On February 1, 2025, Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2025-26, unveiling measures poised to affect the daily lives of millions of Indians. The budget emphasizes tax relief for the middle class, agricultural advancements, and support for gig workers, all aimed at fostering inclusive economic growth.

Income Tax Reforms: Relief for the Middle Class

A cornerstone of this year's budget is the overhaul of personal income tax slabs under the new tax regime. The government has raised the tax exemption threshold to ₹12.8 lakh annually, up from ₹7 lakh. This change ensures that individuals earning up to ₹12.8 lakh will not be liable for income tax. Additionally, reduced tax rates have been introduced for incomes above this threshold. These adjustments aim to increase disposable income, thereby boosting consumption and savings among the middle class.

The revised tax structure is anticipated to result in an annual revenue loss of approximately ₹1 lakh crore for the government. However, officials are optimistic that the increased consumer spending will offset this shortfall by stimulating economic activity.

Agricultural Initiatives: Support for Farmers

The budget introduces a national mission to enhance crop productivity, targeting 1.7 crore farmers. This initiative includes increased subsidized credit limits and programs aimed at boosting high-yield crop production. These measures are designed to strengthen the agricultural sector, ensuring food security and improving the livelihoods of farmers.

Formalization of Gig Economy Workers

Recognizing the growing gig economy, the government plans to provide identity cards and register gig workers on the e-Shram portal. This move will offer approximately 1 crore gig workers access to healthcare under the Pradhan Mantri Jan Arogya Yojana, ensuring better social security for this segment of the workforce.

Economic Growth and Fiscal Outlook

The budget projects a reduction in the fiscal deficit to 4.4% of GDP for the upcoming fiscal year. The government plans to borrow ₹14.82 lakh crore to cover the deficit. Despite global economic uncertainties, these measures aim to revitalize growth by enhancing domestic demand and supporting various sectors.

Finance Minister Nirmala Sitharaman's 2025 budget presents a comprehensive approach to addressing the needs of the common Indian. Through significant tax reforms, agricultural support, and initiatives for gig workers, the budget seeks to enhance disposable incomes, stimulate consumption, and promote inclusive economic growth. As these measures are implemented, their effectiveness in achieving the desired economic outcomes will be closely monitored.

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