Finance Minister Nirmala Sitharaman has placed the middle class at the centre of Budget 2025, offering a significant tax relief that will ease financial burdens on millions of taxpayers.
The highlight of this year’s budget is zero income tax for earnings up to ₹12 lakh. For salaried individuals, the exemption limit extends to ₹12.75 lakh, factoring in the ₹75,000 standard deduction. This announcement is expected to boost disposable income, encourage spending, and provide much-needed financial relief.
A shift in capital expenditure strategy
In previous budgets, Sitharaman prioritised large capital expenditures, focusing on infrastructure projects such as railways, highways, and urban development. However, this year’s budget takes a more measured approach. The government has allocated ₹11.2 lakh crore for capital expenditure in 2025-26, a modest increase from ₹11.1 lakh crore in the previous budget. This is a notable slowdown compared to the 11% rise in the last budget, signalling a shift towards balancing growth with fiscal prudence.
Maintaining fiscal discipline
Sitharaman has maintained her reputation for financial prudence by keeping the fiscal deficit at 4.4% for the next financial year. This is lower than the expected 4.5%, demonstrating the government’s commitment to economic stability while ensuring that resources are allocated effectively. The decision to moderate capital expenditure growth while expanding tax relief highlights the government’s strategy of supporting economic activity without compromising fiscal discipline.
Focus on Viksit Bharat roadmap
While focusing on tax relief and economic stability, the Viksit Bharat 2047 vision remains a key priority. Sitharaman has detailed plans to rejuvenate key sectors, particularly agriculture and small industries, recognising them as engines of economic growth. The budget also prioritises human capacity building, with a strong emphasis on skill development and workforce training. These initiatives are expected to enhance employability, address job creation concerns, and strengthen the long-term growth trajectory of the economy.
Challenges in the economic landscape
This budget comes at a time when India’s economy is facing multiple challenges. Consumer demand remains subdued, inflation is impacting household budgets, and GDP growth is showing signs of slowdown. The Economic Survey estimates a growth range of 6.3% to 6.8% in FY26, which is below the pace required to achieve the Viksit Bharat 2047 target. The report stresses the importance of land and labour reforms to accelerate economic expansion.
Balancing growth with sustainability
India continues to be one of the fastest-growing major economies, but there are clear signs of moderation. The government remains committed to achieving an 8% annual growth rate, which is considered crucial for long-term economic prosperity. The projected growth rate for FY25-26 is 6.4%, compared to 8.2% in FY23-24, indicating the need for policy measures that drive sustainable growth.
Budget 2025 strikes a careful balance between taxpayer relief, economic expansion, and fiscal discipline. The higher tax exemption limit will benefit millions of middle-class families, while a measured increase in capital spending ensures financial stability. The government’s continued focus on employment generation, skill development, and sectoral growth aligns with its long-term vision for a stronger, self-reliant India.