Indian Budget Expectations

The anticipation surrounding India’s budget is palpable as Prime Minister Narendra Modi embarks on his third term.

This budget, the first major policy announcement of his new term, is expected to define the economic trajectory of India for the next five years.

With Finance Minister Nirmala Sitharaman at the helm, several key areas are being speculated upon, from tax reforms to rural employment schemes.

Lowering Personal Tax Rates

One of the significant expectations from the upcoming budget is the potential reduction in personal tax rates for specific categories of individuals.

Sources within the government have indicated that Finance Minister Nirmala Sitharaman is considering this move to provide relief to taxpayers while ensuring the fiscal deficit target for the year remains intact.

This measure aims to increase disposable income in the hands of the middle class, thereby boosting consumption and economic growth.

Fiscal Deficit Management

Despite the focus on tax cuts, maintaining the fiscal deficit within acceptable limits remains a priority.

The government is likely to balance tax relief with prudent fiscal management to ensure economic stability.

This approach is crucial for sustaining investor confidence and promoting long-term growth.

Economic Growth vs. Consumption

India’s economy showcased remarkable growth, registering an impressive 8.2% in the fiscal year 2023-24.

However, this growth has not been mirrored in consumption patterns, which have only increased at half that pace.

The Confederation of Indian Industry (CII) has emphasized the need for measures to stimulate consumption, especially in rural areas.

Enhancing Rural Employment and Income

The government is expected to focus on enhancing rural employment and income to address the disparity between economic growth and consumption.

This includes offering higher wages in the rural job guarantee scheme and increasing cash handouts to farmers.

These measures aim to uplift rural households and boost their purchasing power, thereby driving overall consumption.

Managing Consumer Prices

The Modi administration has taken steps to control consumer prices by regulating the export of essential commodities.

Since 2022, restrictions on exporting staples and reducing tariffs on pulses and vegetable oils have been implemented to facilitate cheaper imports. However, these moves have had a mixed impact.

Impact on Rural Wages

While controlling consumer prices is crucial, these measures have adversely affected rural wages, which have stagnated over Modi’s decade-long tenure.

With over 45% of India’s population relying on agriculture for their livelihood, addressing the challenges faced by the rural workforce is essential for balanced economic growth.

Filling Job Vacancies and Restoring Pension Benefits

Another significant area of focus in the upcoming budget is addressing job vacancies and pension benefits.

According to a joint statement by ten labor unions involved in the pre-budget consultations with Sitharaman, the government should urgently fill job vacancies and restore pension benefits from a previously scrapped scheme.

Enhancing Employment Opportunities

Filling job vacancies across various government sectors is expected to provide employment opportunities and improve public service delivery.

Restoring pension benefits will offer financial security to retirees, contributing to social stability and economic confidence among senior citizens.

Indirect Tax Reforms

Reforming the Goods and Services Tax (GST) regime is another critical expectation from the budget.

The Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested simplifying the GST structure by reducing the number of tax slabs and including sectors currently outside its ambit.

Simplifying GST Structure

A simplified GST structure with fewer tax slabs can reduce compliance burdens and improve the ease of doing business.

Including more sectors under the GST umbrella can broaden the tax base, increase revenue, and create a more uniform tax regime.


As Prime Minister Narendra Modi’s third term begins, the upcoming budget is poised to set the stage for India’s economic policies over the next five years.

Key expectations include lowering personal tax rates, boosting rural employment and income, managing consumer prices, filling job vacancies, restoring pension benefits, and reforming the GST regime.

These measures aim to balance economic growth with social equity, fostering a more inclusive and resilient economy.

The budget’s success will depend on the government’s ability to implement these measures effectively while maintaining fiscal discipline.

As the nation awaits the detailed announcements, the hope is that the budget will address the diverse needs of India’s population and pave the way for sustained and inclusive growth.

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