On 1 February 25, Finance Minister Nirmala Sitharaman presented the Union Budget of 2025-26 with the theme of Sabka Vikas. The budget is intended to plan the route of inclusive growth in India, by walking the fine line between fiscal restraint and developmental issues. A detailed synopsis of its important features that are of interest to the aspirants of UPSC is given below.

Constitutional Context

1. Article 112 of the Indian Constitution says that the government must make an annual financial statement to the Parliament, this statement will indicate the estimated receipts and expenditures of a given financial year.

2. The Budget has been divided into three parts: Consolidated Fund, Contingency Fund and Public Account.

3. It is by the Departmental Standing Committee that one of the ways by which Parliamentary scrutiny is held, and by which the proposals of taxation must pass before they become law.

4. It is an important process in the Governance and Constitution part of the UPSC syllabus, and contextualizes the manner in which debates on the budgetary policy are held in Parliament.

Macro-Fiscal Framework

1. It is estimated that the total receipts (excluding borrowings) will be Rs. 34.96 lakh crore and total expenditure will be Rs. 50.65 lakh crore in 2025-26.

2. It has pegged the net tax receipts at Rs. 28.37 lakh crore.

3. The fiscal deficit will be 4.4% of GDP, which will be lowered to 4.8% of GDP in 2024-25.

4. Gross market borrowings: It is estimated at Rs. 4.82 lakh crore.

5. One of the key areas of concern at Rs. 11.21 lakh crore or approximately 3.1% of GDP is the capital expenditure (CapEx) area.

6. The focus on the CapEx is consistent with the government's approach to drive growth through infrastructure and productive investment. CapEx and multiplier effects are connected in the Economy section of UPSC.

Growth Waterwheels and Sectoring

The Budget has four engines of growth, namely Agriculture, MSMEs, Investment, and Exports, and reforms are the catalyst and inclusiveness is the orientation.

1. Agriculture / Allied Sectors

2. PM Dhan-Dhaanya Krishi Yojana is a program that is designed to increase the output, storage and irrigation, as well as credit in the specific districts.

3. One of the missions is a Mission of Aatmanirbharta in Pulses, which is aimed at producing tur, urad and masoor in reduced amounts to stop over-reliance on imports.

4. Kisan Credit Card (KCC) has been increased to Rs. 5 lakh as opposed to Rs. 3 lakh.

5. Introduction of a Makhana Board in Bihar, to help local producers in the largest cultivation area.

2. MSMEs

1. Registration, credit, and turnover thresholds have been raised in order to expand financial inclusion.

2. Women and SC/ST entrepreneurs get special credit to grow inclusively.

3. Investment & Innovation

1. Rs. 1.5 lakh crore interest-free loans to states for capital works.

2. Introduction of an Urban Challenge Fund (Rs. 1 lakh crore) on urban infrastructure and redevelopment.

3. Rs. 20,000 crore to fund private-sector-led R&D and AI, and frontier technologies.

4. Introduction of 50,000 Atal Tinkering Labs in schools to encourage innovation.

4. Exports / Trade Facilitation

1. BharatTradeNet (BTN), a digital platform to facilitate trade processes, was introduced.

2. Subsidies to perishable agricultural products, electronics and EV components through trade policies.

Taxation and Fiscal Reforms

1. In the new tax structure, there is an exemption of up to Rs. 12 lakh of income, and there is a standard deduction of up to Rs. 12.75 lakh, so the income up to that level is effectively tax-free.

2. TDS/TCS thresholds have been changed: senior citizen interests deduction has been added Rs. 50,000 onward and Rs. 1,00,000 onward; the rent TDS threshold has increased to Rs. 2.4 lakh to Rs. 6 lakh.

3. Delay in payment of TCS is being decriminalized in order to motivate TCS payment.

4. The Income-tax Act, 1961, is to be replaced by a new Income Tax Bill, which will make the tax regime easier.

5. Essential equipment such as lithium-ion cells, receives a cut in customs duties, increasing the production of EVs and the export of electronics.

Such actions are associated with such topics of GS Paper 3 as Economic Growth, Budget, Fiscal Policy, and Taxation.

Social Sector, Health, Education and Welfare

1. The Budget focuses on 6 development principles: zero poverty, quality education, affordable healthcare, meaningful employment, 70% women participation, and prosperity of farmers.

2. The development of skills and rural prosperity is emphasized to overcome the underemployment in rural places.

3. The tax cuts in middle classes in the form of higher thresholds and deductions boost disposable income and consumption.

Important Dimensions and Observations

1. Fiscal prudence and growth stimulation are at a trade-off, with the push towards fiscal prudence and higher capital outlays.

2. Implementation is the key to success, in particular, the coordination with state governments regarding central schemes and loan programs.

3. The agricultural policies have to manoeuvre through regional heterogeneity, water shortages and price fluctuations.

4. In the case of UPSC, this budget provides content in GS Paper 3 and essays and interviews on the topics of governance, fiscal policy, and inclusive development.

Concluding Remarks

The Union Budget 2025-26 gives the aspirants a clear picture of the fiscal, economic and social priorities of India. Learning how to combine expenditure, taxation, sectoral reforms, and inclusive growth allows the candidates to relate policy actions to the overall governance and economic systems. The focus on infrastructure, innovation and agriculture is indicative of how the government wants to provide a balance between growth and equity, as well as financial prudence-all themes of civil services preparation.