On February 1, 2025, Finance Minister Nirmala Sitharaman unveiled her record eighth Union Budget in the Indian Parliament, setting a progressive roadmap for India’s transformation into ‘Viksit Bharat’ by 2047.

This budget, which encompasses a comprehensive strategy with a focus on agriculture, MSME, investment, and exports, will significantly stimulate economic growth while addressing both immediate and long-term challenges.

Boosting Disposable Income

Central to the 2025 budget is the reform in personal income tax—the biggest of which we have seen in many years. By exempting incomes up to ₹12 lakh from taxation—up from the previous ₹7 lakh bracket—the government has put ₹1 lakh crore back into the pockets of the people. This move will boost disposable income across the board, thereby fuelling consumption and creating a ripple effect across the economy that supports GDP growth.

This will supercharge the economy’s primary engine while also reducing bureaucratic hindrances and the long-standing grievances of India’s middle class by effectively championing a socio-economic justice that will resonate strongly with millions.

Fiscal Deficit Goals

Second, India’s commitment to fiscal consolidation is both visionary and necessary. By pegging the fiscal deficit at 4.4% of GDP by FY26, the government is reassuring current and prospective investors that India is on a path of sustainable economic governance. This balance of growth and fiscal discipline is crucial in maintaining macroeconomic stability—a key factor for attracting foreign direct investments.

As economic shocks and instabilities continue to upend parts of the world, India’s prudent fiscal management will signal a steady and fertile market, creating confidence among global investors and positing India as the top destination to grow industry and infrastructure.

Boost To Labour-Intensive Sectors

Third, by reviving key labour-intensive sectors like textiles, leather, toys, and food processing, India is killing two birds with one stone. These sectors are positioned to absorb large portions of the workforce, effectively addressing unemployment while enhancing skill development. In particular, the initiative to develop tourism by enhancing infrastructure and simplifying travel processes, including visa-free travel for specific groups, will have a vast multiplier effect—boosting significant job creation and regional development across the board.

In tourism, the emphasis on developing the top 50 tourist destinations in partnership with various states creates a dual benefit of economic and cultural enrichment. The policy enhancements in this sector can unlock dormant potential, transforming India into a hub of global tourism that celebrates and monetises its diversity.

Revamping PPPs In Infra

Fourth, revamping public-private partnerships (PPPs) in infrastructure will inject new life into long-standing projects that require innovative solutions and fresh capital. The Rs. 10 lakh crore Asset Monetization Plan is a proactive approach to maximising resource efficiency and ushering in a new era of infrastructural development.

A Nuclear Focus

Fifth, the ambitious energy transition plan, with a strong focus on nuclear energy, is a clear marker of India’s commitment to environmental sustainability and energy independence. The goal of developing 100 GW of nuclear energy by 2047, combined with an allocation of ₹20,000 crores for research on small modular reactors, is the government’s concerted effort to modernise India’s energy landscape. Additionally, proposed amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act will catalyse private sector participation, encouraging innovation and investment.

The Fund Of Fund Scheme

Sixth, the budget places a strong emphasis on innovation, with a ₹10,000 crore replenishment for the Fund of Fund Scheme (FFS), doubling its total to ₹20,000 crore and boosting domestic venture capital for startups through Alternative Investment Funds (AIFs). Launched in 2016, the FFS has transformed initial scepticism into measurable success, with ₹11,688 crore committed through 151 AIFs that have catalysed a capital pool exceeding ₹91,000 crore. The FFS is a game-changer in providing essential growth capital to early-stage companies.

As a major plus, the establishment of a dedicated Fund of Fund for DeepTech indicates a concerted effort by GoI to employ advanced technologies to drive economic progress. Innovations in AI, quantum computing, and biotechnology are taking centre stage in this new digital world, and strategic investments will sharply enhance India’s global competitiveness.

The National Geospatial Mission, for its part, will also modernise infrastructure through the integration of geospatial data, in turn, improving urban development and land management. By creating a comprehensive geospatial database, India will be able to undertake informed decision-making and resource allocation, increasing efficiency across sectors.

Improving The Ease Of Business

Seventh, the budget’s focus on regulatory reforms is an extension of the Narendra Modi government’s sustained efforts to make India a more business-friendly environment. The newly established High-Level Committee for Regulatory Reform is another step towards eliminating bureaucratic inefficiencies that have long stifled innovation and investment. The committee will audit current financial regulations and their impacts on the sector’s growth, showing India’s willingness to adapt policies in alignment with evolving economic realities.

The Investment Friendliness Index of States is a proven method of incentivising regional governments to cultivate attractive investment conditions. As we witnessed with the Aspirational Districts Programme, goal-driven competition among states leads to a healthier economic environment overall, encouraging both domestic and foreign investments to flow into various regions, instead of being concentrated in a few metropolitan areas.

