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Middle-class tax cuts grabbed the headlines. But the budget also addressed Prime Minister Narendra Modi's priorities in agriculture, labor-intensive manufacturing and exports. Changes to the electricity market were also of note: India wants more nuclear energy, and is liberalizing rules in this sector to attract more private and foreign capital.
We have illustrated these trends in a series of charts.
Support for the agriculture sector
The 2025-26 budget will see rural development get the second-largest share of increased government funding. Priorities will include improved agricultural productivity, crop diversification, sustainable farming, enhanced irrigation, better grain storage and expanded credit for farmers. A research project targeting "high-yielding seeds" will be launched, seeking to commercially promote varieties bred to increase harvests while resisting pests and the effects of climate change.
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As our pie charts comparing 2024 and 2025 show, the rural development and agricultural slices of the budget have both increased. Rural development will provide the second-biggest share of the increase to spending in absolute terms.
Agriculture accounts for about 15% of Indian GDP and employs more than 100 million people. As we wrote last year, productivity in this sector has steadily improved, but lagged behind other nations; dissatisfaction in rural regions was linked to Modi's surprise loss of his legislative majority in last year's elections. Our final chart in this section shows how Indian crop yields have improved, but not kept pace with many other nations in Asia – including neighboring Bangladesh.
Support for the manufacturing sector
Manufacturing has long been a relative laggard in the Indian economy. As our chart shows, this sector has received a steadily decreasing share of bank credit. Modi has sought to change this trend – seeking the broad employment uplift that labor-intensive industries like apparel can provide.
The budget's National Manufacturing Mission aims to strengthen smaller and medium-sized enterprises. Credit access is a key focus: "micro" and small enterprises had their credit limits doubled to the equivalent of USD $1.2 million, while startups will receive increased guarantees and potential access to a USD $1.2 billion "Fund of Funds." Small- and medium-sized exporters can access term loans of up to INR 200 million (USD 2.4 million), and micro-enterprises will benefit from 1 million credit cards with INR 500,000 (USD 6,000) limits in the first year. More programs will target historically disadvantaged groups and women entrepreneurs.
Investment into nuclear energy
The government has set out an INR 200 billion (USD 2.4 billion) budget that will advance the research and development of small modular reactors. The plan aims to have at least five indigenously developed SMRs operating by 2033.
As our chart shows, nuclear currently accounts for just 3-4% of India's electricity generation. Coal is still the most important fuel for power production – and a very polluting one at that.
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