If low inflation is interpreted as a success, fiscal ambitions will be limited. And if it is perceived as indicative of weak demand, the policy response will have to be suitably adjusted.
For India to sustain strong economic growth, policymakers must go beyond optics and tax cuts. Only then will the “middle-class bonanza” translate into real economic momentum.
Defence spending saw an annual increase of 9 percent between 2013-14 & 2025-26, a PRS analysis, published on 4 Feb, showed. In FY 2025-26, Centre allocated Rs 6,81,210 cr to the MoD.
Cancer care in India is marked by barriers of access & disparities in availability of quality care. Daycare centres at district hospitals could save patients up to Rs 10,000 cr annually.
US-India Business Council praises focus on nuclear energy & critical minerals but stresses need for clear private-sector roadmaps & streamlined regulatory approvals for long-term success.
The discussion with ICRA's Aditi Nayar, Grant Thornton Bharat's Rishi Shah & EY India's Samir Kanabar will offer expert insights on fiscal policies, economic growth, and taxation.
The programme aims to create jobs, support small farmers, empower rural women, expand skill training & reduce migration by promoting entrepreneurship & modernising agriculture.
Sitharaman allocated Rs 500 crore in Budget for centre, which is part of wider effort to integrate AI into key sectors & strengthen technical & vocational education ecosystem.
Premier David Eby, the leader of the minerals- and gas-rich province of British Columbia, spoke with executives at Tata Steel and Reliance Industries on a trade mission to India.
Overall, President Droupadi Murmu has approved Gallantry awards to 70 armed forces personnel, including six posthumous, on the eve of 77th Republic Day.
No nation other than China can negotiate one-on-one with Trump on an equal footing. That’s why the middle powers who so far formed the core of multilateral bodies now feel orphaned.
I would submit that there are three major flaws in your analysis.
Your main argument that the budget has not helped a substantial chunk of the middle class is as follows:
_“These projections define a middle-class Indian as someone earning Rs 1.09 lakh to Rs 6.46 lakh per year (2020-21 prices) or Rs 5 lakh to Rs 30 lakh annually per household. However, AY 2023-24 income tax data paints a different picture.
Of the 75.46 million (7.54 crore) salaried individuals who filed tax returns, 58.92 million (5.89 crore) earned less than Rs 7 lakh and were already exempt from tax. With the new Rs 12 lakh exemption, the number of tax-exempt salaried individuals will rise to 67.76 million (6.77 crore) in 2024-25.
Thus, the Budget’s “middle-class bonanza” will directly benefit only 88.4 lakh salaried individuals—a fraction of the 43 crore Indians classified as middle class. Given this, the actual boost to private consumption remains uncertain.”_
*The Flaws in Your Argument:*
1. _*Misinterpretation of Income Tax Data Trends*_
You rely on income tax return statistics from Assessment Year (AY) 2023-24, which represents Financial Year (FY) 2022-23, when the income was earned. You assume that the same income distribution pattern will persist in future years. However, incomes generally rise over time due to economic growth, inflation adjustments, and career progression. Many individuals currently earning below ₹7 lakh will likely move into the ₹7-12 lakh bracket in the coming years. Thus, relying on AY 2023-24 figures to estimate the number of beneficiaries under the new tax slabs understates the actual impact of the policy, as it applies three years later.
2. _*Incorrect Timing of the New ₹12 Lakh Exemption*_
The Finance Minister’s announcement of the ₹12 lakh tax exemption was introduced in the Union Budget 2025-26 and applies to Financial Year 2025-26, corresponding to Assessment Year 2026-27. This means taxpayers will benefit from this exemption on income earned between April 1, 2025, and March 31, 2026, when filing tax returns in AY 2026-27. However, you imply that the new exemption applies in 2024-25, which is incorrect. If you meant FY 2024-25 or AY 2025-26, both assumptions are mistaken.
3. _*Misleading Comparison Between Beneficiaries and Middle-Class Population*_
You claim that the budget’s tax relief will “directly benefit only 88.4 lakh salaried individuals—a fraction of the 43 crore Indians classified as middle class.” However, this comparison is misleading:
o The 88.4 lakh taxpayers benefiting from the tax cut do not represent individuals but households, covering 4.42 crore Indians (assuming an average household size of 5). This is a significant portion of the middle class.
o Furthermore, the 88.4 lakh figure is based on FY 2022-23 tax return statistics, which do not reflect the income shifts that will occur by FY 2025-26. By then, many more individuals will qualify for the exemption, making the actual number of beneficiaries much larger.
