The budget introduces significant income tax reforms aimed at bolstering the middle class's spending power. The nil tax slab threshold has been elevated to ₹1.2 million annually, with recalibrated tax slabs and rates. Under the new regime, a maximum tax rate of 30% applies to incomes exceeding ₹2.4 million. These measures are designed to stimulate consumer demand and economic activity.
In agriculture, the government has launched missions targeting pulses and cotton to enhance farm output. A high-yield crop program aims to benefit 17 million farmers, coupled with increased subsidized credit access. These initiatives seek to strengthen the agricultural sector and support farmers' livelihoods.
The budget also proposes establishing a National Manufacturing Mission to invigorate the industrial sector. Additionally, the foreign direct investment limit in insurance is set to rise to 100%, aiming to attract more international capital and expertise into the industry.
Infrastructure development receives a substantial boost, with plans to enhance regional air connectivity and develop critical minerals. A notable initiative is the creation of a ₹250 billion maritime development fund to support the shipbuilding and repair industry. The government will contribute 49% of this fund, with the remainder sourced from ports and the private sector. This move includes promoting shipbuilding clusters and extending a 10-year import tax exemption on inputs for shipbuilding and shipbreaking activities.
To support startups and small firms, the budget introduces incentives and funds, fostering innovation and entrepreneurship. The energy sector is also a focal point, with the announcement of a Nuclear Energy Mission aiming for 100 GW of nuclear power by 2047.
On the fiscal front, the government targets a fiscal deficit of 4.4% of GDP for 2025-26, down from the revised 4.8% of the current year. Despite an increase in gross borrowing to ₹14.82 trillion to fund the deficit, net market borrowing will see a slight reduction to ₹11.54 trillion. The budget balances fiscal prudence with economic support, following revenue losses from personal tax adjustments.
The stock market's response to the budget has been mixed. Consumer goods stocks, including Hindustan Unilever, Nestle, and Dabur, experienced gains due to the raised income tax thresholds. Automakers like Bajaj Auto, Hero MotoCorp, and Maruti Suzuki also saw positive movements, attributed to increased disposable income from lower taxes. Conversely, infrastructure stocks declined, led by L&T, due to perceived modest capital spending hikes. Insurers such as HDFC Life and SBI Life faced declines as higher tax slabs reduced incentives for tax-saving products.