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Smt. Nirmala SitharamAN’s reply in Lok Sabha on budget 2025-26
While replying to the discussion on the Union Budget 2025-26 in the Lok Sabha, the Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman, expressed her gratitude to the Honorable Members for their in-depth discussions in Lok Sabha on on 11 February 2025. She noted that the Budget had been presented amidst significant global uncertainties, shaped by geopolitical tensions such as the Middle East crisis and the Russia-Ukraine conflict, along with stagnation in global GDP and persistent inflation in emerging markets. Despite these difficulties, she emphasized India’s economic resilience, citing the first advanced estimates from the National Statistical Office (NSO), which projected a 6.4% growth in real GDP and 9.7% in nominal terms. The synopsis of her speech is as follows:
The Union Minister of Finance and Corporate Affairs, Smt. Nirmala Sitharaman said: the world scenario in the last 10 years has turned almost 180 degrees, as a result of which the challenges for any country in making its budget are far more complicated now than ever before. As per the first advanced estimates from the NSO, India’s economy is expected to grow by 6.4 per cent in real terms and by 9.7 per cent in nominal terms.
The Union Budget 2025-26 has sought to address these immediate challenges facing the domestic economy in the global context. It also rolls out a futuristic path for transforming India into Vikasit Bharat. Our main goals in this Budget are to accelerate growth, secure inclusive development, integrate private-sector investments and uplift household sentiments.
So, with a focus on Garib, youth, Annadata and Naari, the Budget likes to reveal new schemes and reforms in the following broad sectors: promotion of agriculture, MSMEs, investments and exports as growth engines in building rural prosperity and resilience. We also want to have employment-led development spurring domestic consumption and boosting manufacturing in India, including export promotion.
Continuing public capital expenditure and rekindling the animal spirits in the private sector to step up investments, and most importantly, investing in people,investing in the economy and investing for innovation — these are actually the points on which the Union Budget is focusing so that we balance the national development priorities with fiscal imperatives. In the Budget of 2025-26, the effective capital expenditure is projected at Rs.15.48 lakh crore as against Rs.13.18 lakh crore in the RE of 2024-25.
It indicates that the Government is using almost the entire borrowed resources for financing effective capital expenditure. The sectoral outlays in the year 2025-26 include agriculture and allied activities which get Rs. 1.71 lakh crore; rural development gets Rs. 2.67 lakh crore; urban development and transport, Rs. 6.45 lakh crore; health and education, Rs. 2.27 lakh crore, defence which excludes defence pension, Rs. 4.92 lakh crore. These data from the current Budget show that capital expenditure outlays have not come down at all. On the contrary, they have gone up. Across all schemes, the transfer of resources to the States has been growing by the year. In this Budget, it is Rs. 25.01 lakh crore, which is Rs. 2.1 lakh crore more than the previous year. So, the amounts going to the States have not come down at all. India’s development story actually presents a stark tale of two opposite approaches to Budget-making and also for fiscal prudence.
The Union budgeting reveals recurrent claims of transparency. The Food Corporation of India has continuously maintained off-budget borrowings. In 2020-21, the Government took a major step of bringing all the off-budget borrowings of FCI, which totalled Rs.1.2 lakh crore, onto the Budget. So, that enabled better public understanding and discourse on Government debt and also brought a sense of credibility to the Budget documentation itself. That year, we also started to provide the 50-year interest-free loan to the States. From an allocation of Rs.12,000 crore in 2020-21, it has now, in the current Budget, reached Rs.1.50 lakh crore. In 2021-22, the Ministry of Housing and Urban Affairs’ off-budget borrowing was also taken on board. We have taken these initiatives to ensure the Budget’s transparency and nothing outside of the Budget will be done.
Recognising the taxpayers by easing tax rates
In 2023-24, one big step was recognising the taxpayers by easing tax rates. This year, it has gone to Rs. 12 lakh. In 2024-25, we empowered the Ministries with a proposal
In 2023-24, one big step was recognising the taxpayers by easing tax rates. This year, it has gone to Rs. 12 lakh
which was suggested by the PAC. It will result in substantially enhanced financial delegation to improve operational efficiency in Ministries. This year proactive disclosures, realistic estimation, and ensuring greater predictability are the steps that we have taken. I want to submit here that not only the Centre but also the States will have to look at debt consolidation and also rationalise their debt balances. And therefore, we have outlined a debt consolidation pathway for the Union Government till March, 2031, and this would give some kind of a guidance to the markets with greater predictability also.
Government jobs under Rozgar Mela
Coming to rising unemployment, I want to highlight the fact that according to the 2023-24 Annual Periodic Labour Force Survey, the Labour Force Participation Rate has increased from 49.8 per cent in 2017-18 to 60 per cent in 2023-24, reflecting a rise of about 10.3 percentage points. The Worker Population Ratio has increased from 46.8 per cent in 2017-18 to 58.2 per cent in 2023-24, reflecting a rise of 11.4 percentage points. The unemployment rate has declined from six per cent in 2017-18 to 3.2 per cent in 2023-24. Over 9.25 lakh appointment letters have been issued for the Central Government jobs under Rozgar Mela.
Retail inflation is within notified tolerance
Further, regarding the concerns about high inflation, especially food inflation, I would like to say that it actually receives the highest priority of this Government. Overall retail inflation is within the notified tolerance band of 2-6 per cent. I just want to highlight the fact that food inflation which was affected because of adverse weather conditions or supply chain disruptions has all been attended to. We are still continuing to do it. The water levels in reservoirs are also being monitored. It has improved so that water adequacy for irrigation for Rabi crop production is ensured. As per RBI’s latest meeting of the MPC that they held on 7th February, CPI inflation for 2025-26 is projected to lower at 4.2 per cent. During the UPA regime, food inflation reached an even staggering 11 per cent causing severe hardship for the public. Under the NDA regime from 2014-2024, it was brought down to 5.3 per cent indicating a robust focus on supply chain improvements and agricultural reforms.
