Takeaways from India’s budget that slashes income tax on the salaried middle class to spur growth

NEW DELHI (AP) — Indian Prime Minister Narendra Modi’s government presented an annual budget to Parliament on Saturday that focused on wooing the salaried middle class with tax cuts and spurring economic growth by boosting agriculture and manufacturing.

In her budget speech, Finance Minister Nirmala Sitharaman said the government is focused on boosting private investment to strengthen growth, increasing funding in the agriculture sector and enhancing the spending power of India’s middle class.

“The focus of the budget is taking everyone together on an inclusive path,” Sitharaman said, adding that the government is aiming for a fiscal deficit of 4.4% of India’s gross domestic product for the 2025-26 financial year.

The world’s fifth-largest economy is expected to post its slowest growth in four years due to a sluggish manufacturing sector, persistent food inflation, stagnant job growth and weak urban consumption. The country’s chief economic advisor, in a report released on Friday, forecast India’s economy would grow 6.3% to 6.8% in the next fiscal year.

Here are some takeaways from the budget:

Income tax cuts for the salaried middle class

Sitharaman said her government will initiate reforms in sectors like finance, power, urban development and mining, with “transformative reforms in taxation.” She raised the starting point for income tax to $14,800 from $8,074 and said the government will introduce a new income tax bill next week.

“The new structure will substantially reduce the taxes of the middle class and leave more money in their hands, boosting household consumption, savings and investment,” Sitharaman said.

Modi, who is now in his third term as the country’s prime minister, has been under pressure to allay discontent