India’s latest budget marks an ambitious attempt to modernise its vast workforce. The financial blueprint for 2025-26, unveiled by Finance Minister Nirmala Sitharaman, places unprecedented emphasis on human capital development—from expanding medical education to extending social security to gig workers. At its core lies a calculated bet: that investing in skills and worker welfare will cement India’s position as a global economic powerhouse.
The centrepiece of this transformation is a muscular push towards workforce development. Five new National Centres of Excellence for Skilling will focus on emerging fields such as climate technology and artificial intelligence. “Human capital remains the cornerstone of economic progress,” observes Kamaljeet Kaur, group chief human resources officer, Gensol. “A well-trained workforce enhances resilience, fosters innovation, and strengthens India’s position in the global economy. Investing in skills today will define our competitive edge tomorrow.” The centres, developed through public-private partnerships, aim to bridge critical skill gaps that have long plagued Indian industry.
Notably, the government is casting its net beyond metropolitan areas. A new National Framework for Global Capability Centres (GCC) targets talent development in tier-2 cities, potentially reshaping India’s economic geography. This decentralisation could help address the longstanding urban-rural divide in employment opportunities, creating a more balanced economic landscape across the country.
“Human capital remains the cornerstone of economic progress. A well-trained workforce enhances resilience, fosters innovation, and strengthens India’s position in the global economy. Investing in skills today will define our competitive edge tomorrow.”
Kamaljeet Kaur, group chief human resources officer, Gensol
The middle class, long considered the backbone of India’s consumer economy, receives substantial relief through tax reforms. Income up to Rs 12 lakh is now tax-exempt, a move that could boost consumer spending and allow companies to rethink compensation strategies. As Nitin Khindria, CHRO, Omega Seiki Mobility notes, “With most companies following an April increment cycle, HR and finance teams need to work together to educate employees on maximising their take-home salary, optimising savings, and planning investments wisely.”
“With most companies following an April increment cycle, HR and finance teams need to work together to educate employees on maximising their take-home salary, optimising savings, and planning investments wisely.”
Nitin Khindria, CHRO, Omega Seiki Mobility
Healthcare reforms emerge as a crucial pillar of the budget’s workforce strategy. The government plans to establish daycare cancer centres in district hospitals and add 10,000 medical seats this year, with 75,000 more planned over five years. “The establishment of daycare cancer centres and the addition of medical seats directly address the healthcare sector’s growing needs. This is a crucial step toward making quality healthcare more accessible,” says Jasdeep Singh, group CEO, CARE Hospitals. Perhaps more significantly, health insurance coverage will extend to one crore gig workers, marking a watershed moment in formalising India’s burgeoning gig economy.
The manufacturing sector receives particular attention through a Rs 2,819 crore allocation under the Production Linked Incentive (PLI) scheme for automobiles and components. This injection of capital aims to boost research and development while easing credit access for MSMEs. The impact could be transformative, creating a ripple effect across the automotive supply chain and potentially generating significant employment opportunities. The leather and textile sectors also stand to benefit from financial incentives and relaxed credit norms, further diversifying India’s manufacturing base.
“Digital transformation receives unprecedented emphasis, with substantial investments in artificial intelligence, 5G, and 6G initiatives.”
Priyanka Anand, vice president and head, human resources, Southeast Asia, Oceania, and India at Ericsson
Digital transformation receives unprecedented emphasis, with substantial investments in artificial intelligence, 5G, and 6G initiatives. Priyanka Anand, vice president and head, human resources, Southeast Asia, Oceania, and India at Ericsson, highlights the importance of global partnerships in “shaping a future-ready workforce, particularly in AI, 5G, and 6G.” The expansion of Atal Tinkering Labs to 50,000 schools suggests a long-term commitment to fostering innovation from the ground up, potentially creating a pipeline of tech-savvy talent for India’s growing digital economy.
Rural development and women’s empowerment feature prominently in the budget’s inclusive growth agenda. The Kisan Credit Card limit increases to Rs 5 lakh, while targeted schemes support women entrepreneurs. “India’s budget stays optimistic with an emphasis on empowering the poor, advancing women, enabling youth, and boosting rural development,” notes Santosh Kumar Dhanewar, head – HR, south portfolio, Nexus Malls. This multi-pronged approach to inclusive development could help tap into India’s demographic dividend more effectively.
“India’s budget stays optimistic with an emphasis on empowering the poor, advancing women, enabling youth, and boosting rural development.”
Santosh Kumar Dhanewar, head – HR, south portfolio, Nexus Malls
Perhaps most striking is the formal recognition of gig workers within India’s social security framework. Beyond health insurance, they will receive formal identification and protections similar to full-time employees.
This move acknowledges the changing nature of work in the digital age and could serve as a model for other emerging economies grappling with the rise of the gig economy. As Kaur of Gensol puts it, this reinforces “commitment to their well-being and growth.”
The budget’s comprehensive approach to workforce development aligns with India’s vision of Viksit Bharat (Developed India). The success of these initiatives will depend not just on implementation but on how effectively they can adapt to rapidly evolving technological and economic landscapes. Private sector engagement will be crucial, particularly in areas like skill development and healthcare expansion.
For human resources professionals, the budget presents both opportunities and challenges. They must now navigate a complex landscape of tax reforms, upskilling requirements, and evolving workforce protection measures. The emphasis on technology and AI in particular will require a fundamental rethink of traditional HR practices.
As India positions itself for the next phase of economic growth, this budget’s focus on human capital development could prove prescient. By addressing both immediate workforce needs and long-term capability building, it lays the groundwork for a more skilled, inclusive, and resilient economy. The question now is not just whether India can execute this ambitious vision, but whether it can do so quickly enough to maintain its competitive edge in the global economy.