Vol. 12, Issue 1, Part A (2026)

Abstract
The Union Budget 2025-26 presented by India on 1 February 2025 marked a pivotal fiscal policy blueprint designed to stimulate economic growth, improve ease of doing business, and attract global capital. This article examines the budget’s key policies, especially reforms related to foreign direct investment (FDI), taxation, infrastructure, and sectoral incentives. Drawing on 50 sample data points from policy announcements, investor response indicators, and macroeconomic metrics, the article analyzes budget implementation success and its impact on foreign investors and multinational enterprises (MNEs). Findings indicate that while tax incentives and regulatory reforms enhanced investor sentiment, actual implementation effectiveness varies across sectors, underscoring the need for sustained policy follow-through. The Union Budget of India for the financial year 2025–26, presented on 1 February 2025 by Finance Minister Nirmala Sitharaman, laid out an ambitious fiscal roadmap aimed at sustaining economic growth, enhancing public welfare, and steering the country towards the long-term vision of Viksit Bharat 2047. Central to the Budget was a marked emphasis on broadening tax relief, with a complete rebate introduced for individuals earning up to ₹12.75 lakh under the new tax regime, providing substantial relief to the middle class and stimulating consumption demand. Alongside tax measures, the Budget strengthened credit support for key sectors such as MSMEs by enhancing priority sector lending classification and expanding credit guarantee cover, which has begun to ease access to affordable capital and has encouraged enterprise growth. Strategic increases in capital expenditure were aimed at infrastructure development, with significant allocations for rural connectivity, urban housing, and digital infrastructure, facilitating enhanced economic activity across regions. The agriculture and allied sectors received targeted support through schemes for high-yielding crop varieties and natural farming initiatives, supporting rural livelihoods. Implementation of these Budget measures has been progressive; enhanced lending provisions and expanded credit flows have catalyzed MSME activity, while infrastructure projects under capital outlays are advancing across multiple states. Fiscal reforms have empowered ministries with greater financial delegation, improving expenditure efficiency and transparency in project execution. In employment and rural development, legislative milestones such as the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission Act, 2025, which revises rural employment guarantees, reflect Budget-aligned policy evolution aimed at strengthening livelihood security in practice. While challenges in utilization of allocated funds in certain sectors persist, early indicators point to improved labour force participation, increased investment activity, and tangible enhancements in access to credit for underserved segments of the economy. Overall, the implementation of the 2025 Budget’s priorities has begun translating allocations into outcomes that support inclusive growth, structural reform and economic resilience in the Indian context.