A Deep Dive into Budget 2025

Introduction

The Union Budget 2025 is here, and it has sparked discussions across the country. Many are calling it Nirmala 2.0 Candle (in reference to the Nirmala Candle of 2019), this budget has made waves, particularly for the middle class. However, the question remains: is this just a short-term boost, or are we observing a fundamental change in how we perceive India's economic? Let's break it down.

A Budget for the Middle Class

The last time we saw a budget that truly changed market sentiment was in 2019 when corporate tax reductions led to a 5.3% jump in Nifty. This became known as the Nirmala Candle, showcasing market optimism. This time around, the budget has given India another reason to celebrate (not to the markets yet, but to the citizens) —the middle class finally gets a break.

With significant income tax reductions and a clear focus on economic expansion, the 2025 budget lays the foundation for India's long-term growth.

But before we analyze its impact, let’s understand the economic hurdles that led to these bold reforms.

Economic Challenges Before the Budget

1. Slowing Consumption – The middle class was burdened by taxes and inflation, leading to decreased spending power.

2. Election-Related Delays – Government spending was stalled due to central and state elections, impacting economic momentum.

3. Foreign Portfolio Investor (FPI) Outflows – Global investors were pulling out due to stock overvaluation or economic uncertainties.

4. Geopolitical & Economic Uncertainty – Global slowdowns and rising tensions negatively affected exports and inflation.

   
   

The Economic Survey which was released just before the budget higanhlighted five key themes that needed urgent attention:

• De-regulation & Economic Freedom

• Focus on Domestic Growth Levers

• Importance of Skilling & Employment

• Leveraging the Services Sector

• Addressing Climate Change & Sustainability

  
  

The budget had to address these concerns while ensuring fiscal responsibility. (Economic health)

Key Takeaways from Budget 2025

This year’s budget was built on five key pillars:

1. Economic Growth & Investments

2. Inclusive Development

3. Boosting Private Sector Investments

4. Strengthening Household Sentiments

5. Enhancing Middle-Class Spending Power

   
   

To achieve these, the government focused on four domestic growth levers:

• Agriculture – Improving productivity and rural prosperity.

• MSMEs – Supporting small businesses and strengthening Make in India initiatives.

• Infrastructure Investments – Accelerating growth through capital projects.

• Exports & Trade – Strengthening India’s position in global markets.

  
  

The Game-Changer: Middle-Class Tax Relief

The most talked-about and felt about, aspect of this budget was the tax relief for the working class. The introduction of zero income tax up to ₹12.75 lakh is not just a minor transformation— but in my opinion is a bold shift.

Consider these numbers:

• Out of 7.5 crore tax filings in FY 2023-24, 6.5 crore individuals earned below ₹12 lakh.

• With the new slabs, 87% of taxpayers will have zero tax liability.

• This move results in a ₹1 lakh crore revenue loss for the government, but the benefits far outweigh the costs.

  
  

Why This Tax Cut Matters

A tax cut at this massive scale creates a positive economic loop:

• More disposable income → reduction in debt stress → higher discretionary spending → stronger demand → economic expansion.

• India’s economy is 60% consumption-driven (compared to 67% in the USA). Strengthening the middle-class will fuel our long-term stability.

  
  

However, this also marks a shift from a savings-driven model (PPF, NPS incentives) to a consumption-driven economy. While our high savings rate helped us navigate past crises like COVID, today’s reality demanded for a higher domestic spending to accelerate growth.

Is India Aligning with High-Growth Global Economies?

Developed economies thrive on investment and spending rather than excessive saving. This budget nudges India toward a more dynamic financial ecosystem. However, policy changes alone won’t be enough.

• State Governments Must Act – The success of economic de-regulation depends on state-level execution. They must step up and provide the right opportunities for Investments.

• Beyond Services, We Need Manufacturing Strength – A service-driven economy alone won’t sustain long-term growth; self-reliance in energy and manufacturing is critical.

  
  

Final Thoughts: Execution is Key

The Central Government has done its part, balancing fiscal prudence with economic stimulus. Now, State Governments and Industries must step up to ensure sustained growth.

This is a transformational moment; India has a unique opportunity to define its economic trajectory for the next decade. We have capabilities, the talent, and the vision—what we now need is flawless execution.

Jai Hind | Jai Bharat!

Conclusion

The 2025 Budget is a strong step toward a more resilient economy. The key question remains—will this be a one-time push or a long-term structural change? Only time will tell.

What are your thoughts on the budget? Let me know in the comments!

Thanks for reading and stay tuned for more insights.