India Allocates $12 Billion in Tax Cuts for Middle Class

India's Finance Minister Nirmala Sitharaman announced significant tax cuts during her budget speech, providing around ₹1 lakh crore ($12 billion) in relief to the middle class by raising the income tax exemption cap from ₹7 lakh to ₹12 lakh. This move is intended to stimulate consumption amid a challenging economic environment marked by rising prices and falling wages, with the economy projected to experience its weakest growth since the pandemic. The tax changes will result in a revenue loss of ₹1 trillion ($11.6 billion) for the federal government, yet it aims to narrow the budget deficit to 4.4% of GDP for the coming fiscal year. While the NSE Nifty 50 Index initially dropped over 300 points during the announcement, stocks in consumer-facing sectors rallied in response. The budget also includes measures to support farmers and small businesses, aiming to enhance overall economic sentiment and investment. Critics, however, express concerns about the sustainability of growth given the flat infrastructure spending.