Modi Teases Special Budget Provisions for Poor and Middle Class

PM Narendra Modi prayed that Goddess Lakshmi bless the poor and middle classes with generosity and wealth.

Prime Minister Narendra Modi, on Friday, suggested the possibility of a generous Budget for the poor and middle classes. During his address, he invoked the Hindu goddess of wealth, Lakshmi, expressing his hopes that she would be especially kind and generous towards these sections of society. He emphasized the importance of balancing this generosity with prudence and careful achievement in the government’s financial approach. His remarks hint at a future focus on uplifting the economically weaker sections while ensuring fiscal responsibility.

The Prime Minister’s remarks, made just a day before the presentation of the third Modi government’s second full Budget, hinted at something out of the ordinary for the poor and middle classes. Typically, the middle class is most concerned with income tax rates, which are directly addressed in the Budget. Modi’s comments, however, suggested a potential focus on addressing the needs of these sections in a more significant way, possibly signaling changes that could directly benefit them. This has sparked anticipation about how the upcoming Budget might prioritize these groups, offering more than the usual fiscal measures.

Income Tax Slabs in India: A Growing Need for Change

Since 2020, the income tax slabs in India have remained largely unchanged, sparking increasing debate among experts and citizens alike. This stagnation in tax policies has raised concerns, especially as two major factors — inflation and economic slowdown — have significantly altered the real value of income.

Impact of Inflation on Real Income:
One of the key concerns regarding the unchanged income tax slabs is inflation. As the cost of living continues to rise, individuals find themselves entering higher tax brackets sooner, effectively paying more taxes on their income despite the fact that their real purchasing power may not have improved. For instance, a person who was in the lower-middle-income group a few years ago may now find themselves in a higher tax bracket, solely because inflation has eroded the value of money. This trend creates an unfair burden on taxpayers who are struggling to cope with rising expenses, thus reducing their disposable income.

The Slowdown in Economic Growth:
India’s economy is expected to see a slowdown, with the GDP growth forecast dropping from 8.2% in 2023-24 to an estimated 6.4% in 2024-25. This slowdown has profound implications for tax policy. Reduced economic growth often results in lower levels of income and consumption, which can further hamper the economy. As consumer spending diminishes, the government faces a need to adopt measures to stimulate demand, such as reducing the tax burden on middle- and lower-income groups. Lower tax rates or higher exemptions for these groups can increase disposable income, potentially boosting consumption and contributing to economic recovery.

Policy Response and the Case for Tax Reforms:
Given these challenges, there is a growing call for a revision of the income tax slabs. Experts argue that adjustments should be made to account for inflation, thereby ensuring that taxpayers do not unintentionally fall into higher tax brackets simply due to nominal wage increases. By updating the tax slabs to reflect the current economic reality, the government can help alleviate the financial strain on the middle class, increase disposable income, and encourage consumption — an essential component for stimulating growth during a period of economic uncertainty.

Conclusion:
The combination of inflationary pressures and a slowing economy highlights the urgent need for revisiting India’s income tax structure. A more responsive tax policy, with updated slabs and exemptions, can help protect taxpayers’ purchasing power and contribute to broader economic recovery efforts. As India looks toward fostering growth and boosting consumption, tax reforms will play a pivotal role in shaping the economic landscape for the years to come.

Will Modi’s Remarks Lead to Big-Bang Announcements for the Poor?

In recent months, there has been growing speculation regarding Prime Minister Narendra Modi’s remarks on addressing the economic challenges faced by the poor. The question now arises: will these comments translate into significant policy changes aimed at alleviating poverty, such as the restoration of LPG subsidies, or will the government opt for enhancing its existing welfare programs?

LPG Subsidies: A Key Political Promise
The restoration of LPG subsidies has been a recurring promise made by the Bharatiya Janata Party (BJP) and several opposition parties during state elections. Many argue that the increasing cost of LPG has placed a heavy burden on households, particularly among the poor. With energy costs climbing, the government could be urged to reconsider subsidies to reduce the financial strain on these households. If Modi’s remarks lead to the reinstatement of LPG subsidies, it could serve as a significant relief for millions of low-income families, who would benefit from lower cooking gas prices.

Enhancement of Existing Welfare Programs
Another likely avenue for policy change is the expansion or enhancement of the government’s existing welfare programs. Programs like PM-KISAN (Pradhan Mantri Kisan Samman Nidhi), which provides direct income support to farmers, could be extended or increased to support agricultural workers and rural families more effectively. Additionally, PMAY (Pradhan Mantri Awas Yojana), aimed at providing affordable housing, could see an increase in allocations or the introduction of more accessible options for low-income families.

Another welfare initiative that could benefit from expansion is the Jal Jeevan Mission, which aims to provide tap water to every rural household. A larger budget or more accelerated rollout of this initiative could vastly improve living standards in rural areas, providing better access to clean water.

