BUDGET SQUEEZE

Poised to woo the middle class and tame fiscal deficit, Union Budget 2025-26 cuts corners on key welfare schemes, offers little for climate adaptation and decarbonisation

- RAJIT SENGUPTA, SHAGUN, AKSHIT SANGOMLA, RAJU SAJWAN, SUSHMITA SENGUPTA, NIVIT KUMAR YADAV AND PARTH KUMAR NEW DELHI

THE CHALLENGE before the Union Budget 2025-26 was clear: India needed to boost employment and increase disposable incomes to stimulate demand in a slowing economy. The “Economic Survey 2024-25”, released on January 31, 2025, a day before the Union Budget, had already flagged a worrying trend—real incomes for salaried workers, wage earners and the self-employed had declined over the past five years. In response, Union finance minister Nirmala Sitharaman opted to provide tax exemptions for the salaried middle class earning up to ₹12 lakh annually and restructured tax slabs to ease the burden on others employed in the formal sector. In doing so, the budget ignored 94 per cent of India's workforce, which remains in the informal sector. This segment, excluded from tax relief, continues to experience stagnant or declining wages. Simultaneously, the government has prioritised to reduce the fiscal deficit, which had ballooned during the pandemic years. But this comes at a cost—little to no increase in key welfare spending.