Key Financial Terms Simplified:
- Fiscal Deficit (FD): The amount by which the government’s spending is more than its income (excluding loans). This shows how much the government needs to borrow.
- Revenue Deficit (RD): When the government spends more on regular expenses (like salaries and subsidies) than it earns from taxes and other sources.
- Effective Revenue Deficit (ERD): Revenue Deficit minus the money given as aid to create capital assets like roads, schools, and hospitals.
- Primary Deficit (PD): Fiscal Deficit minus the interest payments on past borrowings.
- Capital Expenditure (Capex): Money spent on building long-term assets like highways, railways, and factories.
- Effective Capital Expenditure (Eff-Capex): Capital Expenditure plus grants given for creating long-term assets.
Government Spending and Income in 2025-26:
Revised Estimates (RE) for 2024-25: The government expects to spend ₹47.16 lakh crore. However, this is ₹12,764 crore less due to payments that the central government owes to states from previous years.
Budget Estimates (BE) for 2025-26: The total spending is expected to rise to ₹50.65 lakh crore. Capital expenditure will be ₹11.21 lakh crore, while effective capital expenditure will be ₹15.48 lakh crore.
Economic Growth and GDP:
India’s Gross Domestic Product (GDP) for 2025-26 is estimated at ₹356.98 lakh crore, which is 10.1% higher than the revised estimate of ₹324.11 lakh crore for 2024-25, according to the National Statistical Office (NSO).
The government will also use some of its cash reserves (cash balance drawdown) to manage its financial plans.
Support to States and Union Territories:
The government will transfer ₹25.01 lakh crore to states and union territories in 2025-26, an increase of ₹4.91 lakh crore compared to 2023-24. This includes tax revenue, grants, and funds for centrally sponsored schemes.
Experts’ Opinions on the Budget:
- Dr. Raghuram Rajan (Former RBI Governor): “A higher capital expenditure indicates that the government is focusing on long-term economic growth, which is a positive move. However, managing the fiscal deficit remains crucial to avoid excessive borrowing.”
- Nirmala Sitharaman (Finance Minister): “This budget focuses on strengthening infrastructure, creating jobs, and boosting the economy while maintaining fiscal discipline.”
- Arvind Panagariya (Economist): “The increase in support to states is a good step, as it will help in regional development and ensure funds reach grassroots projects efficiently.”
- Dr. Krishnamurthy Subramanian (Former Chief Economic Advisor): “A 10.1% GDP growth estimate reflects optimism, but achieving it will depend on global economic stability and domestic demand.”




In conclusion, the Union Budget 2025-2026 reflects the government’s commitment to fostering economic growth through substantial tax reforms, significant investments in agriculture, science, and technology, and measures to promote trade and exports. By providing tax relief to the middle class and implementing initiatives aimed at various sectors, the budget seeks to stimulate consumption, encourage savings, and drive investment, thereby paving the way for a more resilient and self-reliant economy.