Fuel inflation under UPA-II was 8.9 per cent compared to NDA 2014-2024 which is at 4.4 per cent highlighting better management of global price volatility under NDA. Total domestic active LPG customers have more than doubled from 14.52 crore in April, 2014 to 32.89 crore as of December, 2024. Under the PM Ujjwala Yojana, the refill rate is per capita consumption is 4.4 cylinders in a year. In this Budget, the Government has taken steps to ensure better productivity in agriculture, so that the supply-side problems can be better administered. PM Dhan Dhanya Krishi Yojana Developing Agricultural Districts Programme is a very important one where a hundred lowproductivity agricultural districts are being focussed. There are other points like the decline in household savings and an increase in household debt. I want to say some facts in this regard. The household savings consist of net financial plus physical savings, increased by a compound average growth rate of 8.9 per cent CAGR from 2019-20 to 2022-23. There is a reallocation of savings by households to real assets. In the post-COVID period, household real estate investments have increased considerably. The share of savings in physical assets in gross household
Nirmala Ji given a very clear picture
of the Indian economy: PM ModiThe Prime Minister, Shri Narendra Modi has praised Finance Minister Smt. Nirmala Sitharaman’s address in the Parliament, stating that it provides a clear picture of the Indian economy and the reform trajectory government is undertaking.
The Prime Minister posted on X; “During her remarks in Parliament, Finance Minister @nsitharaman Ji has given a very clear picture of the Indian economy and the reform trajectory we are undertaking. Here are the links to her speeches…”
savings has steadily increased from 30.8 per cent in 2015-16 to 42.7 per cent in 2022-23. So, according to the National Account Statistics, household savings in physical assets have increased by a compound average growth rate of 15.6 per cent from 2019-20 to 2022-23.
Health, education and, social welfare
Public spending outlays in health, education, social welfare, and rural development have increased from Rs. 4.16 lakh crore to 5.54 lakh crore between 2020-21 to 2025-2026. So, there is no cut in any of these. Fiscal consolidation was another issue on which it was being asked whether it is being done at the cost of public spending and social sector spending. It was said that the education budget has been reduced, and the budget for PM POSHAN, Jal Jeevan Mission, PM Awas Yojana, and Post Matric Scholarships have come down. With respect to social welfare, the budget has increased from Rs. 56,501 crore in 2024- 2025 to Rs. 60,052 crore in 2025-2026. It has not gone down. Coming to education, the budget has increased from Rs. 1.26 lakh crore in 2024-2025 to Rs. 1.29 lakh crore in 2025-2026.
Talking about health, the budget which was Rs. 89,287 crore in 2024-2025 has gone to Rs. 98,311 crore in 2025-2026. I would like to highlight one point at this time. The technology which has been adopted for Budget and Budget management has today given all of us the advantage of getting facts by looking at the portal or by looking at the documents. please refer to the Expenditure Profile Statement.
The next head is Samagra Siksha. An amount of Rs.11,516 crore is lying there in the States. An amount of Rs. 5,205 crore is lying in the State accounts, and this is for Poshan Abhiyan. Under the Flexible Pool for RCH health system, strengthening the National Health Program and the National Urban Health Mission, an amount of Rs.2,988 crore lying with the States. Under Human Resources for Health and Medical Education, an amount of Rs.7,059 crore is lying in the State account.
An amount of Rs. 12,319 crore is left with the States in the Swachh Bharat Mission – Urban. For the Urban Rejuvenation Mission which was launched in 500 cities, an amount of Rs. 12,377 crore is lying with the States. On Jal Jeevan Mission, an amount of Rs. 13,782 crore is lying with the States. These are the funds lying unused on the part of the states. I have already mentioned that the amount of capital expenditure, being given, is increasing steadily every year.
Micro-enterprises
With regard to micro-enterprises I would like to highlight the fact that currently, its allocation is Rs. 1 crore and the revised one is Rs. 2.5 crore. The current turnover of micro-enterprises is Rs. 5 crore and we have revised it to Rs. 10 crore. For small enterprises, the current investment is Rs. 10 crore, and now, we have revised it to Rs. 25 crore, and likewise, the current turnover is Rs. 50 crore and we have revised it to Rs. 100 crore. Similarly, for medium enterprises, we have revised it from Rs. 50 crore to 125 crore, and for turnover, we have revised it from Rs. 250 crore to 500 crore. The loan per capita ceiling of KCC has since been increased from Rs. 3 lakh to 5 Lakh lest they should be compelled to borrow from the middleman. That is the intention with which we have brought in the KCC. Nearly, eight crore farmers will be benefiting from this short-term lending which will begin from 1st April 2025.
Three years prior to 2024-25, the country’s GDP growth rate averaged at about eight per cent. Only in two out of last twelve quarters, has the growth rate touched 5.4 per cent or remained below it. On account of a strong economic foundation, a speedy rebound is happening and we shall take measures which will going forward help in keeping our economy growing fastest as in the last few years. We will continue to remain the fastest-growing economy. Private final consumption expenditure is expected to grow by 7.3 per cent in 2024-25 driven by good rural demand. With these words, I would like to thank all the hon. Members who have participated in the Budget Discussion.