Indian Finance Minister Nirmala Sitharaman introduced her coalition government’s budget for the 2025-26 fiscal year on Sunday, a C$836-billion package designed to accelerate economic growth, boost private sector investment, and “enhance the spending power of India’s rising middle class.”
Sitharaman envisions four “engines” for India’s economy, powered by the “fuel” of reforms: agriculture, investment, exports, and micro, small, and medium enterprises. The budget, however, acknowledges that “continuing geopolitical headwinds suggest lower global economic growth over the medium term.”
As part of the budget, earnings of up to C$19,723 are now tax-free, although only an estimated seven per cent of Indians file tax returns.
Growth estimates slump
The IMF projects India’s GDP growth to reach 6.5 per cent for both the 2025 and 2026 fiscal years. Observers suggest “sluggish manufacturing activity and reduced government expenditure” are to blame for the lower-than-expected growth estimates.
New Delhi will need to realize larger annual economic gains to become a developed country by 2047 — a central goal of Indian Prime Minister Narendra Modi.
Part of the solution may lie in bolstering ties, trade, and investment with countries like China. New Delhi and Beijing seem to be ‘resetting’ and strengthening relations, possibly due to the unpredictability presented by Trump’s return to the White House.
India’s foreign secretary visited Beijing in late January to meet with his Chinese counterpart. Both parties agreed to “take certain people-centric steps to stabilize and rebuild ties.”
