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In the wake of Finance Minister Nirmala Sitharaman's presentation of the Union Budget 2025, former Union Finance Minister P. Chidambaram expressed discontent with several aspects of the budget. According to Chidambaram, the new schemes and programs outlined in the budget are "beyond the capacity" of the government. As the finance minister of India, Nirmala Sitharaman announced a range of initiatives, but Chidambaram voiced concerns over the sustainability and practicality of these measures.
Tax Relief for the Middle Class
One of the key highlights of Budget 2025 was the announcement of a significant income tax relief for the middle class. For those earning up to ₹12 lakh annually, the budget proposes that no income tax will be applicable. This reform, hailed by many as a step toward easing the financial burden on the average Indian, was a central point in Sitharaman's budget speech.
The Finance Minister of India also rejigged tax slabs for higher-income groups, with reduced taxes for those earning between ₹12 lakh and ₹24 lakh per annum. This progressive tax relief aims to provide more disposable income to the middle class, thereby stimulating household consumption, savings, and investment.
Chidambaram's Critique: Budget Beyond Government's Capacity
Chidambaram, a seasoned finance minister in the governments led by Dr. Manmohan Singh, Inder Kumar Gujral, and HD Deve Gowda, questioned the feasibility of the government's grand plans. He emphasized that many of the new schemes proposed in the budget seem to be "beyond the capacity" of the current administration. According to him, while the BJP might gain favor with the middle class and the electorate in Bihar, the country’s bureaucracy will likely benefit more from this budget.
Moreover, Chidambaram expressed doubts about the growth trajectory the government aims to achieve. He predicts that the economy will likely grow at the usual 6% to 6.5% in the fiscal year 2025-26, suggesting that the ambitious reforms in the budget might not bring the desired economic transformation.
Sitharaman's Vision for Economic Growth
Despite Chidambaram's concerns, Finance Minister Nirmala Sitharaman’s Budget 2025 reflects a more optimistic vision for India’s economic future. Her emphasis on tax relief for the middle class aims to fuel domestic consumption, which is seen as a driver of economic growth. By freeing up more income for the middle class, the government hopes to boost spending and investment, which could have a cascading effect on various sectors, including retail, housing, and small businesses.
Furthermore, Sitharaman's rejigging of the tax slabs is designed to ease the financial load on high earners, while ensuring that those with higher incomes contribute proportionally more to the national exchequer. This balanced approach aims to retain investor confidence while offering relief to the common man.
A Fine Balance Between Relief and Realism
While Finance Minister Nirmala Sitharaman’s budget provides considerable relief for the middle class, the broader economic implications remain to be seen. The finance minister of India has attempted to balance fiscal responsibility with populist measures aimed at reviving consumption. On the other hand, Chidambaram's critique points to the inherent challenges in executing such ambitious plans, especially within the constraints of government capacity.
As the country moves forward into the new fiscal year, it remains to be seen whether Budget 2025 will deliver the intended economic revival or fall short of its promises.
