Budget 2025: Govt to counter slowdown, may unveil measures including tax relief to help economy climb

NEW DELHI: The budget is likely to unveil several measures to support demand and prop up growth, recognising that the slowing economy needs help.

The measures being considered include tax relief for the middle class, tariff measures to shield the industry from the adverse external environment, and initiatives to foster job creation and private investment, among others, said people familiar with the deliberations.

A meeting in the Prime Minister’s Office last week discussed broad contours of the budget and more will be held to firm up details, they said.

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The budget for FY26 will be presented on February 1.

Buoyed by electoral wins in Maharashtra and Haryana, the Narendra Modi government is keen to deliver a strong message in the budget — of continued emphasis on reforms, ease of doing business and living. “Discussions have begun… There is a growing view in the government that this budget should send out a strong signal,” said one of the persons cited.


India’s economic growth is projected to ease to a four-year low of 6.4% in FY25, triggering demand for measures to spur demand and investments.

The tax measures discussed include relief for individuals under the new tax regime, simplification of corporate tax and an easier tax deducted at source (TDS) regime.

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There has been clamour, including from within the BJP, for further widening slabs under the new tax regime as urban consumption has begun to splutter, they said, adding that a final call will be taken over the next few days.

Revving Up Capex
Currently, the highest 30% tax kicks in at Rs 15 lakh annual income for individuals. A lower tax burden can help revive slowing urban demand.

Some follow-up measures are also likely to support job creation, building on the three employment-linked incentive schemes announced in the July budget.


The Centre’s capital expenditure, which faltered in the current year due to elections, is expected to receive a sharper emphasis in the budget, to crowd in private investment. Gross fixed capital formation, a measure of investments, is expected to rise 6.4% in FY25, easing from 9.2% the preceding year.

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A tariff rejig in the basic customs duty is likely to shield industry from the onslaught of cheaper imports as fears of dumping of Chinese goods intensify, ET had reported earlier. Measures to ease the foreign investment regime have also been discussed and could find a mention in the budget.