Tax Cuts, Trade Wars & Growth: FM Sitharaman’s Bold Budget Vision

India: Finance Minister Nirmala Sitharaman, in an exclusive interview shed light on key aspects of Budget 2025, highlighting tax reforms, economic strategies, and India’s stance on global trade uncertainties.

Biggest Personal Income Tax Relief Yet

One of the most striking announcements in the budget was the increase in the tax-free slab from ₹7 lakh to ₹12 lakh, benefiting all taxpayers, including those earning up to ₹25 lakh. Sitharaman emphasized that this move is aimed at respecting honest taxpayers and encouraging compliance.

“From 2019, Prime Minister Narendra Modi has been clear about making tax compliance simpler and trust-based,” she stated, highlighting past initiatives such as faceless assessments and the ‘Vivad Se Vishwas’ scheme.

New Income Tax Law: A Radical Shift?

The new income tax bill is focused on simplification, reducing interpretative issues, and ensuring easy compliance. The FM hopes it will be at least half the size of the existing tax code. “We are working towards a decriminalized approach, focusing on trust and self-declaration,” she explained.

Navigating Global Trade Uncertainties

With the US imposing tariffs on Mexico, Canada, and China, concerns about a potential global trade war loom. Sitharaman acknowledged the uncertainty, stating, “We will be watchful, but we can’t predict the impact on India yet.” The government is focusing on export promotion, market diversification, and strengthening institutions like ECGC and Exim Bank.

Customs Duty Rationalization: Strategic Move or Response to US Tariffs?

India has been reducing customs duties over the past two years to facilitate imports essential for MSMEs, labor-intensive industries, and raw materials. The FM clarified that this is a structured, ongoing effort and not a reaction to US tariffs.

Capex & Private Investments: A Push for Growth

Despite record capital expenditure allocations, private investment remains sluggish. Sitharaman refuted concerns about underutilization, citing massive spending in roads, railways, defense, and infrastructure.

Fiscal Responsibility & Welfare Spending Concerns

State debts and increasing welfare expenditures have raised concerns about financial sustainability. Sitharaman stressed the need for states to rationalize spending, urging discussions at the state assembly level.

Looking Ahead: India’s Growth Strategy

With a projected nominal GDP growth of 10.1% for FY25, the government is betting on agriculture, exports, MSMEs, and technological advancements like AI and semiconductors. “Cooperative federalism will play a crucial role in our economic roadmap,” she concluded.

As India navigates complex global and domestic economic challenges, Budget 2025 lays out an ambitious yet structured path forward, blending tax relief, strategic investments, and economic resilience.