Union Budget 2025-26: Key Highlights & Analysis

3. BUDGET SUMMARY & ANALYSIS: 2025-26 Index 1. KEY-TERMS 1 2. PART-A: INTRODUCTION 3 3. PART-B: SUMMARY OF THE BUDGET 7 ? Taxation ........................................................................................................................................7 ? Agriculture ....................................................................................................................................9 ? Defence .......................................................................................................................................11 ? Infrastructure .............................................................................................................................13 ? MSME ..........................................................................................................................................14 ? Manufacturing ...........................................................................................................................15 ? Gig Workers ................................................................................................................................15 ? Education ....................................................................................................................................16 ? Innovation ..................................................................................................................................16 ? India Post ....................................................................................................................................17 ? Energy .........................................................................................................................................17 ? Investment ..................................................................................................................................18 ? Miscellaneous .............................................................................................................................19 ? Major Schemes discussed in the Budget .................................................................................20 4. PART-C: ANALYSIS 2 2 5. PART-D: PRACTICE QUESTION 2 5 ? PRELIMS PRACTICE QUESTIONS ..............................................................................................25 ? MAINS QUESTIONS ...................................................................................................................27 www.iasscore.in

5. 1 BUDGET SUMMARY & ANALYSIS: 2025-26 KEY-TERMS ? Annual Financial Statement (AFS): government’s projected income and expenditure for the upcoming fi nancial year and serves as the basis for budget allocation. Types of Budgets in India: ? Annual Budget: ? The standard, comprehensive budget presented every year, outlining income and expenditure for the coming fi nancial year. Interim Budget: ? A temporary budget presented when elections are approaching, to ensure government operations continue until a new budget is passed. Vote on Account: ? A provision that allows the government to manage its expenses temporarily until the full budget is passed. Appropriation Bill: It is a legislative proposal that grants the government the legal authority to spend funds for the fi nancial year, which becomes law upon Parliament’s approval. Assets: Economic resources owned by the government, such as public infrastructure, investments, land, and other tangible items that hold monetary value. Budget Estimates (BE): The government’s forecast of expected revenues and expenditures for the upcoming fi nancial year, helping to set fi scal expectations and priorities. Capital Receipts: Funds acquired through borrowings, disinvestment, or the sale of government assets, which typically represent non-recurring sources of income. Capex (Capital Expenditure): This refers to the funds used by the government for acquiring or upgrading physical assets such as infrastructure, buildings, and equipment. Capex is crucial for long-term economic growth and development. It is a key document that outlines the ? ? ? ? ? www.iasscore.in

6. 2 BUDGET SUMMARY & ANALYSIS: 2025-26 Capital Market: backed securities are bought and sold. The capital market plays a crucial role in funding government projects and initiatives through investments. Fund of funds (FoF): Unlike traditional funds that invest directly in companies, a fund of funds acts as an umbrella fund that invests in other venture capital or private equity funds. This strategy helps diversify risk while enabling broader capital fl ow to startups across sectors. Gene Bank: A gene bank is a facility or repository that stores genetic material, such as seeds, plant tissues, or animal genetic material, to preserve biodiversity and ensure the availability of genetic resources for future use. Germplasm refers to the living genetic resources, such as seeds, tissues, or reproductive cells, that are used for the breeding and propagation of plants and animals. Primary Defi cit: The fi scal defi cit excluding interest payments, representing the government’s current borrowing needs for fi nancing its expenditures. Public Account: A special government account that manages non-budgetary transactions, such as savings schemes, provident funds, and other public funds. Public-Private Partnership (PPP): This is a cooperative arrangement between public and private sectors for the provision of public assets or services. PPPs are often used in infrastructure projects to leverage private investment and expertise. Revenue Receipts: The government’s income generated from both tax revenues (such as income tax, GST, excise duties) and non-tax sources (like dividends from public enterprises or fees). Revenue Expenditure: The government’s spending on its routine operations, including outlays for salaries, subsidies, pensions, and interest payments on debt. Revenue Defi cit: A shortfall that occurs when the government’s expenditure exceeds its revenue receipts, indicating an imbalance in covering regular operational costs. This is a fi nancial market where long-term debt or equity- ? ? ? ? ? ? ? ? ? ? www.iasscore.in

7. 3 BUDGET SUMMARY & ANALYSIS: 2025-26 PART-A INTRODUCTION Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025 in the Lok Sabha. The Union Budget, also called the Annual Financial Statement, is a statement of accounts of the Government. Article 112 (for the central government) and Article 202 (for the state government) provides for the annual fi nancial statement to be laid before the respective legislatures. The Budget division comes under the Department of Economic Affairs of Finance Ministry of Government of India. The budget is caused to be presented before both the houses of the Parliament by the President. It is presented by the Finance Minister. To realise the goal of Viksit Bharat, this budget focuses on transformative reforms across six domains. These are: Taxation Power sector Urban development Mining Financial sector Regulatory reforms Targets of Viksit Bharat ? ? ? ? ? ? Zero poverty 100% quality, good school education Access to high quality, affordable and comprehensive healthcare 100% skilled labour with meaningful employment 70% women in economic activities farmers making India the food basket of the world www.iasscore.in

