Sat Feb 01 10:36:08 UTC 2025: ## India’s Budget 2025-26: Tax Cuts Aim to Boost Middle Class, Spur Economic Growth
**NEW DELHI** – India’s government unveiled a new budget Saturday aimed at revitalizing the economy and bolstering the middle class. Finance Minister Nirmala Sitharaman announced significant income tax cuts, raising the tax-free income threshold to ₹1.28 million ($14,800) annually and lowering rates for higher earners. This move, expected to cost the treasury ₹1 trillion ($11.6 billion) annually, is designed to stimulate domestic demand and counter slowing growth.
The budget, part of Prime Minister Narendra Modi’s third term agenda, addresses concerns about slowing economic growth and high inflation impacting disposable incomes. Measures to support farmers, the youth, women, and the poor are also included. A nationwide program focusing on high-yield crops like pulses and cotton will target at least 17 million farmers, while increased subsidized credit will aid agricultural productivity.
The government also plans to formally register and support India’s growing gig economy, estimated to employ over 23 million people by 2030, by providing identity cards and access to welfare programs. Further initiatives include a new startup fund and increased investment in innovation, alongside a significant Nuclear Energy Mission aiming for 100GW of nuclear power by 2047.
Economists like Sakshi Gupta of HDFC Bank believe the tax cuts will boost consumer demand and savings among the middle class, who have been impacted by inflation. To offset the revenue loss from tax cuts, the government will modestly increase capital spending to ₹11.21 trillion in 2025-26. The budget aims to address a projected slowdown in growth, attributed to weak urban demand and private investment, while hoping to stimulate a much-needed economic upswing.
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