Budget 2025: Middle-class hopes for tax relief as economy faces global headwinds

Finance Minister Nirmala Sitharaman is poised to make history on Saturday as she presents her eighth consecutive Union Budget, a record-breaking feat. The salaried class is eagerly anticipating potential relief in income tax rates and slabs to alleviate the financial strain caused by inflation. On Friday, Sitharaman gave the final touches to the Budget document in New Delhi.

Key highlights ahead of the budget presentation

India’s economic outlook for 2025-26

The Economic Survey presented by Sitharaman in Parliament forecasts India's GDP growth between 6.3% and 6.8% for FY 2025-26. Despite India’s globally leading growth rate, concerns remain about sustaining an 8% annual growth rate to achieve the ambitious Viksit Bharat target by 2047.

Expectations of the middle class

Prime Minister Narendra Modi has raised hopes among the middle class by invoking Goddess Lakshmi, emphasizing the need to uplift the poor and middle-income groups. "I pray to Goddess Lakshmi that the poor and the middle-class sections in the country are blessed by her," Modi stated on Friday.

Global and domestic challenges

The upcoming budget comes amid global geopolitical uncertainties, with the US under newly re-elected President Donald Trump threatening trade tariffs against countries like India. Additionally, India's economic growth rate has slowed to a four-year low, prompting calls for a strategic fiscal push.

Calls for tax reforms and economic stimulus

Analysts and experts anticipate tax rationalization, increased exports, better capital spending implementation, and a structured approach to reforms. DK Srivastava, Chief Policy Advisor at EY India, noted, "As we navigate a challenging economic landscape, the upcoming budget must balance fiscal prudence with growth-oriented measures. Increasing capital expenditure and putting more disposable income in the hands of consumers, particularly urban consumers, will be pivotal to uplifting growth in domestic demand."

Karnataka demands fair resource allocation

Karnataka Chief Minister Siddaramaiah has called for equitable resource distribution, criticizing the central government’s "discriminatory approach." He stated, "Instead of treating states merely as revenue-generating units, the Centre must respond to their financial challenges with fairness and empathy. Regarding resource allocation, including tax devolution, the Centre must follow scientific and equitable standards."

NRIs seek tax relief on capital gains

Congress General Secretary K C Venugopal urged the finance minister to address concerns of Non-Resident Indians (NRIs) regarding recent tax changes on real estate capital gains. He appealed for equal tax benefits for NRIs, aligning them with domestic citizens in the upcoming budget.

Opposition criticizes the budget process

Leader of the Opposition in Lok Sabha Rahul Gandhi highlighted the lack of representation of marginalized communities in the budget-making process. "Tomorrow you will see that the finance minister will go with a briefcase. A photo will come. You will not see a single Dalit, a tribal, a backward class person, or a minority in the photo. 90 officers will prepare the budget tomorrow. Out of 90, 3 officers are from OBC. Your population is 50 percent and tomorrow if 100 rupees are distributed in the budget, then your officers will decide on only 5 rupees," Gandhi stated.

Congress prepares to challenge government policies

The Congress party convened a meeting at Sonia Gandhi’s 10 Janpath residence on Friday, where they decided to raise pressing issues such as inflation, unemployment, the Maha Kumbh stampede, and alleged insults to B R Ambedkar.

Himachal’s expectations from the budget

Himachal Pradesh Chief Minister Sukhvinder Singh Sukhu has high hopes for the budget, particularly regarding infrastructure development. He emphasized the need for a world-class international airport, urging the Union government to bear the full cost.