8. 4 BUDGET SUMMARY & ANALYSIS: 2025-26 The proposed development measures in the budget focuses on gareeb, youth, annadata, and naari under 10 broad areas: Spurring Agricultural growth Building rural prosperity and resillience Taking everyone together on an inclusive growth path Boosting manufacturing Supporting MSMEs Enabling employment-led development Investing in people, economy and innovation Securing energy supplies Promoting exports Nurturing innovation SNAPSHOT OF INDIAN ECONOMY ? The Economic Survey forecasts modest growth of 6.3 to 6.8% for FY26, similar to the projected 6.5% growth in FY25. ? While total expenditure is lower at Rs 47.16 lakh crore for 2024-25 as per the Revised Estimates compared with Rs. 48.20 lakh crore in Budget Estimate, the capex for the year, as per RE is Rs 10.18 lakh crore (lower than Rs 11.11 lakh crore announced in July 2024). ? Where does the money come from and go? Borrowings and other liabilities form the largest chunk of where money fl ows in from for this Budget, at 24%, last year it was 27%. ? At the second spot is income tax at 22% (previous year 19%), followed by infl ow from GST and other taxes at 18%, same as 2024-25. ? Corporation tax also makes up a signifi cant chunk at 17%. ? Non-tax revenue, union excise duties, customs and non-debt capital receipts is where the government gets the rest of its budget money from. www.iasscore.in

9. 5 BUDGET SUMMARY & ANALYSIS: 2025-26 Rupee Comes From Rupee Comes From Income Tax (22%) 22% Borrowing and Other Liabilities (24%) 24% ? Union Excise Duties (5%) 5% 9% 18% Non-Tax Receipts (9%) 1% GST & other taxes (18%) Non-Debt Capital Receipts (1%) 4% Customs (4%) 17% Corporation tax (17%) Rupee Goes To Pensions (4%) Other Expenditure (8%) 4% Interest Payments (20%) 8% 20% Centrally Sponsored Scheme (8%) 8% ? Central Sector Scheme (excluding capital outlay on Defence and Subsidy) (16%) Finance Commission and other transfers (8%) 8% 16% 22% 6% 8% Major Subsidies (6%) States' share of Taxes and Duties (22%) Defence (8%) www.iasscore.in

10. 6 BUDGET SUMMARY & ANALYSIS: 2025-26 ? The fi scal defi cit for FY25 is set at stands at 4.4%. 4.8%, while the estimated fi scal defi cit for FY26 The Defi cits: The gap between the receipts and expenditure is called defi cit. Budget Defi cit ? = Total Expenditure – Total Receipts Revenue Defi cit ? = Revenue Expenditure – Revenue Receipts Effective Revenue Defi cit ? = Revenue Defi cit – Grant in aid for creation of capital assets Fiscal Defi cit ? = Total Expenditure – Total Receipts except Borrowing and Other liabilities Primary Defi cit ? = Fiscal Defi cit – Interest Payment Monetised Defi cit ? = Borrowings from RBI + Draw down balance of government from RBI www.iasscore.in

11. 7 BUDGET SUMMARY & ANALYSIS: 2025-26 PART-B SUMMARY OF THE BUDGET Below are the key highlights that will shape the fi nancial landscape in the coming year. TAXATION ? Tax Reform: take forward the “trust fi rst, scrutinise later” concept. The government will soon be introducing a new Income Tax bill to ? Direct Tax Proposals: ? There will be no income tax till income up to Rs 12 lakh. Rebate benefi t (for those earning below Rs. 12 lakh) Total Benefi t Tax after benefi t Income Tax on Slabs and rates Benefi t of Full rebate upto Rs. 12 lakhs Present Proposed Rate/Slab Up to 8 lakh 30,000 20,000 10,000 20,000 30,000 0 9 lakh 40,000 30,000 10,000 30,000 40,000 0 10 lakh 50,000 40,000 10,000 40,000 50,000 0 11 lakh 65,000 50,000 15,000 50,000 65,000 0 12 lakh 80,000 60,000 20,000 60,000 80,000 0 16 lakh 1,70,000 1,20,000 50,000 0 50,000 1,20,000 20 lakh 2,90,000 2,00,000 90,000 0 90,000 2,00,000 24 lakh 4,10,000 3,00,000 1,10,000 0 1,10,000 3,00,000 50 lakh 11,90,000 10,80,000 1,10,000 0 1,10,000 10,80,000 www.iasscore.in