Among these pro-market initiatives, the Jan Vishwas Bill 2.0 sends a reassuring message to investors by decriminalising over 100 provisions that have long deterred many entrepreneurs. This shift only encourages healthy risk-taking, while also nurturing an atmosphere where innovation can thrive, laying the groundwork for a more resilient and dynamic economy.

A Fillip To MSMEs

Lastly, and equally important, is the budget’s renewed focus on supporting micro, small, and medium enterprises (MSMEs), which are the backbone of India’s economy. Increasing the investment and turnover thresholds for MSMEs by 2.0 to 2.5 times allows a wider array of businesses to benefit from government programmes designed to support smaller firms. Doubling the credit guarantees addresses longstanding challenges around financing, empowering these enterprises to thrive and contribute significantly to job creation. By redefining the regulatory landscape and bolstering support for MSMEs, the government sets a foundation for a vibrant entrepreneurial ecosystem.

These measures not only aim to stimulate economic growth but also reflect a compelling vision for India’s journey towards becoming a developed nation by 2047. As we move forward, the real test will be in the execution and effectiveness of these reforms. Ultimately, it is this commitment to thoughtful regulation and support that can transform India’s economic narrative.

As India navigates global uncertainties, this budget positions the country as a potential leader, signalling to investors that it prioritises stability, sustainability, and inclusive growth. The initiatives outlined in this budget are strategic actions that can galvanise India’s economy, creating a more equitable society and a vibrant marketplace for generations to come. The future looks good, and with efficient implementation, the vision of a prosperous, developed India could be realised by 2047.

(The author is India’s G20 Sherpa and former CEO, NITI Aayog. Views expressed are personal.)

Disclaimer: These are the personal opinions of the author

The parliament’s budget session is scheduled to start on January 31 and run until April 4. The Union Budget 2025 under the Narendra Modi 3.0 government will be presented in February by Finance Minister Nirmala Sitharaman. This time she is set to make history by presenting her 8th consecutive budget. She has presented seven straight budgets, including an interim one in February in 2024.She also holds the record for the longest budget speech, delivered on February 1, 2020, which lasted two hours and 40 minutes.

As she prepares to deliver the country’s next budget, much of the pre-budget discussion in the media is centered around whether the middle class will receive relief through a reduction in income tax. Let’s take a closer look at her journey from being an alumna of Jawaharlal Nehru University to becoming India’s finance minister.

Early Life and Education:

According to the Ministry of Corporate Affairs, Nirmala Sitharaman was born on 18th August 1959 in the temple town of Madurai, Tamil Nadu. She did her schooling and her graduation in economics from Seethalakshmi Ramaswamy College in Tiruchirapalli. She went on to do her master’s in economics from Jawaharlal Nehru University, New Delhi. Indo-European textile trade was the focus of her draft PhD thesis.

Nirmala Sitharaman served as an assistant to an economist in the Agricultural Engineers Association, UK, in London. She subsequently worked as a senior manager (research and analysis) with Price Waterhouse, London. During this time she also briefly worked with BBC World Service.

On her return to India, she served as the deputy director of the Centre for Public Policy Studies at Hyderabad. Her interest in education led her to lay the foundation of ‘Pranava’, a reputed school in Hyderabad. She was a member of the National Commission for Women from 2003-05 and instrumental in voicing various issues of women’s empowerment.

Her Entry into Politics and Role as Finance Minister

Nirmala Sitharaman joined the Bhartiya Janata Party in 2008 and was made a member of the National Executive. She was nominated as party spokesperson in March 2010, from when she has been a full-time party worker.

Nirmala Sitharaman was inducted into the Union of India’s Cabinet in a government led by Prime Minister Narendra Modi on 26th May 2014. She was made a Minister of State (Independent Charge) for Commerce and Industry. In addition, she was also made Minister of State for Finance and Corporate Affairs.

Personal Life

Nirmala Sitharaman is married to Dr Parakala Prabhakar, an alumnus of Jawaharlal Nehru University and the London School of Economics, and they have one daughter.

Nirmala Sitharaman’s journey from a middle-class upbringing to becoming one of the most powerful female leaders in Indian politics is a story of perseverance, intellect, and dedication.

As the dust settles on the proposals that the Finance Minister made in the Budget earlier this month, some aspects have become clearer while questions remain on others.

Budget 2024-25 saw several initiatives around employment and skilling being proposed. Do these form a good first step in addressing the jobs challenge the country faces? Or should the government have begun addressing the problem at the level of primary school and worked upwards?

Guest: Amit Basole, Professor of Economics at Azim Premji University

Host: K. Bharat Kumar

Edited by Jude Francis Weston

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