Sitharaman has done her part. Now, it's over to Modi
Nirmala Sitharaman's Budget 2025 has been widely praised for its tax bonanza for the middle class as well as its fiscal prudence. The tax relief to the middle class is important for its expected immediate impact on the economy.
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For the past three quarters, urban demand for groceries and lifestyle products to smartphones and TVs has been challenging due to inflationary pressures, low wage growth and higher housing rentals. FMCG sales rose 3% YoY in the December quarter, with urban markets growing only 0.5%, while rural sales rose 5%. Sales growth in organised retail segments such as apparel, footwear, beauty and quick service restaurants was in mid-single digits in 2024, compared to 15% in 2022, the year before the slowdown began.
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The budget is likely to tackle the consumer demand challenge. It is a Rs 1 lakh crore jackpot for those under the new tax regime — disposable income that the government expects will fuel a consumption boom to speed up the slowing economy. The budget proposes zero levy for taxable income up to ₹12 lakh, while raising the basic exemption limit from Rs 3 lakh to Rs 4 lakh a year. In the new regime, those with a taxable salary of up to Rs 7 lakh a year do not pay any tax through the