12. 8 BUDGET SUMMARY & ANALYSIS: 2025-26 The benefi ting small taxpayers receiving smaller payments. Tax deduction limit for senior citizens doubled from Rs 50,000 to Rs 1 lakh. Time to fi le tax returns extended from two years to four year. Cess And Tariff Full exemption of Basic Customs Duty (BCD) on cobalt powder and lithium-ion ? battery waste, scrap, and 12 other critical minerals. 37 new medicines and 13 new patient assistance programs will be included in ? the exemption list. Six life-saving medicines will be added to a list with a concessional customs ? duty of 5%. Fully extend BCD on wet blue leather. Exempt crust leather from 20% duty ? Reduce BCD from 30% to 5% on frozen fi sh paste. Reduce BCD from 15% to 5% ? fi sh hydrolycates. BCD on interactive fl at panel displays from 10% to 20% and reduce the BCD on ? open cell and other components for LCDs and LEDs to 5%. ? annual limit for TDS on rent has been raised from Rs 2.40 lakh to Rs 6 lakh, ? ? ? Mains PYQ 1. What is the meaning of the term ‘tax expenditure’? Taking housing sector as an example, discuss how it infl uences the budgetary policies of the government. (2013) 2. Distinguish between Capital Budget and Revenue Budget. Explain the components of both these Budgets. (2021) Prelims PYQ With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure? (2014) Defence expenditure 1. Interest payments 2. Salaries and pensions 3. Subsidies 4. Select the correct answer using the code given below. 1 only (a) 2 and 3 only (b) 1, 2, 3 and 4 (c) None (d) Solution: (c) 1. www.iasscore.in

13. 9 BUDGET SUMMARY & ANALYSIS: 2025-26 Under which of the following circumstances may ‘capital gains arise? (2012) When there is an increase in the sales of a product 1. When there is a natural increase in the value of the property owned 2. When you purchase a painting and there is a growth in its value due to increase in its 3. popularity Select the correct answer using the codes given below: 1 only (a) 2 and 3 only (b) 2 only (c) 1, 2 and 3 (d) Solution: (b) 2. AGRICULTURE Development measures focusing on Garib, Youth, Annadata and Nari Spurring Agricultural Growth & Building Rural Prosperity Prime Minister Dhan-Dhaanya Krishi Yojana - Developing Agri Districts Programme To cover 100 districts and likely to help 1.7 crore farmers. Mission for Cotton Productivity Enhanced Credit through KCC 03 5-year mission to facilitate improvements in productivity and sustainability of cotton Facilitate short term loans for 7.7 crore farmers, fishermen, and dairy farmers with enhanced loan of ?5 lakh. 02 04 farming. 01 05 National Mission on High Yielding Seeds Makhana Board in Bihar To be set up to improve production, processing, value addition, and marketing and organisation of FPOs. Targeted development and propagation of seeds with high yield, pest resistance and climate resilience. www.iasscore.in

14. 10 BUDGET SUMMARY & ANALYSIS: 2025-26 ? Jan Dhanya Krishi Yojana initiative moderate crop intensity, and below-average credit access. It aims include -- crop diversifi cation, augmenting storage, improving irrigation, and facilitating long and short-term credit for farmers Rural Prosperity and Resilience Program tackle underemployment in agriculture. ‘Atmanirbharta Mission’ for pulses has been launched. The programme is to be spread over 6 years aimed at bringing about self-suffi ciency in pulses production. Major pulses that are grown in India: ? gram. Chief Characteristics: ? Pulses are the major sources of protein in a vegetarian diet. ? Being leguminous crops, all the above-mentioned pulses (except tur) help ? in restoring soil fertility by fi xing nitrogen from the air. Pulses need less moisture and survive even in dry conditions. ? Important Producing Areas ? : Madhya Pradesh, Uttar Pradesh, Rajasthan, Maharashtra and Karnataka. It is grown on about 11% of the total sown area in India. India is largest producer and consumer ? consumer of pulses in the world. National mission for edible oil and seeds will focus on 100 districts with low productivity, ? : It is a scheme designed to ? Tur, urad, moong, masur, peas and : India is the largest producer as well as ? aims at AatmaNirbharta in the sector. Prelims PYQ With reference to pulse production in India, consider the following statements: (2020) Black gram can be cultivated as both kharif and rabi crop. 1. Green gram alone accounts for nearly half of pulse production. 2. In the last three decades, while the production of kharif pulses has increased, the production of 3. rabi pulses has decreased. Which of the statements given above is/are correct? 1 only (a) 2 and 3 only (b) 2 only (c) 1, 2 and 3 (d) Solution: (a) 1. ? ? A national mission for high yielding seeds A comprehensive program for vegetable and fruits will also be launched in partnership with States. will be launched. www.iasscore.in

15. 11 BUDGET SUMMARY & ANALYSIS: 2025-26 ? For Atmanirbharta in metric tonnes will be set up in Assam. urea production, a plant with annual capacity of 12.7 lakh ? Fisheries : ? The government will bring an enabling framework for sustainable harnessing of fi sheries in India’s economic zone. ? Kisan credit cards facilitate short term loans for 7.7 crore farmers, fi shermen and dairy farmers. The loan limit will be enhanced from Rs 3 lakh to Rs 5 lakh. ? India ranks second largest globally in fi shery products. ? Mission for Cotton productivity farming. will facilitate signifi cant improvement in cotton ? Makahana Board and value addition. The board will offer support and trade-related technologies while ensuring that farmers benefi t from all relevant government schemes. : A Makhana Board will be set up in Bihar to enhance processing Mithila Makhana, or Makhan (Euryale ferox Salisb.) ? It is a unique variety of aquatic fox nut cultivated in the Mithila region of Bihar and Nepal. It is one of the three prestigious cultural identities of Mithila, alongside Pan and Machh (fi sh). Makhana is particularly signifi cant during the by Maithil Brahmins for newly married couples. Nutritionally, it is rich in protein, fi ber, and micronutrients such as calcium, magnesium, iron, and phosphorus. In 2022, it received a Geographical Indication (GI) Tag. ? ? Kojagara festival celebrated ? ? DEFENCE ? The government allocated Rs 5.25 lakh crore for the 26, lower than last year’s outlay of Rs 6.21 lakh crore and Rs 5.94 lakh crore from the year before. Ministry of Defence for 2025- ? The last year’s Rs 1.72 lakh crore. capital outlay has been pegged at Rs 1.63 lakh crore, again lower compared to www.iasscore.in

