NEW DELHI

The Indian government headed by Prime Minister Narendra Modi Saturday proposed a budget of $584 billion for the next fiscal year 2025-2026, also announcing a cut in personal income tax rates to support the Indian middle-class. 

Presenting her record eighth budget to the parliament, Finance Minister Nirmala Sitharaman said the budget promises to continue the government's efforts including enhancing the spending power of India’s rising middle class and to accelerate growth. 

The budget proposes development measures focusing on the poor, youth, farmers and women, said the minister, adding the Indian economy was the “fastest-growing among all major global economies.” 

One of the major announcements that caught everyone's attention was the cut in personal income tax rates for the middle-class population, with the finance chief saying people earning up to 1.28 million rupees ($13,800) per year would not have to pay any taxes. 

According to Sitharaman, in the year 2025-26, the total expenditure is estimated at 50.65 lakh crore rupees ($584 billion) and the fiscal deficit is estimated to be 4.4% of the GDP. 

Jaijit Bhattacharya, president of the Centre for Digital Economy Policy Research, told Anadolu the reduction of direct tax rates and making it nil for income up to 1.28 million rupees was a “big announcement.” 

"This will lead to significantly increased consumption, and therefore increase in indirect taxes,” he said, adding: “The budget has a series of critical initiatives impacting investments into the economy, both foreign and domestic.” 

Overall “this is a budget in continuity, making life easier for people and businesses, supporting the vulnerable sections of the society and helping in building investor confidence,” he added. 

Indian Home Minister Amit Shah took to X and said the country's middle class is always in Prime Minister Narendra Modi’s heart. 

“The proposed tax exemption will go a long way in enhancing the financial well-being of the middle class. Congratulations to all the beneficiaries on this occasion,” he said. 

The middle class represents 31% of India, the world’s biggest population. 

The main opposition Congress party, however, wasn’t impressed by Modi’s budget. 

“This budget has been the weakest budget of the last 10 years,” senior Congress leader Gaurav Gogoi said, adding the budget was the “same old budget which we have been hearing for the last 10 years.”

Ahead of Saturday’s budget, a survey had pointed out that more Indians were becoming less hopeful about their quality of life “as stagnant wages and higher living costs cloud prospects.”