Reviving Middle-Class Spending

In recent years, high inflation has significantly eroded the purchasing power of the middle class, impacting demand for staples, snacks, and other consumer goods. The 2025 Budget proposes income tax relief and measures to support the rural economy and small & medium enterprises, aiming to reverse this trend. "The substantial tax relief measures, particularly making income up to Rs 12 lakh tax-free, will provide essential financial respite to middle-class families, increasing their disposable incomes and encouraging spending," said Mohit Malhotra, CEO at Dabur India.

Budget 2025 Updates

Key updates include changes to income tax slabs for the FY 2025-26, with no income tax for earnings up to Rs 12 lakh. Jagrut Kotecha, CEO at PepsiCo India, believes these measures will alleviate the burden of inflation and rising costs, boosting consumption.

Impact on Consumption and Economy

While demand for premium products remains intact, mass categories driven by lower to mid-income households have lagged. The middle class, crucial for driving sales volumes, now drives nearly 60% of domestic consumption. Paresh Parekh of EY India highlights the significant liquidity infusion from tax relief, expected to positively impact urban consumption.

Supporting Unorganized Sectors

Anand Ramanathan of Deloitte India notes the budget's focus on social security for gig workers, Mudra loans for homestay providers, and accessible credit for farmers, aiming to broaden consumption support beyond the formal sector.