16. 12 BUDGET SUMMARY & ANALYSIS: 2025-26 Expenditure of Major Items 4,91,732 Defence Rural Development 2,66,817 Home Affairs 2,33,211 1,71,437 Agriculture and Allied Activities Education 1,28,650 98,311 Health Urban Development 96,777 IT and Telecom 95,298 81,174 Energy Commerce & Industry 65,553 60,052 Social Welfare in ? Crore Scientific Departments 55,679 www.iasscore.in

17. 13 BUDGET SUMMARY & ANALYSIS: 2025-26 INFRASTRUCTURE ? Urban Challenge Fund: Fund aimed at transforming cities into growth hubs. The government will create a Rs 1 lakh crore Urban Challenge ? The fund will fi nance 25% of the cost of bankable projects, with an alloca? on of Rs 10,000 crore for 2025-26. The remaining 50% will be funded through bonds, bank loans, and public-private partnerships (PPPs). ? Each infrastructure ministry will present a three-year list of Partnership (PPP) projects, with a focus on three PPP proposals per ministry. Public-Private ? Capex expenditure and offer incentives to encourage reforms. : The government will provide ₹1.5 lakh crore in interest-free loans for capital ? Tourism: ? PM Gati Shakti development of the top 50 tourist destinations will be carried out in partnership with state governments. data will be made accessible to the private sector, and the ? Medical tourism and ‘heal in India’ to be promoted in partnership with private sector. ? Promoting Exports: ? Export Promotion Mission easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets. : With sectoral and ministerial targets to facilitate ? BharatTradeNet international trade will be set-up as a unifi ed platform for trade documentation and fi nancing solutions. Support for integration with Global Supply Chains. : A digital public infrastructure, ‘BharatTradeNet’ (BTN) for ? National Framework for GCC Capability Centres in emerging tier 2 cities. : As guidance to states for promoting Global ? Warehousing facility for air cargo and warehousing for air cargo including high value perishable horticulture produce. : To facilitate upgradation of infrastructure ? Modifi ed UDAN scheme to 4 crore passengers over the next 10 years. Additionally, greenfi eld airports will be facilitated in Bihar to support this expansion. will be launched to connect 120 new destinations and cater ? The shipbuilding fi nancial assistance policy establishment of a Maritime Development Fund, having a corpus of Rs 25,000 crore. The government will contribute 49% to this fund. will be revamped with the ? Railways: No major announcement was made www.iasscore.in

18. 14 BUDGET SUMMARY & ANALYSIS: 2025-26 The Railway Budget was separated from the General Budget in 1921 based on the Acworth Committee’s recommendation. This practice continued for 92 years until it was merged with the General Budget in 2017-18 on the recommendation of the Bibek Debroy Committee. MSME ? Credit guarantee cover will be enhanced from Rs 5 crore to Rs 10 crore for micro- enterprises leading to additional Rs 1.5 lakh crore credit in next 5 years. MSMES ? MSMEs are the second engine which encompasses manufacturing and services, with a focus on MSME numbering 5.7 crores. Currently, over 1 crore registered MSMES, generating 36% of manufacturing. These MSMEs are responsible for 45% of exports. ? ? To help achieve higher tech upgradation and better access to capital, investment and turnover limit for all MSMEs enhanced to 2.5 & 2X respectively. ? Export promotion mission to be jointly driven by Commerce Ministry, MSMEs. ? Support to be given to MSMEs to tackle non-tariff barriers in exports. ? New Fund of Funds (FoF) 10,000 crore to be set up. FoF for startups received commitments for over Rs 9 lakh crore. with fresh expanded scope & fresh contribution of Rs ? in Crore Investment Turnover Current Revised Current Revised Micro Enterprises Small Enterprises Medium Enterprises 1 2.5 5 10 10 25 50 100 50 125 250 500 www.iasscore.in

