Himalaya Harbinger, Rudrapur Bureau
Sources within the Finance Ministry have hinted that the upcoming 2024-2025 Budget will be a pro-people one. The ministry is considering a significant move: lowering income tax rates for individuals earning between ₹15 lakh and ₹17 lakh per year. This potential change aims to lighten the financial burden on middle-income earners, leaving them with more cash in hand.
But that’s not all. The changes will reportedly apply specifically to the new tax regime. The government, the sources claimed, is contemplating revisions to the tax slabs.
There are already reports that claim that Budget 2024 might prioritize tax cuts for low earners over welfare spending. These tax cuts are seen as a better way to increase disposable income, which would boost consumption and economic activity.
In the new tax system, the first slab of 5% starts at Rs 3 lakh, but by the time income reaches Rs 15 lakh, the tax rate jumps to 30%. So, while income increases fivefold, the tax rate increases sixfold, which is seen as too steep.
Budget for the fiscal year 2024-25 will likely be presented in Parliament on July 18. Finance Minister Nirmala Sitharaman has started pre-Budget discussions with industry groups.
The upcoming Budget will outline the Modi 3.0 government’s economic agenda. Sitharaman needs to stimulate growth without increasing inflation while securing resources for coalition government commitments. The agenda aims to position India as a USD 5-trillion economy soon and transform the nation into a ‘Developed India’ by 2047.
The Reserve Bank of India projects a 7.2 percent growth for the Indian economy this fiscal year, driven by improving rural demand and easing inflation. The Modi 3.0 government inherits a strong economy with established fiscal discipline, boosted by the RBI’s highest-ever dividend of Rs 2.11 lakh crore for FY24.
Key priorities for Prime Minister Modi’s third term include addressing agricultural challenges, job creation, sustaining capital expenditure, and increasing revenue growth to maintain fiscal consolidation. Rating agency S&P has upgraded India’s sovereign rating outlook to positive, reflecting approval of the economic policies over the past decade. There is potential for a further rating upgrade in the next 1-2 years if the government meets its fiscal deficit targets.