The Need for Focus on Asset Generation
While income support programs like PM-KISAN directly address immediate financial relief, there is also a growing need for asset-generating schemes that focus on long-term empowerment. Programs like PMAY and Jal Jeevan Mission help in creating sustainable infrastructure and improving livelihoods. These initiatives not only provide immediate relief but also pave the way for economic mobility by enhancing access to resources such as housing and clean water, which are critical for the poor to break free from the cycle of poverty.

Conclusion:
As India faces economic headwinds and a growing need to support the poor, the question remains whether Prime Minister Modi’s remarks will lead to transformative changes. Whether it’s the restoration of LPG subsidies or an expansion of welfare programs like PM-KISAN, PMAY, and Jal Jeevan Mission, any significant shift in policy could provide much-needed support for low-income families. The government’s response will be pivotal in determining whether these remarks materialize into tangible measures that can provide relief and foster long-term economic growth for the underprivileged.

Balancing Fiscal Prudence with Welfare Expectations: The Challenge Ahead for Modi’s Budget Vision

As India looks towards its upcoming budget session, the government faces the delicate task of balancing its fiscal consolidation goals with the growing expectations for welfare measures aimed at supporting the poor. Prime Minister Narendra Modi’s recent remarks on Lakshmi’s relationship to prudence suggest a keen awareness of this challenge. While advocating for economic progress, Modi emphasized the need for innovation, inclusion, and investment as the foundations of India’s roadmap towards becoming a Viksit Bharat (developed India).

Fiscal Consolidation and Prudence: A Critical Imperative
Fiscal consolidation is an ongoing priority for the Indian government, especially given the significant financial resources required to support the country’s ambitious development plans. Modi’s emphasis on prudence suggests that the government remains committed to managing fiscal deficits and ensuring the sustainability of public finances. While the need for welfare measures, such as restoring LPG subsidies or expanding programs like PM-KISAN and PMAY, is undeniable, the government must avoid overburdening its finances.

Delivering on welfare promises without derailing fiscal consolidation will require a careful mix of targeted spending and efficient allocation of resources. The government will need to prioritize initiatives that offer long-term returns, such as those that focus on infrastructure development, job creation, and sustainable growth, rather than simply addressing short-term needs. This balance will be crucial for maintaining the country’s credit rating and ensuring that fiscal health does not deteriorate.

Innovation, Inclusion, and Investment: A Roadmap for Growth
In his comments, Modi highlighted three key pillars for achieving India’s economic goals: innovation, inclusion, and investment. These principles offer valuable insight into the government’s approach to economic development in the budget.

  • Innovation: By fostering an environment of innovation, the government hopes to drive technological advancements, improve productivity, and create new industries. Investment in research and development (R&D), digital transformation, and skill development will be key to creating a more resilient and competitive economy. Supporting innovation can also lead to job creation, which is essential for boosting consumption and improving the quality of life for the underprivileged.
  • Inclusion: Inclusivity will remain at the heart of Modi’s vision, ensuring that the benefits of economic growth reach all segments of society. Welfare programs aimed at the poor will likely remain a priority, but these initiatives will need to be carefully designed to promote self-sufficiency, not just dependence. The focus could be on providing opportunities for upward mobility, such as access to education, skill development, and financial inclusion.
  • Investment: Modi’s roadmap emphasizes investment, both domestic and foreign, as a cornerstone of economic growth. Increased investment in infrastructure, healthcare, and education will be vital for achieving long-term prosperity. Additionally, policies that incentivize private sector investment and public-private partnerships could accelerate economic growth and job creation.

The Path Forward: Achieving a Viksit Bharat
As Modi aims for a Viksit Bharat, or developed India, the roadmap must go beyond short-term fiscal relief and focus on building a sustainable, inclusive, and innovative economy. This will involve a balance between maintaining fiscal discipline and addressing the growing needs of the poor. While there will be pressure to expand welfare measures, the government must also ensure that its actions lay the foundation for long-term economic prosperity, thus securing a future that benefits all citizens, regardless of their economic status.

Conclusion:
Prime Minister Modi’s remarks on the Budget session indicate that the government is aware of the delicate balance it must strike between fiscal prudence and the need to deliver on welfare expectations. By focusing on innovation, inclusion, and investment, the government aims to drive economic activities that will pave the way for a developed India. However, careful planning and execution will be required to meet both fiscal targets and the aspirations of India’s underprivileged while fostering sustainable growth. The upcoming budget will undoubtedly be a crucial milestone in realizing this vision.

India’s Economic Outlook: A Look Ahead to the Economic Survey and Union Budget 2025-26

As India prepares for the Economic Survey and Union Budget presentations, all eyes will be on the government’s strategy to rejuvenate the economy and chart a course towards achieving its ambitious goal of becoming the world’s third-largest economy by the end of Prime Minister Narendra Modi’s third term. With India currently holding the position of the world’s fifth-largest economy, the upcoming budget for 2025-26 will be crucial in determining how the country navigates the challenges of economic slowdown and inflation to position itself for sustained growth.