19. 15 BUDGET SUMMARY & ANALYSIS: 2025-26 Mains PYQ 1. Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard. (2023) MANUFACTURING ? The government announced the setting up of a for small, medium and large industries to further Make In India. The mission will also support clean tech manufacturing and will help build our ecosystem for solar cells, EV batteries, motors, controllers, wind turbines, grid-scale batteries etc. National Manufacturing Mission ? Prelims PYQ What is/are the recent policy initiative(s) of Government of India to promote the growth of manufacturing sector? (2012) Setting up of National Investment and Manufacturing Zones 1. Providing the benefi t of ‘single window clearance’ 2. Establishing the Technology Acquisition and Development Fund 3. Select the correct answer using the codes given below: 1 only (a) 2 and 3 only (b) 1 and 3 only (c) 1, 2 and 3 (d) Solution: (d) 1. Prelims PYQ 1. “Success of ‘Make in India’ program depends on the success of ‘Skill India’ programme and radical labour reforms.” Discuss with logical arguments. (2015) GIG WORKERS As of 2024, India has approximately 7.7 million gig workers, with projections that this number could soar to 23.5 million by 2030. www.iasscore.in

20. 16 BUDGET SUMMARY & ANALYSIS: 2025-26 ? The PM Swanidhi Scheme will be revamped with higher loan limits and the introduction of a Rs 30,000 UPI-linked credit card. The government will also facilitate identity card issuance and registration on the e-Shram portal for gig workers, providing insurance coverage for nearly 1 crore workers. A new scheme will be implemented for the socio-economic upliftment of urban workers, with enhanced loan opportunities through PM Swanidhi. ? ? Mains PYQ 1. How has globalization led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country? (2016) EDUCATION ? Five National Centres of Excellence for Skilling youth with the necessary skills for global opportunities. Additionally, infrastructure will be expanded in IITs set up after 2015, allowing for 6,500 more students across fi ve IITs. A Centre of Excellence for AI in Education will be established with an outlay of Rs 500 crore. Atal Tinkering Laboratories (ATLs): 50,000 Atal Tinkering Laboratories (ATLs) will be set up in government schools in the next 5 years to foster scientifi c temper in young minds. Broadband connectivity is to be provided to all secondary schools. A Deeptech Fund of Funds will be explored to support technological advancements, while 10,000 fellowships will be provided for tech research at IITs and IISc under the PM Research Fellowship Scheme. Over the next 5 years, the scheme will offer 10,000 scholarships to further tech ? innovation and research. A Bharatiya Bhasha Pustak scheme to be implemented for Indian language books for schools and higher education. INNOVATION will be established to equip the ? ? ? ? ? ? Gene Bank for Crops Germplasm to be set up for future food and nutritional security. National Geospatial Mission and data. Using PM Gati Shakti, facilitation of modernization of land records, urban planning, and design of infrastructure projects. Research, Development & Innovation: Allocating Rs 20,000 crore to implement private sector driven Research, Development and Innovation initiative : The 2nd Gene Bank with 10 lakh germplasm lines ? : To develop foundational geospatial infrastructure ? www.iasscore.in

21. 17 BUDGET SUMMARY & ANALYSIS: 2025-26 ? Gyan-Bharatam Mission heritage will be undertaken to cover 1 crore manuscripts. for survey, documentation, and conservation of manuscripts INDIA POST ? ? India Post is set to be transformed into a major public logistics organisation. With the support of India Post Payments Bank and 2.4 lakh dak sevaks, it aims to become a catalyst for rural logistics and development. India Post ? ? Establishment: Functions: Delivering mails ? Accepting deposits under Small Savings Schemes ? Providing life insurance cover under Postal Life Insurance (PLI) and ? Rural Postal Life Insurance (RPLI) Providing retail services like bill collection, sale of forms, etc. ? The DoP also acts as an agent for Government of India in discharging other services for citizens such as Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) wage disbursement and old age pension payments. 1 October 1854 ? ENERGY ? 100 gigawatt (GW) of nuclear energy by 2047 is essential for engergy transition. Power sector reforms, and augmentation of capacity to be incentivised. Additional borrowing of 0 .5% of Gross State Domestic Product (GSDP) by states, nuclear energy mission for R&D of small modular reactors with an outlay of Rs 20,000 crore will be set up by 2033. ? India’s Nuclear Power Capacity ? ? India has a largely indigenous nuclear power programme. Currently, 24 reactors supply India’s an additional 21 reactors totalling 15,300 MW under various stages of development by NPCIL. 8,180 MW of nuclear energy, with www.iasscore.in

22. 18 BUDGET SUMMARY & ANALYSIS: 2025-26 ? Three-stage nuclear power programme: stage nuclear power programme, with the long-term goal of deploying a thorium-based closed nuclear fuel cycle. The fi rst stage ? involves the use of pressurised heavy water reactors (PHWRs), fuelled by natural uranium, and light water reactors. The second stage ? involves reprocessing used fuel from the fi rst stage to recover the plutonium to fuel FBRs. In stage 3 ? , Advanced Heavy Water Reactors (AHWRs) will burn thorium-plutonium fuels and breed fi ssile uranium-233. India has adopted a three- Net-zero challenge ? In 2021, at the Modi committed to achieving the following goals by 2030: increasing ‘non-fossil fuel’ energy production to 500 GW ? a 50% share of the total power production by renewable energy ? (RE) 45% reduction in the economy’s carbon intensity ? reduction of 1 billion tonnes carbon emissions ? By 2070, India would be ‘net-zero’ in carbon emissions. 26th UNFCC Conference of Parties, Prime Minister Narendra ? Mains PYQ 1. With growing energy needs should India keep on expanding its nuclear energy programme? Discuss the facts and fears associated with nuclear energy. (2018) 2. One of the intended objectives of Union Budget 2017-18 is to ‘transform, energize and clean India’. Analyse the measures proposed in the Budget 2017-18 to achieve the objective. (2017) INVESTMENT ? The government will create a model investment-friendly environment and encourage sustained foreign investment. Bilateral Investment Treaty to foster a more ? The from 74% to 100%. This applies to insurers who invest their entire premium within India. Foreign Direct Investment (FDI) limit in the insurance sector has been raised www.iasscore.in

