Union Budget 2025-26: Focus on employment and consumption as economy slows
03 Feb 2025

The government will focus on employment, skilling, MSMEs, and the middle class to push growth in a slowing economy, finance minister Nirmala Sitaraman said while presenting the Union Budget for the fiscal year 2025-26 in Parliament today.
She said the budget for the full year and beyond is anchored on the prime minister’s package of 5 schemes and initiatives to facilitate employment, skilling and other opportunities for over 40 million youth over a 5-year period with a central outlay of Rs2 lakh crore.
She said the Budget 2025-26 has made a provision of Rs1.48 lakh crore for education, employment and skilling.
As promised in the interim budget presented in July last year, this year’s budget also prioritises the path of strong development and all-round prosperity, following the roadmap for the pursuit of ‘Viksit Bharat’.
In line with the strategy set out in the interim budget, the new budget envisages sustained efforts on the following nie priority areas for generating opportunities for all.
Budget Priorities
1) Productivity and resilience in Agriculture
2) Employment and Skilling
3) Inclusive Human Resource Development and Social Justice
4) Manufacturing and Services
5) Urban Development
6) Energy Security
7) Infrastructure
8) Innovation, Research & Development and
9) Next Generation Reforms
The finance minister said future budgets will build on these priorities, and add more priorities and actions, adding that the `economic policy framework’ will give more details about this.
She said the present budget details some of the specific actions to be initiated in the current year as also some of the previous announcements towards fulfilment of these priorities.
Sitaraman said the government will undertake a comprehensive review of the agriculture research setup to bring the focus on raising productivity and developing climate resilient varieties. Funding will be provided in challenge mode, including to the private sector. Domain experts from the government and outside will oversee the conduct of such research.
New 109 high-yielding and climate-resilient varieties of 32 field and horticulture crops will be released for cultivation, she added.
The government will encourage natural farming and support 10 million farmers across the country to switch to natural farming in the next two years.
The scheme will be implemented through scientific institutions and willing gram panchayats. Besides 10,000 need-based bio-input resource centres will be established.
The government, she said, will continue to strengthen the production, storage and marketing of pulses and oilseeds, as announced in the interim budget, for achieving self-sufficiency in pulses and oilseeds.
The budget proposes formation of large scale clusters for vegetable production, close to major consumption centres. Farmer-Producer Organisations, cooperatives and start-ups will be encouraged to form vegetable supply chains by carrying out collection, storage, and marketing.
The centre, in partnership with the states, will facilitate the implementation of the Digital Public Infrastructure (DPI) in agriculture for coverage of farmers and their lands in 3 years.
It is also proposed to enable issuance of Jan Samarth based Kisan Credit Cards in 5 states.
Government will provide financial support for setting up a network of Nucleus Breeding Centres for Shrimp Broodstocks. Nabard will facilitate financing for shrimp farming, processing and export.
National Cooperation Policy
The centre will bring out a National Cooperation Policy for systematic, orderly and all-round development of the cooperative sector. The aim is to fast-track growth of rural economy and generate employment opportunities on a large scale. The budget has made a provision of Rs1.52 lakh crore for agriculture and allied sector.
Employment Linked Incentive scheme
It is proposed to implement three separate schemes for ‘Employment Linked Incentive’, as part of the Prime Minister’s package. These will be based on enrolment in the EPFO, and focus on recognition of first-time employees, and support to employees and employers.
Under the EPFO scheme, all persons entering the workforce across sectors for the first time will be provided with one month’s wage. This will be done through direct benefit transfer of one-month salary in 3 instalments to first-time employees, as registered in
the EPFO, with a ceiling of Rs15,000. The eligibility limit will be a salary of Rs1 lakh per month. The scheme is expected to benefit 21 million youth.
The scheme for job creation in manufacturing will incentivise additional employment in the manufacturing sector, linked to the employment of first-time employees. Under the scheme, an incentive will be provided at specified scale directly both to the employee and the employer with respect to their EPFO contribution in the first 4 years of employment. The scheme is expected to benefit 30 lakh youth joining the workforce and their employers.
Under the scheme to support employers, for all additional employment, across sectors, within a salary of Rs1 lakh per month, the government will reimburse up to Rs3,000 per month of employer contribution towards EPFO for 2 years. The scheme is expected to incentivise additional employment of 5 million persons annually.
Participation of women in the workforce
In order to facilitate increased participation of women in the workforce, the budget proposes setting up of working women hostels in collaboration with industry, and establishing creches. The partnership will also organise women-specific skilling programmes, and promotion of market access for women SHG units.
Skilling programme
The budget announced a new centrally sponsored scheme, the 4th under the Prime Minister’s package, for skilling 2 million youth, in collaboration with state governments and Industry, over a 5-year period. Besides, 1,000 Industrial Training Institutes will be upgraded in hub and spoke arrangements and aligned with the skill needs of industry.
Skilling Loans
The Model Skill Loan Scheme will be revised to facilitate loans up to Rs7.5 lakh with a guarantee from a government promoted fund. This is expected to help 25,000 students every year.
