Union Finance Minister Nirmala Sitharaman will present her eighth consecutive budget on Saturday, in which a cut or change in income tax rates / slabs is expected to provide relief to the middle class struggling with inflation and stagnant wage growth. The Finance Minister may also take measures to support the weakening economic growth in the budget for the financial year 2025-26, while sticking to the draft of reducing the fiscal deficit.

Expectations of income tax relief have increased after Prime Minister Narendra Modi invoked the Goddess of Wealth for the upliftment of the poor and the middle class. Especially the lower middle class may get some relief in the budget.

Slight improvement in investment activity

Deloitte India economist Rumki Majumdar said that the first quarter figures point to a significant increase in private consumption and a slight improvement in investment activity. He said that with the completion of elections in India, it is estimated that government spending will increase, which will support growth in the coming quarters. He said that the government will continue to prioritize efforts towards skill development and employment generation.

Can give priority to macro stability

Ernest & Young (EY) expects capital expenditure to increase by at least 20 percent to boost economic activity. DK Srivastava, Chief Policy Advisor at EY India, said that amid the challenging economic scenario, the upcoming budget should balance fiscal restraint with growth measures. DBS Senior Economist Radhika Rao said that the central government can give priority to macro stability by sticking to the path of fiscal consolidation and staying away from populist measures.

Sitharaman's record eighth budget

Finance Minister Nirmala Sitharaman on Friday finalized the first full budget of the third term of the Narendra Modi government. It is expected that a balance will be established between the aspirations of the middle class for tax cuts and the needs of the economy to boost growth. Sitharaman will present her record eighth consecutive budget on February 1. The budget is expected to be fiscally prudent as well as include measures to support weakening economic growth and reduce the burden on the middle class struggling with high prices and stagnant wage growth.

Economic Review data

The Finance Ministry said on the social media platform 'X', Union Finance and Corporate Affairs Minister Nirmala Sitharaman today interacted with secretaries and senior officials involved in the budget making process while finalizing the Union Budget 2025-26 in her office in North Block in New Delhi. Minister of State for Finance Pankaj Chaudhary also participated in the meeting. This budget will come at a time when the gross domestic product (GDP) growth rate is expected to fall to a four-year low of 6.4 percent in the current financial year. The Economic Review 2024-25 presented by the Finance Minister in both the Houses has estimated that India's GDP growth rate will be 6.3-6.8 percent in the financial year 2025-26, which is much lower than the growth rate required to become a developed nation.

The Economic Survey called for deregulation and reforms in areas such as land and labour to boost growth. It indicated that India's global growth was slowing and more work was needed to achieve the 8 per cent growth rate needed to achieve the goal of a developed India by 2047.