23. 19 BUDGET SUMMARY & ANALYSIS: 2025-26 MISCELLANEOUS ? Measures for Labour Intensive Sectors ? Focus Product Scheme for Footwear & Leather Sectors: to facilitate employment for 22 lakh persons, generate turnover of ₹ 4 lakh crore and exports of over ₹ 1.1 lakh crore. scheme is expected ? Measures for the Toy Sector manufacturing ecosystem that will create high-quality, unique, innovative, and sustainable toys to represent the ‘Made in India’ brand. : To focus on development of clusters, skills, and a ? Current state: 0.3% of exports (ranked 27th) and 0.1% of imports (ranked 61st), totaling USD 60 million. The country exports a variety of toys, notably electronic toys, plastic dolls, and metal toys. India holds a marginal position in the global toy trade, with ? Support for Food Processing: Food Technology in Bihar, enhanced income for the farmers and skilling, entrepreneurship and employment opportunities for the youth. Establishment of a National Institute of ? Loan for SC/ST women: a fi ve-year tenure, benefi ting 5 lakh women from SC/ST communities. A new scheme has been launched to offer term loans with ? Banks will be required to maintain a facilitate better fi nancial access and support. Grameen credit score for self-help groups to ? Extend Jal Jeevan mission and O&M. 15 crore households have been provided portable tap water access under Jal Jeevan Mission. with an enhanced outlay, focus on quality infrastructure ? Jan Vishwas 2.0 bill to decriminalise over 100 provisions in existing laws. ? Clean tech investments with higher turnover limits, will further industrial expansion and job creation. in electric vehicles (EVs), batteries, and wind turbines, along ? Adjustment in basic customs duty ? The Budget announced exemptions from basic customs duty (BCD) for 36 life- saving drugs, 35 additional capital goods for EV manufacturing, and wet blue leather. ? BCD on fl at panel displays will increase from 10% to 20%, while duty on fi sh paste will be reduced from 30% to 5%. ? SWAMIH Fund 2 contributions from the Indian government, banks and private investors. will be established as a blended fi nance facility. This will include ? Nutrition: Saksham Anganwadi and Poshan 2.0 programs nutritional support to 8 crore children, 1 crore mothers, and 20 lakh adolescent girls, focusing on lactating women, adolescent girls, and children. will provide vital www.iasscore.in

24. 20 BUDGET SUMMARY & ANALYSIS: 2025-26 Items that have become costlier Items that have become cheaper ? Mobile phones: battery production to come in list of exempted capital goods. 36 Lifesaving drugs and medicines of medicines fully exempted from Basic Customs Duty. EV batteries, Wet Blue leather Carrier-grade ethernet switches 12 Critical minerals Open cell, LED/LCD Medical equipments Basic Customs Duty exempted on raw materials for manufacturing ships for another 10 years. Marine products, Cobalt products Zinc, lithium-ion battery scrap 28 additional goods for mobile phone ? to be added to the list ? ? ? ? ? ? ? ? Flat panel display Knitted Fabrics ? ? MAJOR SCHEMES DISCUSSED IN THE BUDGET ? Fund of Funds for Startups (FFS) Scheme with a corpus of Rs 10,000 crore to provide much-needed boost to the Indian startup ecosystem and enable access to domestic capital. was approved and established in 2016 ? Under FFS, the Scheme does not directly invest in startups, instead provides capital to SEBI-registered AIFs, known as daughter funds, who in turn invest money in growing Indian startups through equity and equity-linked instruments. ? Atal Tinkering Labs Labs in 2016-17 and around 10,000 such labs have already been set up in schools across the country. The Centre provides funds to schools to set up the lab and operate and maintain it for fi ve years. : The Centre’s Atal Innovation Mission introduced Atal Tinkering ? Stand-Up India scheme: 2016, as a loan scheme to empower women entrepreneurs, especially from the SC/ ST communities. The scheme was extended up to 2025. The Centre had launched the Stand-Up India scheme in ? Under the Stand-Up India scheme, the objective was to facilitate loans from Scheduled Commercial Banks between Rs 10 lakh and Rs 1 crore to at least one one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and one- woman borrower per bank branch for setting up a greenfi eld enterprise in the manufacturing, services or trading sector and also for the activities allied to agriculture. www.iasscore.in

