New Delhi: Prime Minister Narendra Modi on Friday hinted at the possibility of a generous Budget for the poor and middle classes. Evoking the Hindu goddess of wealth, Modi said he was praying that Lakshmi be especially generous towards the poor and the middle classes. To be sure, he also spoke about the need for prudence and achievement.
The Prime Minister's remarks a day before the third Modi government will present its second full Budget hinted towards the Budget with something out of the ordinary for the poor and the middle classes. Normally, the middle class is a constituency seen as being most invested in income tax rates, which comes under the direct purview of the Budget.
Income tax slabs in India have not been changed much since 2020 and there has been a growing clamour for doing so on account of two reasons. Inflation has meant that higher slabs now kick in at much lower real incomes than what was the case earlier. Also, the slowdown in the economy — India's GDP growth went down from 8.2% in 2023-24 to an expected 6.4% in 2024-25 — has necessitated the need for policy efforts to boost consumption.
It remains to be seen whether Modi's remarks lead to some big-bang announcement for the poor such as the restoration of LPG subsidies — the Bharatiya Janata Party and many opposition parties have been making this promise in almost all state elections — or an increase in government's existing welfare programmes which are support income (such as PM-KISAN) or asset generating (such as PMAY or Jal Jeewan Mission).
To be sure, the government will also need to be mindful of its fiscal consolidation imperative while delivering on these expectations, which is perhaps what Modi endorsed when talking about Lakshmi's relation to prudence. "I can say with confidence this Budget session will infuse new confidence, and energy in attaining our goal of Viksit Bharat [developed India]," said Modi outside the Parliament ahead of the Budget Session. He called innovation, inclusion, and investment the basis of the roadmap for economic activities.
The government is scheduled to table the Economic Survey, a report on the state of the country's economic health, on Friday, followed by the Union Budget for 2025-26 on Saturday. The Budget is expected to focus on measures that will help the economy regain growth momentum to become the world's third largest during Prime Minister Narendra Modi's third term. The Indian economy is currently the world's fifth largest.
