How did Sitharaman pull off making two worlds happy at same time
Union Budget for 2025-26, Finance Minister Nirmala Sitharaman appears to have pulled off the rare feat of offering substantial relief to taxpayers while maintaining fiscal discipline. This has been achieved by exercising restraint in capital expenditure and banking on robust growth in personal incomes, particularly at the higher end of the income spectrum.
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Muted Capital Expenditure Growth
The government's capital expenditure for 2025-26 is budgeted at ₹11.2 lakh crore, reflecting a mere 0.9% increase in nominal terms over the previous year’s allocation. When adjusted for inflation, this translates into a decline in real investment for asset creation. Even when factoring in grants for capital assets, the “effective capital expenditure” is projected to rise by just 3%, from slightly over ₹15 lakh crore to just under ₹15.5 lakh crore.
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Optimistic Revenue Assumptions
On the revenue front, the government expects personal income tax collections to grow by an impressive 14.4%, rising from ₹12.6 lakh crore (as per revised estimates for 2024-25) to ₹14.4 lakh crore in 2025-26. This estimate comes despite Sitharaman granting tax cuts and rebates worth ₹1 lakh crore—an optimistic projection
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