Economic Survey: Setting the Stage
The Economic Survey, scheduled for release on Friday, will provide a detailed analysis of the country’s economic health. This document, prepared by the Finance Ministry, assesses the current economic performance and offers insights into the challenges and opportunities ahead. It will set the tone for the forthcoming budget by identifying key areas of concern and outlining possible policy interventions.

In particular, the survey is likely to highlight the effects of inflation, unemployment, and global economic factors on India’s growth trajectory. The government’s fiscal management and the effectiveness of welfare programs, such as PM-KISAN and PMAY, may also be evaluated to gauge their impact on poverty reduction and inclusive growth.

Union Budget 2025-26: Stimulating Growth for a Viksit Bharat
The Union Budget for 2025-26, to be presented on Saturday, is expected to be a critical policy document in the government’s bid to rejuvenate economic growth. With the goal of becoming the world’s third-largest economy, the Budget will likely focus on a mix of short-term measures and long-term structural reforms aimed at revitalizing key sectors of the economy.

Key areas likely to be addressed in the budget include:

  • Stimulating Growth Momentum: In light of the projected GDP slowdown, the budget is expected to introduce measures that aim to revitalize sectors such as manufacturing, agriculture, and services. Investment in infrastructure, including smart cities, green energy, and digital transformation, could be central to this effort, creating jobs and boosting economic output.
  • Attracting Investment: To secure India’s position as the third-largest economy, boosting both domestic and foreign investment will be essential. The government may introduce incentives for private sector investments in emerging industries like electric vehicles, renewable energy, and technology startups, while continuing to support the ease of doing business through regulatory reforms.
  • Welfare and Inclusivity: While the government focuses on growth, it is also expected to continue supporting welfare programs to ensure that the benefits of growth reach all sections of society. This could include increasing allocations for income support programs like PM-KISAN and PMAY, as well as expanding access to healthcare and education. Ensuring that the poor and vulnerable are not left behind will remain a priority.
  • Fiscal Prudence and Deficit Management: Given the global economic uncertainties and the need to maintain fiscal discipline, the government is likely to strike a balance between boosting growth and managing the fiscal deficit. Efforts to control inflation and public debt will play a critical role in sustaining investor confidence.

The Road to a Viksit Bharat
As the government aims to transform India into a Viksit Bharat (developed India), achieving the status of the world’s third-largest economy will require a concerted effort in fostering innovation, enhancing human capital, and promoting sustainable economic growth. The upcoming Budget will be instrumental in determining whether these goals can be achieved, especially in light of ongoing global economic challenges.

Conclusion:
The Economic Survey and Union Budget for 2025-26 will be key instruments in shaping India’s economic future. As the country sets its sights on becoming the third-largest economy in the world, the government will need to navigate both domestic challenges and global uncertainties while laying the groundwork for sustainable growth. The budget’s focus on reviving growth, attracting investment, and ensuring inclusive development will be crucial to achieving this ambitious goal. With strategic reforms and policies, India can position itself to thrive in the coming years.

Courtesy: Business Standard

References

Mukesh Singh Profile He is an IITian, Electronics & Telecom Engineer and MBA in TQM with more than 15 years wide experience in Education sector, Quality Assurance & Software development . He is TQM expert and worked for numbers of Schools ,College and Universities to implement TQM in education sectors He is an author of “TQM in Practice” and member of “Quality circle forum of India”, Indian Institute of Quality, New Delhi & World Quality Congress . His thesis on TQM was published during world quality congress 2003 and he is also faculty member of Quality Institute of India ,New Delhi He is a Six Sigma Master Black Belt from CII. He worked in Raymond Ltd from 1999-2001 and joined Innodata Software Ltd in 2001 as a QA Engineer. He worked with the Dow Chemical Company (US MNC) for implementation of Quality Systems and Process Improvement for Software Industries & Automotive Industries. He worked with leading certification body like ICS, SGS, DNV,TUV & BVQI for Systems Certification & Consultancy and audited & consulted more than 1000 reputed organization for (ISO 9001/14001/18001/22000/TS16949,ISO 22001 & ISO 27001) and helped the supplier base of OEM's for improving the product quality, IT security and achieving customer satisfaction through implementation of effective systems. Faculty with his wide experience with more than 500 Industries (Like TCS, Indian Railways, ONGC, BPCL, HPCL, BSE( Gr Floor BOI Shareholdings), UTI, ONGC, Lexcite.com Ltd, eximkey.com, Penta Computing, Selectron Process Control, Mass-Tech, United Software Inc, Indrajit System, Reymount Commodities, PC Ware, ACI Laptop ,Elle Electricals, DAV Institutions etc), has helped the industry in implementing ISMS Risk Analysis, Asset Classification, BCP Planning, ISMS Implementation FMEA, Process Control using Statistical Techniques and Problem Solving approach making process improvements in various assignments. He has traveled to 25 countries around the world including US, Europe and worldwide regularly for corporate training and business purposes.

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