25. 21 BUDGET SUMMARY & ANALYSIS: 2025-26 ? The Export Support Mission cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets. Jal Jeevan Mission : The scheme was launched in 2019. It comes under Jal Shakti Ministry. The mission aims to create a jan andolan for water, thereby making it everyone’s priority. Regional Connectivity Scheme (RCS) - UDAN, or “Ude Desh ka Aam Nagrik” Launched in ? : 2016. Spearheaded by the ? Ministry of Civil Aviation (MoCA), UDAN aims to enhance regional air connectivity from unserved and underserved airports across India, making air travel affordable for the masses. It is a vital component of ? India’s National Civil Aviation Policy (NCAP) 2016, launched by the Ministry of Civil Aviation (MoCA). PM SVANiDHI: PM SVANiDHI is a special micro-credit facility plan to provide affordable loan of up to Rs. 10,000 to more than 50 lakh street vendors. The scheme is a ? Central Sector Scheme, fully funded by Ministry of Housing and Urban Affairs. Implementing agency: ? Small Industries Development Bank of India eShram Portal : It is the fi rst-ever national database of unorganised workers (migrant workers, construction workers, gig and platform workers, etc.) Special Window for Affordable, Mid-Income Housing (SWAMIH) to help middle-class families who pay EMIs on loans taken for apartments, and rent on their current dwellings. : The mission will facilitate easy access to export credit, ? ? ? ? ? : The scheme aims New Schemes announced in the Budget ? ? ? ? ? ? Dhan Dhanya Krishi Yojna Rural Prosperity and Resilience Program Loan scheme for fi rst-time women, SC, ST entrepreneurs Bharatiya Bhasha Pustak Scheme National Action Plan for Toys Export Promotion Mission www.iasscore.in

26. 22 BUDGET SUMMARY & ANALYSIS: 2025-26 PART-C ANALYSIS The Union Budget 2025-26 emphasizes the theme of “Sabka Vikas” (Development for All) and aims to stimulate balanced growth across all regions of India. The budget outlines broad principles for achieving a “Viksit Bharat” (Developed India) and focuses on key sectors such as agriculture, MSMEs, investment, and exports. Positive Aspects (The Good) ? Focus on Inclusivity: poor (Garib), youth, farmers (Annadata), and women (Nari).This approach aims to uplift marginalized sections of society and promote equitable growth. The budget emphasizes inclusive development by targeting ? Agricultural Initiatives Krishi Yojana” and the “Mission for Aatmanirbharta in Pulses” aims to enhance agricultural productivity and support farmers. This is crucial for food security and rural development. : The introduction of the “Prime Minister Dhan-Dhaanya ? Support for MSMEs proposes measures to enhance credit availability, technological upgradation, and support for women and marginalized entrepreneurs. This can lead to job creation and economic resilience. : Recognizing MSMEs as a vital engine for growth, the budget ? Investment in Education and Innovation Tinkering Labs and National Centres of Excellence for skilling refl ects a commitment to enhancing education and fostering innovation. This is essential for preparing the workforce for future challenges. : The establishment of 50,000 Atal ? Infrastructure Development Jal Jeevan Mission indicate a focus on improving infrastructure and ensuring access to essential services, which can drive economic growth and improve quality of life. : The Urban Challenge Fund and the extension of the ? Tax Reforms: aim to ease the tax burden on the middle class, potentially boosting consumption and savings. The new direct tax slabs and increased thresholds for TDS and TCS ? Export Promotion the establishment of BharatTradeNet for trade documentation can enhance India’s global competitiveness. : Initiatives to support MSMEs in tapping into export markets and www.iasscore.in

27. 23 BUDGET SUMMARY & ANALYSIS: 2025-26 Negative Aspects (The Bad) ? Fiscal Defi cit Concerns: the sustainability of government fi nances. High fi scal defi cits can lead to increased borrowing and potential infl ationary pressures. The fi scal defi cit target of 4.4% for FY26 raises concerns about ? Revenue Loss from Tax Reforms: middle class, are expected to result in a revenue loss of about Rs 1 lakh crore. This could impact the government’s ability to fund essential services and development programs. The proposed tax reforms, while benefi cial for the ? Implementation Challenges: success of these initiatives will depend on effective implementation at the state and local levels. Past experiences indicate that execution can often be a challenge. While the budget outlines ambitious programs, the ? Dependence on Private Sector: public-private partnerships (PPPs) may not always yield the desired results, especially in sectors where public interest is paramount, such as healthcare and education. The emphasis on private sector investment and ? Limited Focus on Environmental Sustainability: infrastructure and development, the budget could have placed greater emphasis on sustainable practices and green technologies to address climate change challenges. Although there are mentions of www.iasscore.in

