A High-Class Budget for Middle-Class India

In a giant leap of faith, the finance minister has put over ₹1 lakh crore in the pockets of income tax paying Indians, betting on better compliance and more scrutiny for higher future revenues, and higher consumption and savings for growth

- Monika Halan

Listening to the reactions of people to the FY26 Union Budget, it seemed as if Diwali had come early this year. The reason for the smiles and the palpable relief was the huge leap of faith the finance minister (FM) took to leave over ₹1 lakh crore in the pockets of the income-tax-paying Indian citizen by making incomes up to ₹12.75 lakh tax-free and taking the base of the highest tax slab of 30% to ₹24 lakh, up from the current ₹15 lakh.

Budget 2025 was riding a giant wave of middle-class angst that I captured in two columns earlier in the year. You can read them at tinyurl.com/bddzk62n and tinyurl.com/mtpxyes2. A dedicated voter base of Prime Minister (PM) Narendra Modi, middle-class India felt cheated with no major tax breaks over the past few years and an increasing sense of unease at the generous cash transfers to the poor. Combined with the continued experience of poor government services and endemic corruption, the mood on the ground was clearly ugly.

The government sensed the mood. Said the finance minister in her speech: "Our Government is committed to keeping an ear to the ground and a finger on the pulse, and responding while balancing our nation-building efforts". And respond she did: "The middle class provides strength for India's growth. This government under the leadership of PM Modi has always believed in the admirable energy and ability of the middle class in nation-building".