Budget 25-26: FM cuts middle class tax burden, aims at consumption-led growth

The Budget focuses on agricultural growth, with initiatives like a Makhana Board, National Mission for High Yielding Seeds, Cotton Productivity Mission, enhanced Kisan Credit Cards, urea plant expansion, and sustainable fisheries development to benefit farmers and boost production.

- Tushar K Mahanti

Finance Minister Nirmala Sitharaman made history by presenting her eighth consecutive Budget. This will take Sitharaman closer to the record ten budgets presented by former prime minister Morarji Desai over different time periods.

But not for record breaking numbers, this year’s Budget was different in its core premises also, with decelerating macroeconomic fundamentals and a sharp fall in GDP growth. India’s gross domestic product growth has slumped to a seven-quarter low of 5.4% in July to September 2024 quarter – much lower than even the most pessimistic projections. GDP grew by 8.1% in the second quarter a year ago. That GDP growth was slowing down was evident when it grew by just 6.7% in the first quarter against 8.2% in the same quarter of last year. Gross value added (GVA) growth slowed to 5.8% during July-September 2024-25 quarter from 6.8% in the first quarter. GVA grew by 7.7% in the second quarter of last fiscal. The poor performance in the first two quarters has caused the finance ministry to downsize the projected GDP growth to 6.4% for 2024-25 against 8.2% achieved last year. The stake is enormous as a slowing economy would put doubt about India’s long advocated desire to become a $ 5 trillion economy by 2030. The Indian economy had left behind the damage caused by the coronavirus pandemic and was back to a high growth regime.

Low consumption hurts growth