The Reserve Bank of India’s recent rate cut, combined with the transformative measures announced in Budget 2025, is set to provide a strong impetus to India’s economic growth. On February 7, the RBI delivered its first rate cut in five years, projecting inflation to trend lower within its 4% target while boosting economic activity. This, coupled with historic tax reliefs and increased public expenditure outlined in the budget, is expected to accelerate consumption, drive private investment, and push India closer to its Viksit Bharat vision.
The dual impact of monetary and fiscal measures is crucial at this juncture. The budget provides significant relief to the middle class, increasing disposable incomes through the exemption of income up to ₹12 lakh and raising the senior citizen tax exemption limit from ₹50,000 to ₹1 lakh. These tax cuts, according to the Department of Financial Services, are likely to channel ₹40,000-45,000 crore into the banking system through savings, further boosting credit growth. With the RBI’s rate cut reducing borrowing costs, private sector investments are expected to pick up, creating more jobs and fueling economic expansion.
The Economic Survey 2024-25 highlights a narrowing urban-rural consumption gap, which has reduced from 84% in 2011-12 to 70% in 2023-24, signaling the expansion of the middle class beyond metropolitan centers. The budget builds on this momentum through targeted interventions in tier-2 and tier-3 cities, including the ₹1 lakh crore Urban Challenge Fund and the expansion of the Ude Desh ka Aam Naagrik (UDAN) scheme to 120 new destinations. These measures aim to create new economic opportunities and enhance mobility, reinforcing Viksit Bharat as Inclusive Bharat, ensuring that growth benefits all sections of society.
The budget’s focus on SabkaSaath, SabkaVikas is evident in its strong support for middle-class priorities, including housing, education, healthcare, and employment. By alleviating financial burdens and enhancing service quality, these initiatives will strengthen human capital, particularly among the two-thirds of India’s population under the age of 35. The government’s commitment to Housing for All is reflected in its increased allocation of ₹15,000 crore to the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund, aimed at completing stressed housing projects and supporting middle-class homeownership aspirations.
Education is another key pillar of Viksit Bharat, driving socio-economic mobility. The establishment of 50,000 Atal Tinkering Labs in government schools over the next five years, coupled with broadband connectivity for all government secondary schools, aims to foster scientific curiosity and digital literacy. Simultaneously, expanded student intake in IITs and medical colleges reinforces the government’s long-term vision of human capital development.
In healthcare, the budget strengthens India’s safety net with increased allocation for Ayushman Bharat-Pradhan Mantri Jan ArogyaYojana (AB-PMJAY) and customs duty exemptions on 36 lifesaving drugs, reducing out-of-pocket medical expenses for middle-class families. Additionally, enhanced credit guarantees for MSMEs and targeted support for first-time entrepreneurs will create new employment opportunities, particularly as India transitions into a technology-driven economy.
Nari Shakti plays a crucial role in the economic progress of both the middle class and society at large. The budget significantly increases the Gender Budget allocation to 8.86% of the total Union Budget for FY 2025-26, up from 6.8% in FY 2024-25. The number of ministries and departments reporting gender-focused allocations has also risen from 38 to 49, reflecting a broader commitment to women’s economic empowerment.
With the combined thrust of fiscal stimulus and monetary easing, India is well-positioned to navigate the AmritKaal period and achieve sustainable, inclusive growth. The budget embeds key structural reforms while ensuring that economic expansion reaches every citizen. As tax reliefs and lower interest rates work together to boost consumption, savings, and investment, the vision of Viksit Bharat by 2047 moves closer to reality, ensuring a prosperous future for all.
By Mayur Shekhar Jha – Founder, Behtar Jharkhand
Mayur Shekhar Jha is a former journalist, entrepreneur, and social activist dedicated to fostering positive change in Jharkhand. As the founder of Behtar Jharkhand, a prominent think tank, he has been at the forefront of initiatives focused on education, healthcare, environmental conservation, and social reforms. With a vision to transform Jharkhand into a model state, Mayur spearheads programs aimed at driving sustainable development and community empowerment. His work has been recognized by key stakeholders, including state leadership, for its impact on the region’s progress.
