The 2025 budget has provided significant relief to the middle class but remained silent on several economic sectors and lacked concrete steps to attract fresh investments.
Major Relief for the Middle Class

The tax exemption limit has been increased from ₹7 lakh to ₹12 lakh, marking a huge benefit for middle-class taxpayers opting for the new tax regime without deductions and exemptions. Those earning above ₹12 lakh and preferring deductions have also gained due to the realignment of tax slabs, leading to a significant reduction in tax burden.
This move particularly benefits senior citizens, who primarily rely on pension and interest income and do not usually invest in tax-saving schemes. For them, the new ₹12 lakh limit is a financial blessing.
Middle Class No Longer the “Beast of Burden”
For years, the middle class has felt overburdened by taxation, while the wealthy easily absorbed tax hits. Despite previous measures like the abolition of wealth tax in 2015 and estate duty suspension since 1985, the tax burden remained uneven.
While the poor have received various subsidies and welfare benefits, the middle class often lacked representation. Corporates have industry chambers lobbying for them, and politicians cater to the poor for electoral gains. But now, the middle class has finally received substantial relief.
Economic Impact: Increased Spending and Investments
With more disposable income, the middle class is expected to spend more, benefiting industries like:
- Automobiles – Higher demand for cars and two-wheelers
- Consumer Electronics – Increased sales of refrigerators, air conditioners, washing machines, and dishwashers
- Jewelry & Gold – Higher investments in gold coins, biscuits, and ornaments, as gold remains a trusted hedge against inflation
Budget’s Shortcomings: No Clear Investment Push
While higher consumer spending may boost manufacturing, the budget lacks specific measures to attract fresh investments. Many corporations, rather than investing in new manufacturing facilities, park their surplus funds in stocks and forex markets, reflecting low confidence in the investment climate.
India needs substantial manufacturing growth for exports to match China, South Korea, and Japan. However, even in sectors like cell phones, India mostly operates as an assembly hub for foreign brands like iPhone, rather than an original manufacturing base.
Political Angle: Bihar and Delhi Considerations
The budget includes special provisions for Bihar, likely aimed at next year’s state elections and to appease BJP’s ally, JDU. In Delhi, home to a large number of government employees and retirees, the tax benefits could influence voter sentiment.
The Resource Challenge: How Will the Government Fund This?
With significant tax cuts and subsidies, the big question remains: how will the government generate additional revenue?
- Strategic sales of PSUs like ITDC (India Tourism Development Corporation) could be explored.
- Better taxation of the ultra-rich – Countries like Colombia tax individuals based on visible wealth indicators like luxury cars and mansions. India could adopt a similar approach.
While the middle class no longer bears the tax burden, the government must ensure fair taxation of high-net-worth individuals (HNWIs) to fund welfare schemes and maintain revenue balance. However, the budget stops short of implementing strong direct tax measures on the super-rich, missing an opportunity for greater tax equity.

Author: This news is edited by: Abhishek Verma, (Editor, CANON TIMES)
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