I-T RELIEF FUELS CONSUMPTION BUDGET

FM focuses on agri, MSMEs, investment, exports; targets FY26 fiscal deficit at 4.4% of GDP

- RAJESH KUMAR

The outlook for the Indian economy has changed significantly since Union Finance Minister Nirmala Sitharaman rose to present the first full Budget of the third Narendra Modi government in July 2024. The last available gross domestic product (GDP) growth number then was 8.2 per cent for 2023-24. Economic growth has since slipped and the Indian economy expanded by 6 per cent in the first half of the ongoing year and the official growth projection for the current financial year is 6.4 per cent. Against this backdrop, the Union Budget for 2025-26—Sitharaman's record eighth consecutive Budget—was presented on Saturday, which proposed several measures, including ease-of-doing-business initiatives, to boost economic prospects.

The Budget focused on four major engines—agriculture; micro, small and medium enterprises (MSME); investments; and exports. The biggest highlight of the Budget, however, was the relief extended to the middle-class taxpayers.

According to the proposal, no income tax will be levied on income up to ₹12 lakh. The slab rates have also been changed under the new regime. As Sitharaman noted in her speech, taxpayers in the new regime with an income of ₹12 lakh will get a benefit of ₹80,000. People in higher slabs will also benefit. The benefit for a taxpayer with an income of ₹25 lakh, for example, will be ₹1,10,000. The government, as a result, will forgo revenue worth ₹1 trillion. The impact of tax relief was visible in the stock market with increased investor interest in consumer-facing companies. Shares of Maruti Suzuki, for example, went up by about 5 per cent in trade on a day when the benchmark index, BSE Sensex, remained flat. Further, to increase the ease of paying taxes and simplify the tax law, the government will introduce a new income-tax Bill next week.