Sun Feb 02 16:50:00 IST 2025: ## India Unveils Budget Focused on Boosting Growth and Middle-Class Spending

**New Delhi** – India’s government presented its first full-year budget since losing its parliamentary majority, aiming to revitalize a slowing economy and address concerns about rising prices and flagging consumption. Finance Minister Nirmala Sitharaman announced a series of measures targeting the middle class and infrastructure development.

A key highlight is a significant increase in the income tax exemption limit to ₹1.2 million (approximately $13,841), benefiting millions of taxpayers. Additional tweaks to tax slabs are also intended to inject more disposable income into the middle class, although the impact may be limited given the relatively small percentage of Indians who currently pay direct taxes (1.6%).

The budget also prioritizes infrastructure, increasing capital expenditure on roads, ports, and railways to ₹11.2 trillion ($129.18 billion). Further bolstering infrastructure spending, interest-free loans will be offered to states. A new Nuclear Energy Mission, with a budget of ₹200 billion ($2.3 billion), aims to generate 100GW of nuclear energy by 2047.

To attract foreign investment and ease the business climate, the government is increasing foreign direct investment limits in the insurance sector to 100% and establishing a high-level committee to streamline regulations in non-financial sectors. Small and micro industries will receive fiscal support of ₹1.5 trillion ($17.31 billion) over five years. Production-linked subsidies and import duty cuts for sectors like textiles and electronics are also intended to stimulate private investment.

Despite increased spending, the government remains committed to fiscal prudence, aiming to reduce the deficit to 4.4% by 2026. The budget projects GDP growth between 6.3% and 6.8% for the fiscal year ending March 2026. The Reserve Bank of India is expected to consider rate cuts in the coming weeks, following recent injections of cash into the banking system. Market reaction to the budget has been positive, with shares in automobile, consumer goods, and online grocery companies showing gains.

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