Breaking down Union Budget 2025-26—Top 5 Sectors in Focus

Budget is likely to be a good omen for sectors such as defense, agriculture, retail and healthcare with AI-driven growth and investments in digital infrastructure.  

Union Minister for Finance and Corporate Affairs Smt Nirmala Sitharaman presented Union Budget 2025-26 in the Parliament on February 1, 2025 and outlined a slew of key proposals with total receipts other than borrowing expected to be Rs.34.96 lakh crore, while the total expenditure is forecast to be Rs.50.65 lakh crore.

The budget, dubbed by the Finance Minister as “by the people, for the people,” has not only engineered a landmark tax relief for middle-class with a total tax exemption for income up to 12 lakh per annum, but it also aims for the poor, youth, farmers and women (GYAN--Garib, Yuva, Annadata and Nari shakti).

The budget emphasizes:

• Agriculture: The Union Budget has termed agriculture as the “1^st engine of Development,” earmarking Rs.1.37 lakh crore for agriculture and farmer’s welfare (Rs.1.27 lakh crore for the Department of Agriculture and Farmers’ Welfare, while Rs.10,466 crore for the Department of Agricultural Research and Education).

• MSME: The Finance Minister has proposed an outlay of Rs.5,272 crore for the Ministry of Textiles, which includes Rs.635 crore to upgrade the technology used in the textile industry (as part of the Amended Technology Upgradation Fund Scheme). The FM has also added two types of looms to boost the domestic production of technical textile products. Further, the government is bullish of making India a global hub for toys with the development of sustainable, unique, top-quality and innovative toys.

• AI for Education: The government has earmarked Rs.500 crore to establish a Centre of Excellence in Artificial Intelligence for education. Meanwhile, the total budget allocation for education stands at Rs.1.28 lakh crore. Promising opportunities await for Industry 4.0 as Sitharaman presented five National Centres of Excellence for Skilling to underscore “Make for India, Make for the World manufacturing.” The FM also announced setting up a National Institute of Food Technology, Entrepreneurship, and Management in Bihar through employment opportunities for the youth, skilling opportunities and value addition to farmers’ produce.

• Exports: The Finance Minister dubbed exports the “fourth engine of growth,” bolstered by the Ministry of Commerce, Finance and MSME. She exhorted that the government will underpin the domestic electronic equipment industry to cash in on Industry 4.0. The export promotion scheme-budget allocation of Rs.2,250 crore-will be the key thrust to address non-tariff barriers in overseas markets, boost access to credit for exporters and streamline export procedures.

BharatTradeNet (BTN) is expected to be established for international trade as a unified platform for trade documentation and financing solutions.

• Healthcare: The government has earmarked Rs.99,858.56 crore to the Ministry of Health and Family Welfare, alluding to a 191% surge since 2014-15. The healthcare budget covers medical research, infrastructure, preventive care, public health programs and health insurance. The FM has also allocated Rs.2,445 crore for PLI for the pharmaceutical industry. Besides, the National Digital Health Mission has allocated Rs.340.11 crore, while outlay for the National Tele Mental Health Programme stands at Rs.79.6 crore.

In what has come like a wind in the sail for drug companies and the public, the budget has proposed full exemption of 36 lifesaving drugs and medicines from Basic Customs Duty (BCD). Moreover, specified drugs and medicines (part of Patient Assistance Programmes) operated by pharmaceutical companies will be fully exempted from BCD.

Amidst a fragile global economy, the macroeconomic budget has earmarked Rs.6.8 lakh crore for defense, Rs.1.61 lakh crore for chemical and fertilizers, Rs.2.87 lakh crore for road transport and highways and Rs.2.55 lakh crore in railways. The highly anticipated budget has allocated Rs.2.15 lakh crore for consumer affairs, food and public distribution, while Rs.2.33 lakh crore for home affairs. With growth projections ranging from 6.3% to 6.8%, India’s growth prospects remain stable and resilient for FY26.