On February 1, 2025, Finance Minister Nirmala Sitharaman presented India’s annual budget. This budget aimed to support the middle class and boost economic growth. It included several key measures, but also had some areas that left people wanting more.
Income Tax Relief
A major highlight was the change in personal income tax. The government raised the tax exemption limit from ₹7.75 lakh to ₹10-15 lakh. This means individuals earning up to ₹10-15 lakh annually will not have to pay income tax. This move is expected to increase disposable income for many families. With more money in hand, people might spend more on goods and services. This could help boost the economy
Standard Deduction Increase
The budget also increased the standard deduction for salaried employees to ₹75,000. This change aims to leave more money in the hands of workers. It is expected to encourage spending and investment.
Support for Agriculture
The government announced a program to promote high-yield crops. This initiative targets 17 million farmers. The goal is to increase agricultural output and farmers’ incomes. Improving the agricultural sector can have positive effects on the economy. It can also help in controlling food prices.
Focus on Infrastructure
The budget emphasized infrastructure development. There is a plan to increase capital spending on roads and railways. This includes the introduction of new-generation trains like Vande Bharat. The government also aims to involve private investors in highway projects. This approach could reduce the financial burden on the government. It may also lead to faster project completion.
Formalizing the Gig Economy
A notable move was the plan to formalize gig economy workers. This includes delivery personnel and ride-sharing drivers. The government intends to improve their access to healthcare and welfare programs. This step recognizes the growing role of gig workers in the economy. It aims to provide them with better social security.
Encouraging Startups and Innovation
The budget proposed investments in startups and innovation. This includes support for new businesses and technological advancements. Encouraging entrepreneurship can lead to job creation. It can also drive economic growth. This move aims to position India as a hub for innovation.
Energy Sector Initiatives
The government announced a Nuclear Energy Mission. The goal is to achieve 100 GW of nuclear power by 2047. This initiative aims to diversify India’s energy sources. It also seeks to promote clean energy. Investing in nuclear power can help meet the country’s growing energy demands. It can also contribute to environmental sustainability.
Misses and Concerns
Despite these positive steps, there are some concerns. Analysts noted a reduction in capital spending and infrastructure investment. This could affect long-term economic growth. The budget lacked significant reforms in areas like agricultural markets and labor laws. Such reforms are considered essential for sustained growth.
Additionally, while tax cuts provide immediate relief, they may limit the government’s revenue. This could restrict further investments in critical sectors. Balancing tax relief with fiscal responsibility remains a challenge.
Public Reaction
The middle class welcomed the tax relief measures. Many are hopeful that increased disposable income will improve their standard of living. However, some are cautious. They are concerned about rising living costs and whether the tax savings will be sufficient. The unchanged goods and services tax and high petrol prices remain points of concern for consumers.
Industry Response
Business leaders appreciated the budget’s focus on boosting consumption. They believe that increased consumer spending will benefit various sectors. This includes consumer goods, automobiles, and real estate. However, there are concerns about the impact on tax revenues. Some industry experts emphasize the need for continued fiscal discipline. They also call for improvements in the ease of doing business.