Union Budget 2025: A Major Relief for Middle-Class Taxpayers, Say Economists

KKN Gurugram Desk | The Union Budget 2025 has received widespread appreciation from economists and financial experts, particularly for the significant tax relief provided to the middle-class income taxpayers. Experts believe that these measures will boost economic growth, increase consumption, and enhance investment, ultimately contributing to a self-reliant India.

Tax Relief to Boost Consumption and Economic Activity

Professor AP Tiwari, former head of the economics department at Dr. Shakuntala Misra National Rehabilitation University, highlighted the importance of tax relief in revitalizing India’s economy. He stated,

“The Finance Minister has taken a crucial step by providing relief to middle-class taxpayers. This move is expected to enhance their purchasing power, leading to higher consumer spending, which in turn will fuel economic activity.”

He further explained that an increase in demand could have a ripple effect—encouraging savings and investment, expanding the tax base, and ultimately boosting government revenue.

Potential Risks and Fiscal-Monetary Coordination

While the tax cuts bring optimism, Tiwari also cautioned about the possible risks associated with these measures. He pointed out that an increase in demand might lead to inflationary pressures and a potential loss in tax revenue. He stressed the need for effective coordination between fiscal and monetary policies to mitigate these risks.

“The budget is not just about tax relief; it is a vision for a developed India. It prioritizes self-reliance, with focused investments in agriculture, healthcare, and emerging technologies such as Artificial Intelligence (AI),” he added.

Middle Class Finally Gets Recognized: Prof. MK Agarwal

Professor MK Agarwal from the University of Lucknow’s Economics Department welcomed the government’s acknowledgment of the middle class’s contributions to the economy. He noted that for years, the middle class had been contributing through increased tax filings, and this budget has finally rewarded them.

“The introduction of the ₹12 lakh tax-free income cap is a much-needed relief for the middle class. Additionally, the upward revision in the standard deduction and TDS relief for senior citizens are commendable moves,” Agarwal emphasized.

He believes these steps will encourage compliance, leading to a broader tax base while reducing the financial burden on millions of middle-class taxpayers.

A Balanced Budget with Focus on Rural Economy and MSMEs

Assistant Professor Smita Mishra from Vidyant Hindu PG College also lauded the Union Budget 2025, particularly its focus on economic inclusivity. She emphasized that the budget presents a roadmap for a self-reliant India by investing in education, healthcare, agriculture, and technology.

“The budget brings significant relief to the middle class, but it also ensures support for rural India. The focus on agriculture, MSMEs, and increasing the Kisan Credit Card limit to ₹5 lakh will fuel rural economic growth,” Mishra said.

The enhanced credit access for farmers and small businesses is expected to stimulate entrepreneurship, leading to higher employment rates and increased rural income.

Empowering Women and Marginalized Communities

One of the standout initiatives in the budget is a new scheme designed to provide term loans of up to ₹2 crore to 5 lakh women, scheduled castes, and scheduled tribes over the next five years.

Mishra described this initiative as a significant step towards financial empowerment, stating,

“Providing easy credit access to women and marginalized groups will enhance economic participation, drive self-sufficiency, and foster inclusive growth in India.”

A Vision for a Developed India

Beyond tax relief, the Union Budget 2025 lays out a comprehensive strategy for long-term economic stability. Key areas of investment include:

• Agriculture & Rural Economy: Increased financial support for farmers and rural enterprises.
• Healthcare: Strengthening infrastructure to improve accessibility and affordability.
• Technology & AI: Encouraging innovations in artificial intelligence and digital transformation.
• Education: Enhanced funding for research, skill development, and higher education institutions.

These initiatives align with the government’s broader vision of making India a global economic powerhouse while ensuring equitable growth across all sections of society.

Final Thoughts: How Will the Budget Impact the Economy?

The Union Budget 2025 has been designed to strike a balance between taxpayer relief, economic stimulus, and inclusive development. Experts agree that if implemented effectively, these measures could lead to:

• Higher disposable income for the middle class, leading to increased consumer spending.
• Greater savings and investments, contributing to long-term economic growth.
• A broader tax base, improving government revenue collection.
• Improved rural economy, reducing income disparity between urban and rural India.

However, effective execution and fiscal discipline will be crucial in ensuring the sustainability of these measures.

As a taxpayer or business owner, how do you feel about the Union Budget 2025? Do you think it meets expectations? Share your thoughts in the comments below!

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