Middle-Class Relief

The Union Budget 2025-26 delivers a substantial T tax break to India's middle class, with the exemption threshold rising to Rs 12 lakh from Rs 7 lakh.

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This move, aimed at boosting consumption, comes at a time when urban demand remains weak and food inflation has squeezed household budgets. While it is a politically astute decision, the question remains: Can the economy sustain this fiscal generosity without derailing its broader financial discipline? The government has sought to strike a balance - reducing the tax burden while keeping the fiscal deficit in check. The fiscal deficit target for 2025-26 has been set at 4.4 per cent of GDP, down from 4.8 per cent this year. This is a notable step toward fiscal consolidation, but it is also a tight-rope walk. The estimated revenue loss from tax cuts stands at Rs 1 lakh crore, and while the government has increased capital expenditure to Rs 11.21 lakh crore, the room for further spending is limited. The rationale behind the tax cuts is clear: putting more money in people's hands to stimulate s