All eyes on Sitharaman as hopes run high on income tax cut

Finance Minister set to present record setting eighth consecutive Budget in a short while

New Delhi: 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.

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,” Modi said on Friday.

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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 four year low, with new US 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. Also, tariff cuts to encourage local manufacturing are expected.

Increased allocations to boost job creation and skills, lower customs duties on intermediaries and increase in agriculture investments are also high on the list of expectations. Measures for accelerating domestic demand and private consumption are also expected.

They all agree on one thing – the government will continue on the path of fiscal consolidation, with a projected fiscal deficit of 4.5 per cent of GDP for FY26 (April 2025 to March 2026) against 4.8 per cent in the current fiscal ending March 31.

This budget is also set against the backdrop of slower domestic consumption and activity, which is likely to be in focus in the announcements. Emphasis will be on employment and skilling with a focus on boosting incomes, support labour intensive sectors, draw in private sector players, and defend against a tougher geopolitical environment.