FM Budget 2025 Exclusive: From 'No Capex Pivot' To New Tax Slab Rationale — Key Highlights

The 2025 Union Budget — seen as one unlike any in more than a decade — was "for the people, to the people and by the people of India," the Finance Minister said adding that, the decision to slash the income tax was taken in "respect" for taxpayers.

In a bid to revive the urban and rural demand, Nirmala Sitharaman in her budget speech said that individuals with income up to Rs 12 lakh will be exempt from paying income tax. This is against the previous cap of Rs 7 lakh.

Further, the Narendra Modi government eyes to narrow the budget deficit for fiscal 2026 to 4.4% of the gross domestic product, slightly below the 4.5% previously estimated.

Analysts noted that this budget marks a shift from capex-heavy spending towards a more balanced approach, prioritising inclusive development and demand-driven growth. However, the Finance Minister emphasised that capex remains one of India's primary growth driver, and the rising focus on consumption is an addition, not a pivot.

Here are the key highlights from Nirmala Sitharaman's exclusive interview with NDTV's Editor-In-Chief Sanjay Pugalia.

Even as the Union Budget 2025 sparks enthusiasm around consumption, Sitharaman has made it clear—capital expenditure remains one of India's primary growth drivers, and the rising focus on consumption is an addition, not a pivot.

"We have not moved away from capex. Consumption is just an addition," Sitharaman told NDTV Profit, dismissing speculation that Budget 2025 prioritises consumption over investment. Sitharaman pointed out that India's capex growth has been so strong over the years that even a 10.23% increase now feels ‘normal’.

Import duties have been rationalised to allow Indian industry to source raw materials and promote domestic manufacturing and exports, Sitharaman said.

"India is taking steps to strengthen its economy, to ensure self-reliance, and as I said, in the next 25 years, to make the country a manufacturing hub through 'Make in India' and making for the world," the finance minister said.

"Custom duty was rationalized and the number of duties of items were reduced, so that our production increases. If we have to import things to value add in our goods and then export, we are doing that as well," she said.

The decision to forgo tax collection from those earning Rs 12 lakh per annum was made based on the assessment of the standard of living of Indians in this middle-income segment and was for the people, to the people and by the people of India, Sitharaman said.

The Finance Minister also gave a rationale to why the income tax relief. She explained that through time the rising inflation demanded a relief for the common man.

"Prime Minister Modi has always emphasised the recognition and respect for taxpayers, and this has been his resolute stance," Sitharaman said.

"He specifically asked me to do something meaningful for the honest taxpayers in the upcoming budget. The aim was to provide relief to individuals earning Rs 1 lakh per month," she said. "We are working to strengthen India's fundamentals for achieving developed nation status in 25 years."

The government is proactively bridging the gap with targeted skilling initiatives, Sitharaman said acknowledging the unprecedented pace of the rise of artificial intelligence

"AI will undoubtedly reshape jobs, and training takes time. That's why we launched the PM Internship Scheme in July, giving individuals a year of exposure while industries adjust," Sitharaman told NDTV Profit in an exclusive interview.

Taking it a step further, Budget 2025 introduces AI training centers that will host global specialists. "This is a major area of focus, crucial for India's demographic dividend and our economy," Sitharaman said.

The Finance Minister emphasised the need to revive and modernise existing sports stadiums, highlighting their underutilisation. She questioned, “Why don’t we revive the stadiums we already have? We know we’re not using them as we should.”

She stressed the importance of making these venues multi-sport accessible and available to the public. Beyond sports, she noted that this approach applies to various public infrastructure projects, urging efficient utilisation of resources.