Hopes running high of tax cut as Nirmala Sitharaman presents record 8th budget

Expectations high for fiscal year budget with focus on boosting consumption, tax relief, infrastructure, and economic growth measures.

A cut or tweak in income tax rates/slabs to ease the burden of the middle class struggling with high prices and stagnant wage growth is widely expected in Finance Minister Nirmala Sitharaman's record-setting eighth consecutive Budget.

The Budget for the fiscal year starting April 1 is expected to contain measures to shore up weakening economic growth while being fiscally prudent. It is likely to focus on steps to boost consumption while sticking to the roadmap of narrowing the fiscal deficit.

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Expectations of relief on income tax, particularly for lower middle class, is high after Prime Minister Narendra Modi invoked goddess of wealth for elevating poor and middle class.

"I pray to Goddess Lakshmi that the poor and the middle-class sections in the country are blessed by her," Mr. Modi said on Friday (January 31, 2025) while speaking to reporters outside Parliament before the start of the Budget session.

His government's first full-year budget in the third term will be presented against the backdrop of geopolitical uncertainties and an economic growth rate slowing to a four-year low, with new U.S. President Donald Trump threatening tariffs against countries like India.

Analysts and experts expect some tax rationalisation, export push, better implementation of capital spending plans and clear roadmap on structural reforms. They also see some expansion in the production-linked incentives, and increased allocation to some welfare schemes while continuing focus on infrastructure creation/upgrade.