Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26, outlining key priorities to accelerate economic growth, ensure inclusive development, support industries, and enhance household sentiment. The budget also emphasized increasing spending power for India’s growing middle class. “Union Budget 2025-26 with an effort to a. Accelerate growth b. Secure inclusive development c. Invigorate society and industry d. Uplift household sentiment and e. Enhance spending on power of India's rising middle class,” Sitharaman said while outlining her Budget focus.
Economic Backdrop and Growth Projections
The Budget comes in the backdrop of the GDP growth rate projected to fall to a four-year low of 6.4 percent in the current financial year, close to its decadal average.
The Economic Survey 2024-25, tabled by the finance minister in both Houses, has estimated India's GDP to grow in the range of 6.3-6.8 percent in FY26. This growth rate is lower than what is needed for India to achieve developed nation status, highlighting the need for deregulation and reforms in key areas like land and labor.
What’s Cheaper and Costlier? Key Changes in Prices
Items That Have Become Cheaper
Medicines: 36 life-saving drugs, including those for cancer and chronic diseases, fully exempted from Basic Customs Duty (BCD).
Electronics: Reduction of BCD to 5% for open cells and other components used in LED/LCD production.
EV and Mobile Batteries: 35 additional goods for EV battery manufacturing and 28 more for mobile phone battery production added to the list of exempted capital goods.
Raw Materials & Critical Minerals: Cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals exempted from BCD.
Leather Goods: Jackets, shoes, belts, and purses to become more affordable.
Marine & Shipbuilding Sector: BCD exemption on raw materials for ship manufacturing extended for 10 years; marine products like wet blue leather and frozen fish paste (Surimi) to see lower customs duty (reduced from 30% to 5%).
Items That Have Become Costlier
Flat Panel Displays: BCD increased from 10% to 20%, impacting the cost of TVs and mobile phones.
Knitted Fabrics: Prices likely to rise due to increased import duties.
Social Welfare Surcharge: Exemption removed on 82 tariff lines currently under cess, making certain imports more expensive.
FM Nirmala Sitharaman's Record-Breaking Streak
Budget 2025 marks Finance Minister Nirmala Sitharaman's 8th consecutive budget presentation. This brings her closer to the record of 10 budgets presented by former Prime Minister Morarji Desai, who holds the record for the most budgets across different terms. Sitharaman’s streak is particularly notable as she is the first woman to hold the position of full-time finance minister.
Key Expectations and Price Changes
As the budget approaches, all eyes are on the key announcements that could impact the prices of various goods and services. The middle class is especially keen to see which items will become cheaper and which might become costlier. In previous budgets, Finance Minister Sitharaman reduced customs duties on items like gold, silver, and platinum. There may be similar announcements this time to reduce the cost of consumer goods, especially tech products and eco-friendly options like electric vehicles and renewable energy items. These changes could help make some products more affordable.