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The upcoming Union Budget 2025, scheduled for presentation on February 1st, 2025, by Finance Minister Nirmala Sitharaman, is generating significant anticipation, particularly among India's middle class. The prevailing sentiment centers around the expectation of substantial income tax relief measures from the Narendra Modi government. Various organizations, notably those affiliated with the Rashtriya Swayamsevak Sangh (RSS), have actively engaged in pre-budget consultations with the Finance Minister, submitting a range of proposals aimed at stimulating economic growth and alleviating financial burdens on different segments of the population. These proposals represent a diverse spectrum of concerns and aspirations, reflecting the multifaceted challenges and opportunities facing the Indian economy.
Among the most prominent proposals is the call for a significant increase in the tax-free income threshold to ₹10 lakh. This measure, if implemented, would directly benefit a substantial portion of the middle class, providing considerable tax relief and boosting disposable income. Proponents argue that this would stimulate consumer spending and overall economic activity. The rationale behind this proposal hinges on the belief that reduced tax burdens will empower individuals to invest more in their businesses or personal growth, thereby contributing to a more robust and inclusive economic environment. The potential impact on government revenue is a key consideration, requiring careful analysis to ensure fiscal sustainability alongside economic stimulation.
Beyond tax relief, the pre-budget discussions have highlighted several other critical areas demanding government attention. A key focus is the agricultural sector, with calls for a targeted stimulus package designed to address the unique challenges faced by farmers and agricultural workers. This underscores the recognition of agriculture's vital role in the Indian economy and the need for sustained support to ensure food security and rural prosperity. The proposed stimulus could encompass various initiatives, ranging from improved infrastructure and technology to enhanced credit access and market linkages, depending on a thorough needs assessment.
The Bharatiya Mazdoor Sangh (BMS), a prominent trade union, has presented a comprehensive set of recommendations to the Finance Minister, echoing many of the themes emerging from other pre-budget consultations. Their proposals include not only the increased tax-free income threshold but also a significant expansion of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) program. The BMS advocates for extending the guaranteed number of workdays per family to 200, a substantial increase from the current provision. This reflects a commitment to providing rural employment opportunities and bolstering social security networks in rural India. The economic implications of such an expansion are substantial, requiring careful consideration of funding mechanisms and potential impacts on labor markets.
The BMS's recommendations extend further to encompass the establishment of an 8th Pay Commission, addressing concerns about government employee compensation and benefits. The union also emphasized the need for tax exemptions for pensioners, aligning with the broader theme of providing relief to vulnerable segments of the population. The proposed increase in minimum pensions for EPS-95 pensioners to ₹5000, followed by a linkage to 50% of minimum wages and Variable Dearness Allowance (VDA), highlights the focus on improving the social safety net for senior citizens.
Furthermore, the BMS called for streamlining GST refunds, a crucial issue for businesses struggling with delayed reimbursements. This reflects the need for efficient and transparent tax administration to support healthy economic growth. The call for a comprehensive manufacturing strategy to address the influx of Chinese imports underscores the importance of strengthening domestic industries and promoting self-reliance in key sectors. This requires a holistic approach, encompassing factors like infrastructure development, technological upgrades, and skill enhancement.
Finally, the organization has highlighted the need for adequate funding for various industrial boards, particularly those supporting workers in sectors like beedi and contract labor. This underscores the continuing need for social protection programs that cater to specific segments of the workforce. The interlinked nature of these proposals emphasizes the need for integrated and holistic policymaking, addressing the various challenges faced by the Indian economy in a coordinated and strategic manner. The outcome of these pre-budget discussions, and the extent to which they inform the final budget, will have far-reaching consequences for the Indian economy and its citizens.
Source: Budget 2025: Will FM Sitharaman raise tax-free income, tax exempt income threshold to Rs 10 lakh?