Education Loans
For those youth who have been left out of government schemes and policies, the finance minister said, financial support with loans up to Rs10 lakh will be provided for higher education in domestic institutions.
For this purpose one lakh students will be given E-vouchers every year for annual interest subvention of 3 per cent of the loan amount.
For inclusive development of people, particularly, farmers, youth, women and the poor, and for achieving all-round social justice, the budget proposes various programmes, including those for education and health, to empower them by improving their capabilities.
Towards this, it is proposed to step up implementation of schemes such as PM Vishwakarma, PM SVANidhi, National Livelihood Missions, and Stand-Up India, meant for supporting economic activities by craftsmen, artisans, self-help groups, scheduled caste, schedule tribe and women entrepreneurs, and street vendors.
The budget has proposed to formulate a plan, called Purvodaya, for all-round development of states in the eastern part of the country that are rich in endowments and cultural traditions. This will cover states like Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh.
The plan will include human resource development, infrastructure, and generation of economic opportunities in order to make the region an engine to attain Viksit Bharat.
On the Amritsar-Kolkata Industrial Corridor, the budget provides for the development of an industrial node at Gaya. This corridor will catalyse industrial and cultural development of the eastern region. This will showcase the “Vikas bhi Virasat bhi” model in India’s growth trajectory.
The budget has proposed the development of road connectivity projects, such as the Patna-Purnea Expressway, Buxar-Bhagalpur Expressway, Bodhgaya, Rajgir, Vaishali and Darbhanga spurs, and an additional 2-lane bridge over river Ganga at Buxar at a total cost of Rs26,000 crore.
It is proposed to take up new power projects, including setting up of a new 2400 MW power plant at Pirpainti, at a cost of Rs21,400 crore.
Besides the construction of new airports, medical colleges and sports infrastructure in Bihar, the state will be given an additional allocation to support capital investments. The centre will also facilitate external assistance for Buhar from multilateral development banks.
To fulfill commitments under the Andhra Pradesh Reorganisation Act, the centre will facilitate special financial support of up to Rs15,000 crore through multilateral development agencies, for building its new capital. Additional funds, if needed, will be arranged in future.
The finance minister said the early completion of the Polavaram project is a priority and that the centre is fully committed to financing and early completion of the irrigation project, which is the lifeline for Andhra Pradesh and its farmers.
Funds will be provided for construction of essential infrastructure such as water, power, railways and roads in Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and Orvakal node on Hyderabad-Bengaluru Industrial Corridor, with an additional allocation this year towards capital investment.
Grants for backward regions of Rayalaseema, Prakasam and North Coastal Andhra, as stated in the Act, will also be provided.
PM Awas Yojana
Under the PM Awas Yojana, 30 million additional houses in rural and urban areas across the country have been announced, for which the necessary allocations are being made.
Women-led development
The budget proposes allocation of over Rs3 lakh crore for schemes promoting women-led development.
Janjatiya Unnat Gram Abhiyan
For improving the socio-economic condition of tribal communities, the budget proposes to launch Pradhan Mantri Janjatiya Unnat Gram Abhiyan by adopting saturation coverage for tribal families in tribal-majority villages and aspirational districts. This will cover 63,000 villages benefitting 50 million tribal people.
Bank branches in North East
India Post Payment Bank will set up more than 100 branches in the North East region to expand banking services.
The budget has made a provision of Rs2.66 lakh crore for rural development, including rural infrastructure.
Manufacturing and services
The budget provides for a special package covering finance, regulatory changes and technology support to MSMEs and the manufacturing sector to help them compete globally, especially in labour-intensive manufacturing.
SIDBI will open new branches to expand its reach to serve all major MSME clusters within 3 years, and provide direct credit to them. With the opening of 24 such branches this year, the service coverage will expand to For 68 out of 242 major clusters.
For MSME units in need for food irradiation as also quality and safety testing, the budget proposes to provide financial support for setting up 50 multi-product food irradiation units in the MSME sector. Besides, 100 food quality and safety testing labs with NABL accreditation will be facilitated.
E-Commerce export hubs
The budget proposes to set up E-Commerce Export Hubs, in public-private-partnership (PPP) mode, to enable MSMEs and traditional artisans sell their products in international markets.
These hubs, under a seamless regulatory and logistic framework, will facilitate trade and export related services under one roof.
Under the 5th scheme in the Prime Minister’s package, the government will launch a comprehensive scheme for providing internship opportunities in 500 top companies to 10 million youth in 5 years. They will gain exposure for 12 months to real-life business environment, varied professions and employment opportunities. An internship allowance of Rs5,000 per month along with a one-time assistance of Rs6,000 will be provided.
Companies are expected to bear the training cost and 10 per cent of the internship cost from their CSR funds.
Industrial parks
The government will facilitate development of investment-ready “plug and play” industrial parks with complete infrastructure in or near 100 cities, in partnership with the states and private sector, by better using town planning schemes.