Union budget 2025: Nirmala Sitharaman to present record 8th budget amid challenges

Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025 today, marking her record eighth consecutive Budget presentation.

This will be the first full Budget under Prime Minister Narendra Modi’s third term and comes at a time of global economic uncertainties, including slowing domestic growth and rising geopolitical tensions.

Sitharaman’s Budget speech, scheduled for 11 AM, will take place amid concerns over India’s slowing economic growth and global trade tensions. Newly elected US President Donald Trump’s proposed tariffs on India and other nations add further uncertainty.

There is widespread anticipation of tax relief for lower-income groups. Prime Minister Modi recently expressed hopes for financial upliftment for the poor and middle class, hinting at possible reductions in income tax rates and an increase in the standard deduction. Currently, the basic exemption limit under the old tax regime stands at ₹2.5 lakh, while it is ₹3 lakh under the new regime.

With financial inclusion for rural households and small businesses highlighted in the Economic Survey, the Budget is expected to introduce measures for easier access to credit through microfinance institutions, self-help groups, and other intermediaries.

To meet India’s long-term development goals, significant investments in infrastructure will be necessary over the next decade. Experts predict major Budget announcements to boost infrastructure spending, despite the current ₹11.11 lakh crore allocation for the sector likely falling short by nearly 20%.

The Budget may introduce tariff reforms aimed at strengthening domestic manufacturing while managing exchange rate pressures. The government is likely to prioritise reducing import dependence and supporting local industries, a crucial factor in India's recent economic growth.

Artificial intelligence is expected to be a major focus, aligning with discussions at the recent World Economic Forum in Davos. With China's cost-effective AI model DeepSeek intensifying global competition, India may introduce policies to accelerate AI research and development.

The Budget is likely to propose incentives for new manufacturing facilities, such as lower corporate tax rates. While these measures could enhance India’s competitiveness in global markets, they may also have mixed consequences for domestic industries and public spending.

India may reconsider its corporate tax structure in response to potential tax cuts under President Trump’s administration. While India significantly reduced its corporate tax rate from 30% to 22% in 2019 to attract investment, analysts argue that it primarily boosted corporate profits without significantly increasing job creation or capital investment.

The government is expected to continue its focus on fiscal consolidation, with a projected fiscal deficit target of 4.5% of GDP for FY 2026, compared to the 4.8% estimated for the current fiscal year ending March 31, 2025.

With a mix of tax relief measures, infrastructure spending, and tariff reforms, the Union Budget 2025 will aim to balance short-term economic concerns with long-term policy goals.