The Union Budget 2025-26 outlines India's vision for economic and social growth while also reflecting the country's commitment to sustainable development. As India moves closer to the 2030 deadline for the United Nations’ Sustainable Development Goals (SDGs), this budget presents a balanced approach towards key sectors such as poverty reduction, education, healthcare, climate action and innovation. While significant progress has been made in many areas, there are opportunities to further enhance investments, particularly in emerging fields like artificial intelligence (AI) and climate resilience.

SDG 1 & 2: Strengthening poverty alleviation and food security
India has made commendable strides in reducing poverty, yet 228.9 million people continue to live below the poverty line (World Bank, 2024). The budget allocates Rs 3.8 lakh crore to rural development programs, including PM-KISAN and MGNREGA, reflecting a 4% increase from the previous year. Given the increasing demand for rural employment, an expanded focus on skill development and digital literacy could further empower rural populations. In addressing hunger, the Poshan 2.0 scheme, which targets malnutrition, received Rs 20,000 crore. This allocation supports existing efforts to reduce malnutrition, particularly among children, and aligns with India’s commitment to achieving zero hunger by 2030. Strengthening nutritional programs and leveraging AI-driven analytics for food distribution efficiency could further enhance impact.

SDG 3: Healthcare – strengthening the foundations
The healthcare allocation in the budget stands at 1.3% of GDP, which, while an improvement, still remains below the WHO-recommended 5%. The National Health Mission received Rs 45,000 crore, a 7% increase, supporting expanded public healthcare initiatives. Countries like Thailand, which allocates 3.7% of GDP to healthcare, provide useful models for expanding coverage further. Ayushman Bharat, India's flagship health insurance scheme, continues to benefit millions, and the introduction of AI-driven diagnostics and telemedicine platforms is set to improve healthcare accessibility. Investments in AI-based predictive healthcare models could help optimize resource allocation and early disease detection.

SDG 4: Advancing education and digital learning
The budget increased education funding to Rs 1.2 lakh crore, reflecting a step forward in addressing learning gaps. However, this remains at 3% of GDP, while countries such as South Korea invest 5.1% and the US over 6%. A greater focus on AI-driven educational platforms and expansion of digital learning infrastructure could accelerate India’s progress in improving learning outcomes. Encouragingly, 50,000 Atal Tinkering Labs are set to be established to enhance STEM education, fostering innovation among students. Programs that integrate AI-powered adaptive learning tools could help personalize education and bridge urban-rural learning divides.

SDG 6: Clean water and sanitation – continued investments
The Jal Jeevan Mission received Rs 90,000 crore, aiming to ensure clean drinking water access to 100% of rural households by 2026. Urban water security remains an area for further development, as 40% of Indian cities face water stress. Implementing AI-enabled water management systems could improve efficiency in water distribution and reduce wastage. Sanitation efforts under Swachh Bharat Mission saw a 10% budget increase, helping advance urban waste management. Countries like Sweden and Germany, which allocate over 2% of their GDP to waste management, provide models for potential expansion of urban sanitation initiatives.

SDG 7 & 13: Renewable energy and climate action – encouraging progress
India’s goal of achieving 500 GW of non-fossil fuel capacity by 2030 is well-supported, with Rs 20,000 crore allocated to renewable energy projects. While a substantial commitment, China has allocated over $280 billion (Rs 23 lakh crore) for renewable energy in 2025 alone, highlighting further opportunities for scaling investments. India is also expanding its climate adaptation budget, which now stands at Rs 15,000 crore. AI-driven climate modelling could significantly enhance disaster preparedness and carbon footprint reduction strategies. The integration of AI and machine learning in climate risk assessment models could help better predict and mitigate climate-related challenges.

SDG 8 & 9: Employment, AI, and innovation – the future of work
Economic growth relies on job creation and innovation, and the budget reflects this with Rs 10,000 crore allocated for MSME credit support. While this is a positive step, South Korea’s $3 billion SME support plan provides a useful benchmark for comparison. Significantly, the government has allocated Rs 8,000 crore for AI research and development, recognizing AI’s role in shaping future industries. AI is set to revolutionize sectors like healthcare, education, agriculture, and governance. Investments in AI-powered automation and upskilling initiatives will ensure a more resilient workforce in an increasingly digital world.

SDG 10 & 16: Inclusive growth and digital governance
Despite income disparities widening, there are no new progressive tax policies aimed at the ultra-rich. India's top 1% owns over 40% of national wealth, yet wealth taxation remains absent. Brazil and Argentina have implemented wealth taxes, generating significant revenue for social programs, but India has not followed suit. Governance and transparency efforts also lack major reforms. Countries like Estonia and Singapore have integrated AI-driven e-governance for tax collection and service delivery, improving efficiency and reducing corruption—an area where India continues to lag.

The Union Budget 2025-26 makes incremental progress with baby steps to align with the bold vision required to achieve the SDGs by 2030. While funding for rural development, healthcare, and education has increased, the allocations still require a boost given the scale of India’s challenges. Compared to global leaders, India’s investment in climate action, infrastructure, and social equity are modest. For India to truly meet its SDG commitments, there is a need to prioritize healthcare expansion, progressive taxation, climate resilience and digital governance reforms. The time to act is now, with stronger financial commitments and policy-driven execution to make sustainable development a reality.

Naman Mishra is a Doctoral Researcher at Bennett University, Greater Noida, India; Dr. Palakh Jain is an Associate professor of Economics at Bennett University and a Senior Visiting Fellow at Pahlé India Foundation. Views are personal.