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Economy

Union Budget 2025: No Hike in MGNREGS Funds, Zero Tax Slab Raised Up to Rs 12 Lakh Income

The stock markets showed a muted response to the budget announcements.

Union Budget 2025: No Hike in MGNREGS Funds, Zero Tax Slab Raised Up to Rs 12 Lakh Income

Nirmala Sitharaman presenting the Union Budget 2025 in Lok Sabha on Saturday. Screengrab from a Sansad TV video.

The Union Finance Ministry has presented the Budget for 2025-26, marking Finance Minister Nirmala Sitharaman’s eighth consecutive budget speech. With inflation and economic challenges looming, many were anticipating relief in the form of tax cuts.

A day prior, the government tabled the Economic Survey, projecting a GDP growth rate of 6.3% to 6.8% for FY26.

However, concerns persist over rural employment, especially as the Finance Minister once again omitted any mention of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA)—the world’s largest job guarantee programme.

The Modi government has allocated Rs 86,000 crore for MGNREGA, mirroring the Revised Estimate for 2024-25. This amount is also identical to the allocation in the July 2024 Budget following the National Democratic Alliance's return to power. Notably, it is lower than the Rs 89,154 crore spent under the scheme in 2023-24, raising concerns over funding cuts to this crucial rural employment safety net.

Sitharaman announced a significant revision in personal income tax under the new tax regime, raising the threshold for nil tax from Rs 7 lakh to Rs 12 lakh per annum. No changes were made to the old tax regime.

The government is expected to forego Rs 1 lakh crore in revenue from direct tax cuts and Rs 2,600 crore from indirect tax concessions. Experts speculate that this revenue shortfall might necessitate reductions in capital expenditure to balance the fiscal deficit.

The stock markets showed a muted response to the budget announcements. The BSE Sensex slipped by 177 points to 77,323, while the NSE Nifty50 remained largely flat, gaining just 94 points (0.4%) to settle at 23,413.

With a focus on tax relief but concerns over expenditure priorities, the 2025-26 Budget has sparked debate over its long-term economic impact.

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