Middle class put on top
Finance Minister Nirmala Sitharaman on Saturday presented her record eighth consecutive Budget, striking a balance between economic growth and fiscal consolidation and putting more money in the hands of the common man.
Sitharaman announced significant income tax cuts for the middle class and unveiled a blueprint for next generation reforms as she looked to shore up a slowing economy amid global uncertainties.
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According to the revised structure, individuals with a net taxable income of up to Rs 12 lakh (Rs 12.75 lakh for salaried individuals) will now pay zero income tax. This is a notable increase from the previous threshold of Rs 7 lakh. The Budget also doubled the limit for tax deduction on interest earned by senior citizens from Rs 50,000 to Rs 1 lakh, raised TDS (tax deducted at source) threshold on rent to Rs 6 lakh per annum (from Rs 2.4 lakh).
The Budget presentation was marked by an Opposition walkout over Maha Kumbh stampede. However, Congress MPs led by Rahul Gandhi and Priyanka Gandhi and those of other INDIA bloc parties soon returned to the Lok Sabha to hear the Budget speech.
Overall, the middle class emerged winner in today’s Budget. Among states, the NDA-ruled Bihar bagged maximum benefits with Sitharaman making five major announcements for the eastern state that goes to the polls later this year.
Seeking to expedite the pace of reforms, Sitharaman, while presenting what was dubbed as “reformist” Budget, listed agriculture, MSMEs, investment and exports as the four growth engines of the Indian economy.
Much emphasis has been placed on encouraging consumption and spending not only through cuts in income tax rates but also through measures to support labour-intensive sectors and create jobs and provide social security to gig workers, among others. For the first time, gig workers will be registered on e-shram portal and get health benefits under the PM Jan Arogya Yojana, a move PM Narendra Modi said would enhance the “dignity of labour”.
The Budget aimed at increasing consumption by putting more money in the hands of the middle class. Consumption, the largest constituent of the country’s GDP, has remained static around 56 per cent. These measures will, therefore, directly boost growth.
Also, the Budget reflected a strategic push towards financial inclusion and sought to prioritise the agricultural and rural sectors, MSMEs and exports. Initiatives like an enhanced Kisan Credit Card limit to Rs 5 lakh and new taxation reforms demonstrate a balanced approach to foster economic empowerment.
Presenting the first full-year Budget of the Modi 3.0 government, the Finance Minister said, “Ours is the fastest-growing economy. Our development track record for the past 10 years and structural reforms have drawn global attention. Confidence in India’s capability and potential has grown. We see the next five years as a unique opportunity to realise ‘sabka vikas’, stimulating balanced growth of all regions.”
The Budget for April 2025 to March 2026 fiscal (FY26) proposed to raise foreign investment limit in insurance sector to 100 per cent from the current 74 per cent and continued spending spree on infrastructure while raising allocations for social sectors as well as providing for measures for poor, youth, farmers and women.
All this Sitharaman did while managing to stick to the fiscal consolidation roadmap, projecting a fiscal deficit of 4.4 per cent of the GDP in FY26 as against an estimated 4.8 per cent in the current year ending March 31. Also announced were duty cuts on intermediaries and certain life-saving drugs.
To balance the revenue lost, she budgeted a modest increase in capital spending at Rs 11.21 lakh crore in the next financial year compared to a lowered Rs 10.18 lakh crore in current fiscal. Besides, an increase in dividend expected from the Reserve Bank and other government-owned financial institutions will also help to contain the losses.
The Budget comes against the backdrop of the Indian economy growing at its weakest pace since pandemic and rising geopolitical risks particularly with the new US President Donald Trump threatening to impose widespread tariffs on several countries, including India.
