Finance Minister Nirmala Sitharaman on Tuesday underlined that the fundamentals of the Indian economy remain strong and the Indian currency remains strong while ruling out any structural slowdown. The minister, who has just presented the Union Budget 2025-26, with significant income tax rebates, also underlined that this was a part of the government’s ongoing initiatives to maintain the trust of taxpayers.
“In every Budget there is a clear sense that we respect taxpayers,” she said while addressing the India Today-Business Today Budget Round Table 2025, elaborating measures such as faceless assessment and the taxpayers’ charter unveiled in earlier budgets. “However, this is also a continuing part of Prime Minister Modi’s effort to respect taxpayers,” she underlined.
The minister said that this would also have an impact on savings and consumption in the economy with recent concerns over urban demand moderating. It is likely to help sales of fast moving consumer goods and also up discretionary spends by consumers, she expressed hope, adding that banks can also see better deposit growth as well as better investments.
In the Union Budget 2025-26, the finance minister has proposed that there will be zero tax on annual income up to Rs 12 lakh along with a significant rejig of the income tax slabs under the new income tax regime.
Speaking about the proposed new Income Tax Act that is set to be introduced in Parliament next week, the minister said she would want the tax reform system to be simple for compliance, which is the intent of the new Act. While declining to give a timeline for the Act to be passed, she said it would be good if it gets passed in the Budget session but the government wants to send it to the Parliamentary Standing Committee on Finance after introducing it in the Parliament.
“If the Standing Committee returns it after the second half of the Budget session starts, we will be happy to take it forward,” she said.
The minister also underlined that there is an ever changing global scenario with several developments in countries across the country and said refuted claims of a structural slowdown in the economy.
“When your fundamentals are strong and your currency is strong compared to all other currencies….just because of the US dollar’s peculiarity. It’s not just the situation for the rupee, it’s for every currency against the US dollar. If your currency is fine and fit except for this volatility against the dollar can it be if your fundamentals are weak? Can it be so if it is a systemic problem?,” she underlined. India can not be the fastest economy continuously for the third year and for the fourth year too, as per World Bank, if the fundamentals were not strong, she further said.
India is seen to grow by 6.4% this fiscal and by 6.3% to 6.8% in FY26. The Indian rupee has breached 87 against the US dollar as policies in the US have taken a toll on currencies of several economies.
On a question on the impact of the tariff hikes announced by US President Donald Trump, “We will have to watch out for it. We can’t speculate on it. We have to wait and see what kind of action has to come. But I would prepare myself for two things – the fall out of the action on China and Mexico and Canada and how that impacts India. But what exactly will be the direct action on India, I can’t speculate.”
She also said the customs duty rationalisation in the Budget was initiated earlier and was actually indicated by her in 2022 and not intended due to the tariff plans of the new US administration.
“India’s markets and fundamentals are strong,” she underlined when asked about why foreign investors are pulling out money from the country. “Domestic situations and issues arising out of it alone cannot be the reason for FPIs to go out. The developments in the US, the global uncertainty…markets like Japan now trying to assert themselves. So many things are happening,” she noted, adding that she would want to make India a more attractive destination for investments which is why the Budget has proposed that the Bilateral Investment Treaty model would be reviewed.