dhan-Dhaanya Krishi Yojana’ launched in 100 districts to:
• Increase productivity and crop diversification.
• Improve post-harvest storage and irrigation.
• Provide better access to credit.
• ‘Rural Prosperity and Resilience’ Programme to create employment in agriculture.
• Loan limit increase for Kisan Credit Cards from ₹3 lakh to ₹5 lakh.
• New initiatives for vegetables, fruits, high-yielding seeds, and cotton productivity.

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2nd Engine: MSMEs

• MSMEs contribute 45% of India’s exports – government to enhance investment & scale.
• Investment and turnover limits for MSME classification increased by 2.5 and 2 times, respectively.
• Enhanced credit availability with guarantee cover.
• New scheme for 5 lakh women, SC/ST first-time entrepreneurs (loans up to ₹2 crore over 5 years).
• ‘Made in India’ toy manufacturing push to position India as a global hub.

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3rd Engine: Investment

Investment in People:

• 50,000 Atal Tinkering Labs in government schools over the next 5 years.
• Broadband connectivity for all rural government secondary schools and primary health centers.
• Bharatiya Bhasha Pustak Scheme for digital books in Indian languages.
• Five National Centres of Excellence for Skilling with global partnerships.
• AI Centre of Excellence in Education with ₹500 crore outlay.
• Gig workers to receive identity cards and healthcare benefits under PM Jan Arogya Yojana.

Investment in Economy:

• Infrastructure ministries to prepare a 3-year PPP project pipeline.
• ₹1.5 lakh crore in interest-free loans to states for capital expenditure & reforms.
• Second Asset Monetization Plan 2025-30 to generate ₹10 lakh crore for new projects.
• Jal Jeevan Mission extended till 2028 to ensure quality rural water supply.
• Urban Challenge Fund of ₹1 lakh crore for city development & sanitation.

Investment in Innovation:

• ₹20,000 crore allocation for private-sector-driven R&D initiatives.
• National Geospatial Mission to improve urban planning.
• Gyan Bharatam Mission for surveying & preserving over 1 crore manuscripts.

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4th Engine: Exports

• Export Promotion Mission to help MSMEs enter global markets.
• ‘BharatTradeNet’ (BTN) – A unified digital trade platform.
• Support for domestic electronic equipment industry to integrate with global supply chains.
• National Framework for Global Capability Centres in tier-2 cities.
• Enhanced infrastructure & warehousing for air cargo & perishable exports.

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Reforms as the Fuel

• Taxpayer-friendly initiatives – faceless assessment, tax charter, fast refunds, etc.
• Foreign Direct Investment (FDI) in insurance raised from 74% to 100% (if investment remains in India).
• High-Level Committee for Regulatory Reforms to review non-financial sector laws.
• Investment Friendliness Index of States to boost competition.
• Financial Stability and Development Council (FSDC) to evaluate financial regulations.
• Jan Vishwas Bill 2.0 – decriminalizing 100+ provisions in various laws.

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Fiscal Consolidation

• Revised Estimate (2024-25):
• Receipts (excluding borrowings): ₹31.47 lakh crore.
• Total expenditure: ₹47.16 lakh crore.
• Fiscal deficit: 4.8% of GDP.
• Budget Estimate (2025-26):
• Receipts (excluding borrowings): ₹34.96 lakh crore.
• Total expenditure: ₹50.65 lakh crore.
• Fiscal deficit: 4.4% of GDP.

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PART B: Taxation & Fiscal Policies

Income Tax Reforms (New Tax Regime)

• No tax on income up to ₹12 lakh per annum.
• Salaried individuals earning up to ₹12.75 lakh pay NIL tax (₹75,000 standard deduction).
• Government to forgo ₹1 lakh crore in tax revenue.

New Tax Slabs (FY 2025-26)

Annual Income (₹)	Tax Rate
0 - 4 lakh	NIL
4 - 8 lakh	5%
8 - 12 lakh	10%
12 - 16 lakh	15%
16 - 20 lakh	20%
20 - 24 lakh	25%
Above 24 lakh	30%

TDS/TCS Rationalization

• Senior citizens’ interest income exemption limit doubled from ₹50,000 to ₹1 lakh.
• TDS threshold on rent increased from ₹2.4 lakh to ₹6 lakh per annum.

Encouraging Compliance

• Updated tax return filing window extended from 2 years to 4 years.
• Vivad Se Vishwas Scheme settled 33,000 disputes.

Customs & Import Duty Changes

• 36 life-saving drugs (including cancer & rare disease treatments) exempted from Basic Customs Duty (BCD).
• Critical minerals like lithium, cobalt, zinc exempted from BCD to boost domestic battery production.
• Textile industry support: Higher import duties on foreign fabrics, tax relief for domestic machinery.
• Lithium-ion battery manufacturing incentives continued for 10 years.

Export Promotion Measures

• Handicraft exports facilitated.
• BCD on Wet Blue leather fully exempted.
• Reduction in BCD on frozen fish paste (30% → 5%) & fish hydrolysate (15% → 5%).

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Key Takeaways

• "Democracy, Demography, and Demand" are India’s growth pillars.
• Middle class drives economic strength – tax reforms to boost savings & investment.
• Focus on inclusivity, self-reliance, and economic expansion.