29. 25 BUDGET SUMMARY & ANALYSIS: 2025-26 PART-D PRACTICE QUESTION PRELIMS PRACTICE QUESTIONS 1. Which of the following is the largest source of revenue for the Indian Budget 2025? 4. With reference to the fi scal defi cit and its components, consider the following statements: (a) (b) (c) (d) Income Tax Borrowings and Other Liabilities Corporation Tax GST and Other Taxes The fi scal defi cit for FY25 is set at 4.8%, which is an improvement from the previous year’s target. The primary defi cit is calculated by subtracting interest payments from the fi scal defi cit. A higher fi scal defi cit can lead to increased borrowing costs for the government in the long run. Which of the statements given above is/are correct? 1 and 2 only (a) 2 and 3 only (b) 1 and 3 only (c) 1, 2 and 3 (d) 1. 2. 3. 2. Which of the following is NOT a component of the fi scal defi cit? (a) (b) (c) (d) Total Expenditure Total Receipts Borrowings Revenue Receipts 3. Consider the following statements regarding the Economic Survey’s projections for India’s growth: 5. Regarding proposed in the budget 2025, consider the following statements: the Urban Challenge Fund, 1. The Economic Survey forecasts a growth rate of 6.3% to 6.8% for FY26, which is consistent with the projected growth for FY25. The growth forecast for FY26 is primarily driven by increased government expenditure in capital projects. The Economic Survey emphasizes the need for structural reforms to sustain this growth trajectory. Which of the statements given above is/are correct? 1 and 2 only (a) 2 and 3 only (b) 1 and 3 only (c) 1, 2 and 3 (d) The fund aims to fi nance 25% of the cost of bankable projects, thereby encouraging public-private partnerships. It is expected to enhance urban infrastructure and promote sustainable development in cities. The fund will be exclusively used for projects related to transportation and mobility. Which of the statements given above is/are correct? 1 and 2 only (a) 2 and 3 only (b) 1 and 3 only (c) 1, 2 and 3 (d) 1. 2. 2. 3. 3. www.iasscore.in

30. 26 BUDGET SUMMARY & ANALYSIS: 2025-26 6. The Jan Dhanya Krishi Yojana initiative focuses on which of the following? 1. The mission aims to achieve self-suffi ciency in edible oil production to reduce import dependency. It focuses on enhancing the productivity of oilseed crops through research and development. The mission is expected to primarily benefi t large agribusiness smallholder farmers. Which of the statements given above is/are correct? 1 and 2 only (a) 2 and 3 only (b) 1 and 3 only (c) 1, 2 and 3 (d) (a) (b) Urban development Crop diversifi cation and credit access for farmers Industrial growth Farmer Education 2. (c) (d) 3. fi rms rather than 7. In the context of government budgeting, what is the term used to describe a situation where revenue exceeds expenditure? (a) (b) (c) (d) Budget Surplus Revenue Defi cit Fiscal Defi cit Expenditure Surplus 11. Consider the following statements regarding the Fund of Funds (FoF) initiative announced in the Budget: 8. The Urban Challenge Fund announced in the budget is aimed at: (a) (b) (c) (d) Rural development Transforming cities into growth hubs Enhancing agricultural productivity Promoting tourism 1. The Fund of Funds is designed to provide direct fi nancial assistance to startups by investing in them directly. It aims to enhance the availability of capital for small and medium enterprises (SMEs) by investing in SEBI-registered Alternative Investment Funds (AIFs). The initiative is expected to facilitate the growth of the startup ecosystem by encouraging private sector investment in innovative ventures. Which of the statements given above is/are correct? Only (a) 2 and 3 only (b) 1 and 3 only (c) 1, 2 and 3 (d) 2. 9. Which of the following is a key feature of the PM Swanidhi Scheme? 3. (a) (b) (c) (d) Provides loans to farmers Offers credit cards to gig workers Focuses on rural infrastructure Supports urban housing projects 10. Consider the following statements regarding the objectives of the National Mission for Edible Oil and Seeds as proposed in the budget: ANSWER KEY 1. 2. (b) (c) 3. 4. (c) (b) 5. 6. (a) (b) 7. 8. (a) (b) 9. 10. (b) (a) 11. (b) www.iasscore.in

31. 27 BUDGET SUMMARY & ANALYSIS: 2025-26 MAINS QUESTIONS 1. The Union Budget 2025 aims to achieve the vision of Viksit Bharat through transformative reforms across six key domains.” Discuss the signifi cance of these domains and how they contribute to the overall economic development of the country. 2. What do you understand by fi scal defi cit? Analyze the implications of fi scal defi cit on the government’s fi nancial health. 3. “The Fund of Funds (FoF) initiative is designed to enhance the availability of capital for startups by investing in SEBI-registered Alternative Investment Funds (AIFs).” Critically assess the potential of the FoF in fostering innovation and entrepreneurship in India. 4. “The Union Budget 2025 emphasizes the importance of inclusive growth by focusing on gareeb, youth, annadata, and naari.” Discuss how the budgetary measures proposed in this context aim to uplift marginalized sections of society and promote equitable development. 5. The Jan Dhanya Krishi Yojana initiative focuses on improving agricultural productivity in districts with low productivity. Examine the objectives of this initiative and its potential impact on rural prosperity and food security in India. 6. The PM Swanidhi Scheme aims to provide affordable loans to street vendors, enhancing their economic resilience. Discuss the importance of such schemes in promoting fi nancial inclusion and supporting the informal sector in India. www.iasscore.in