BLOCKBUSTER BUDGET

BUDGET 2025 FOCUSSES ON PROVIDING RELIEF TO THE MIDDLE CLASS, WHILE KEEPING ITS EYE ON DEVELOPMENT. WILL IT SPUR DEMAND?

- ASHUTOSH KUMAR

DID THE Maha Kumbh Mela serve as an inspiration to the Budget team of the Union finance ministry? Just like paying obeisance to the confluence of the three holy rivers at Kumbh absolves humankind of its transgressions, Budget 2025-26 tries to offer reverence to three macroeconomic fundamentals—demand/growth push with tax cuts to the middle class, debt curtailment, and adhering to fiscal prudence—in an effort towards liberating the economy from the macro challenges.

But first things first. The vast multitude of India’s middle class—an economic powerhouse in itself—has finally got a shot in the arm in the form of a mega tax relief from Prime Minister Narendra Modi’s team. In her Budget speech, as finance minister Nirmala Sitharaman announced making annual income up to ₹12 lakh tax-free, the treasury benches of the Lok Sabha resonated with loud thumps, with Modi, too, joining the exhilaration of the ruling party MPs, with a visage reflecting confidence and vigour.

The move, according to the Central Board of Direct Taxes (CBDT), will make 15 million taxpayers in the ₹7-12 lakh income bracket free of any tax liability. “As a result of the proposal, revenue of ₹1 lakh crore in direct taxes will be foregone,” Sitharaman said in her Budget speech.

With that being the quantum of cash flowing into the economy after the tax break, consumption stocks gave a thumbs up to the move in the days following the Budget. The housing counter buzzed as well, while liquor stocks, too, added fizz to the tax cut party.

Banking on consumption