*Conclusion:*
Your analysis underestimates the impact of the tax exemption by relying on outdated data, misapplying the effective timeline, and making misleading numerical comparisons. The new exemption will benefit a far greater number of middle-class households than you suggest, and its positive impact on consumption and financial well-being will be more substantial than your argument acknowledges.
What a stupid article. First up, this was a long pending demand from the biggest income tax payer bracket, the middle class. That it would have some impact on consumption is moot. Also, where did the govt say that this is the only thing they will/are doing to revive the animal spirits in Indian economy?
I would submit that there are three major flaws in your analysis.
Your main argument that the budget has not helped a substantial chunk of the middle class is as follows:
_“These projections define a middle-class Indian as someone earning Rs 1.09 lakh to Rs 6.46 lakh per year (2020-21 prices) or Rs 5 lakh to Rs 30 lakh annually per household. However, AY 2023-24 income tax data paints a different picture.
Of the 75.46 million (7.54 crore) salaried individuals who filed tax returns, 58.92 million (5.89 crore) earned less than Rs 7 lakh and were already exempt from tax. With the new Rs 12 lakh exemption, the number of tax-exempt salaried individuals will rise to 67.76 million (6.77 crore) in 2024-25.
Thus, the Budget’s “middle-class bonanza” will directly benefit only 88.4 lakh salaried individuals—a fraction of the 43 crore Indians classified as middle class. Given this, the actual boost to private consumption remains uncertain.”_
*The Flaws in Your Argument:*
1. _*Misinterpretation of Income Tax Data Trends*_
You rely on income tax return statistics from Assessment Year (AY) 2023-24, which represents Financial Year (FY) 2022-23, when the income was earned. You assume that the same income distribution pattern will persist in future years. However, incomes generally rise over time due to economic growth, inflation adjustments, and career progression. Many individuals currently earning below ₹7 lakh will likely move into the ₹7-12 lakh bracket in the coming years. Thus, relying on AY 2023-24 figures to estimate the number of beneficiaries under the new tax slabs understates the actual impact of the policy, as it applies three years later.
2. _*Incorrect Timing of the New ₹12 Lakh Exemption*_
The Finance Minister’s announcement of the ₹12 lakh tax exemption was introduced in the Union Budget 2025-26 and applies to Financial Year 2025-26, corresponding to Assessment Year 2026-27. This means taxpayers will benefit from this exemption on income earned between April 1, 2025, and March 31, 2026, when filing tax returns in AY 2026-27. However, you imply that the new exemption applies in 2024-25, which is incorrect. If you meant FY 2024-25 or AY 2025-26, both assumptions are mistaken.
3. _*Misleading Comparison Between Beneficiaries and Middle-Class Population*_
You claim that the budget’s tax relief will “directly benefit only 88.4 lakh salaried individuals—a fraction of the 43 crore Indians classified as middle class.” However, this comparison is misleading:
o The 88.4 lakh taxpayers benefiting from the tax cut do not represent individuals but households, covering 4.42 crore Indians (assuming an average household size of 5). This is a significant portion of the middle class.
o Furthermore, the 88.4 lakh figure is based on FY 2022-23 tax return statistics, which do not reflect the income shifts that will occur by FY 2025-26. By then, many more individuals will qualify for the exemption, making the actual number of beneficiaries much larger.
*Conclusion:*
Your analysis underestimates the impact of the tax exemption by relying on outdated data, misapplying the effective timeline, and making misleading numerical comparisons. The new exemption will benefit a far greater number of middle-class households than you suggest, and its positive impact on consumption and financial well-being will be more substantial than your argument acknowledges.
Article feels incomplete , even this expert doesnt seem to know in detail what is to be done to improve demand .
What a stupid article. First up, this was a long pending demand from the biggest income tax payer bracket, the middle class. That it would have some impact on consumption is moot. Also, where did the govt say that this is the only thing they will/are doing to revive the animal spirits in Indian economy?