Modi turns to India's vast middle class to revive growth in rough global year | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Thursday
July 10, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
THURSDAY, JULY 10, 2025
Modi turns to India's vast middle class to revive growth in rough global year

South Asia

Reuters
01 February, 2025, 05:40 pm
Last modified: 01 February, 2025, 05:45 pm

Related News

  • Air India jet's fuel switches in focus, as crash preliminary report nears
  • Indian textile stocks surge as US slaps 35% tariff on Bangladesh exports
  • Relief for rupee after India left out of US tariff hike; Asia shrugs off Trump move
  • Family members of Indians deported into Bangladesh seek return, lodge police diary
  • Detained in Delhi days ago, 'Bengal family' of three pushed into Bangladesh

Modi turns to India's vast middle class to revive growth in rough global year

Reuters
01 February, 2025, 05:40 pm
Last modified: 01 February, 2025, 05:45 pm
A vendor blows soap bubbles at a wholesale market in New Delhi, India, January 31, 2025. REUTERS/Sahiba Chawdhary
A vendor blows soap bubbles at a wholesale market in New Delhi, India, January 31, 2025. REUTERS/Sahiba Chawdhary

India slashed personal tax rates in its annual budget on Saturday, as the world's fifth largest economy focuses on boosting domestic demand amid uncertainty over the global economic outlook due to potential new tariff barriers.

The world's most populous country is expected to post its slowest growth in four years next year amid frail urban demand and weak private investment, while stubbornly high food inflation has dented disposable incomes.

The government said people earning up to 1.28 million Indian rupees ($14,800) per year will not have to pay any taxes, raising its threshold from 700,000 rupees. It also lowered tax rates for people earning above the new threshold.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

"The new structure will reduce taxes on middle class and leave more money in their hands, boosting household consumption, savings and investment," Finance Minister Nirmala Sitharaman said in parliament.

The move will result in an annual 1 trillion Indian rupee ($11.6 billion) hit to Treasury revenues.

Measures to assist the poor, youth, farmers and women were also included in the budget for 2025-26, Sitharaman said.

Increasing living costs have weighed on the popularity of Prime Minister Narendra Modi, with one survey showing more Indians are becoming less hopeful about their quality of life.

Per capital income is around $2,700 for India's population of 1.4 billion, with about one-third considered middle class.

The announcement came a day ahead of the fourth anniversary of a coup.

The tax cut is "likely to spur consumer demand and savings by the middle class that has faced challenges from elevated inflation and lower income growth," Sakshi Gupta, economist at HDFC Bank.

The move led to a rally in consumer stocks such as Maruti Suzuki, Godrej Consumer Products and Prestige Estates, which jumped by 4% to 8%.

The chart shows GDP growth projections in the economic survey and the actual GDP growth rate

To balance the revenue lost, the government has budgeted for a modest increase in capital spending this year, which will rise to 11.21 trillion rupees in 2025-26 compared to a lowered 10.18 trillion in the current year.

The modest infrastructure spending increase disappointed investors in the sector and stocks of firms including Larsen & Toubro, NBCC, IRB Infra and KEC International < KECL.NS> were down between 1% and 6%.

The government expects to improve its finances, targeting a fiscal deficit of 4.4% of GDP in 2025-26, down from a revised 4.8% of GDP in the current year.

It will borrow 14.82 trillion Indian rupees via the bond markets to fund this year's fiscal deficit.

The government, however, refrained from pre-empting the impact of potential tariffs from U.S. President Donald Trump on India and focussed on lowering some input costs for industries that have been raising output such as electronics and renewables.

The line charts show India's fiscal deficit, gross borrowing, capital expenditure and revenue expenditure.

FOCUS ON FARM, MANUFACTURING AND FINANCIAL SECTOR

India has faced a bout of high food inflation over the past year due to weather changes impacting output.

To boost productivity across the farm sector, the government will launch a national mission to push high-yielding crops, with a special focus on pulses and cotton production.

To help farmers, the limit for subsidised credit has been raised to 500,000 Indian rupees ($5,778) from 300,000 rupees earlier.

The government will also launch missions to push manufacturing and exports, Sitharaman said, without going into details.

India has long aimed to boost the share of manufacturing and exports in its economy but has had little success. The share of manufacturing in the economy has remained close to 17%, short of its long-standing goal of 25%.

To deepen the penetration of insurance in the economy, the foreign direct investment limit on insurance was raised to 100% from 74% currently.

World+Biz

Indian Prime Minister Narendra Modi / India / India Budget

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Council of Advisers&#039; meeting on Thursday (10 July). Photo: CA Press Wing
    Govt cancels 'Sir' address directive from Hasina's rule
  • In terms of stream of education, girls maintained their excellence as well. Photo: TBS
    Lowest SSC pass rate in 17 years as over 6 lakh students fail
  • No final consensus yet on CJ appointment from senior-most judges: Salahuddin
    No final consensus yet on CJ appointment from senior-most judges: Salahuddin

MOST VIEWED

  • Graphics: TBS
    BB raises startup fund limit, drops upper age barrier
  • Workers pack undergarments at the packing section of a garment factory in Ashulia, on the outskirts of Dhaka, Bangladesh, April 19, 2025. Photo: REUTERS/Fatima Tuj Johora
    After US tariffs, jobs hang by a thread in Bangladesh's garments sector
  • Global Islami Bank rectifies 2023 figures, reports Tk2,259cr loss instead of Tk128cr profit
    Global Islami Bank rectifies 2023 figures, reports Tk2,259cr loss instead of Tk128cr profit
  • Bangladesh Bank Governor Ahsan H Mansur. TBS Sketch
    Audit reports of most banks contain cooked up data: BB governor
  • File photo of containers at Chattogram port/TBS
    US buyers push Bangladeshi exporters to share extra tariff costs
  • CA orders law enforcers to complete all election preparations by December
    CA orders law enforcers to complete all election preparations by December

Related News

  • Air India jet's fuel switches in focus, as crash preliminary report nears
  • Indian textile stocks surge as US slaps 35% tariff on Bangladesh exports
  • Relief for rupee after India left out of US tariff hike; Asia shrugs off Trump move
  • Family members of Indians deported into Bangladesh seek return, lodge police diary
  • Detained in Delhi days ago, 'Bengal family' of three pushed into Bangladesh

Features

Photo: Collected/BBC

What Hitler’s tariff policy misfire can teach the modern world

1h | The Big Picture
Illustration: TBS

Behind closed doors: Why women in Bangladesh stay in abusive marriages

4h | Panorama
Purbachl’s 144-acre Sal forest is an essential part of the area’s biodiversity. Within it, 128 species of plants and 74 species of animals — many of them endangered- have been identified. Photo: Syed Zakir Hossain/TBS

A forest saved: Inside the restoration of Purbachal's last Sal grove

4h | Panorama
Women are forced to fish in saline waters every day, risking their health to provide for their families. Photo: TBS

How Mongla’s women are bearing the brunt of rising salinity

1d | Panorama

More Videos from TBS

OpenAI to release web browser in challenge to Google Chrome

OpenAI to release web browser in challenge to Google Chrome

Now | TBS World
Will the title 'Honorable and Excellency' be abolished?

Will the title 'Honorable and Excellency' be abolished?

1h | TBS Today
July Declaration must be constitutionally recognized: Akhtar Hossain

July Declaration must be constitutionally recognized: Akhtar Hossain

34m | TBS Today
We want to recognize the July Uprising on a national level: Salahuddin Ahmed

We want to recognize the July Uprising on a national level: Salahuddin Ahmed

49m | TBS Today
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net