In 2015, Nirmala Sitharaman, then minister of state for commerce and industry (independent charge), was part of the Bharatiya Janata Party leadership team managing the party’s campaign for the Delhi elections. Though the Aam Aadmi Party emerged victorious in the intense battle, the experience gave Sitharaman first-hand insight into the dynamics of Delhi’s electorate.
A decade later, Sitharaman, as the Union finance minister, became central to the BJP’s poll strategy, as she announced sweeping income tax cuts, a move strategically designed to appeal to the aspirational middle class. Following the presentation of her eighth budget, people in Delhi were greeted with newspapers advertisements hailing the BJP’s “gift” to the people of the capital. Billboards across the city hailed the move as “Modi’s gift”. Even a banner outside Sitharaman’s official residence on Safdarjung Road thanked “Didi Sitharaman” for the “gift”.
Gains in the Delhi polls owing to tax cuts can be assessed immediately as the results are scheduled to be declared on February 8. For rest of the country, the budget’s tax announcements are gifts for the aspirational middle class which supported Narendra Modi in three Lok Sabha polls and several assembly elections.
“We have responded to the demands,” said Sitharaman. People reciprocated heartily on social media, hailing her with motifs of Lakshmi (the Hindu goddess of wealth)—a huge change from being singled out for the government’s tax measures in the last few years. Sitharaman had smiled and borne all the criticism as she went around the country hard-selling the government’s policies and gathering feedback from the industry.
In her eighth offering, Sitharaman reworked the government’s image among the middle class, as one crore tax payers will not have to pay tax. When coupled with the government’s announcement of bringing in the eighth pay commission, the Modi government has covered all grounds for its key constituency.
Though the word middle class is defined as a heterogenous socioeconomic grouping, in economic terms, middle class has varying classifications. In 2010, the National Council of Applied Economic Research, a government affiliated body, classified middle class as households with income between Rs2 lakh and Rs10 lakh a year. Other studies revised the higher income limit.
In the income tax slabs under the old tax regime, still applicable, annual income above Rs10 lakh attracted the highest tax—the 30 per cent bracket. In 2020, Sitharaman introduced the new tax regime, where those with an annual income above Rs15 lakh fell into the highest tax bracket. As per the latest budget, annual income above Rs24 lakh attracts the highest tax, indicating the changing profile of the middle class. And, those with a family income below Rs8 lakh per annum are classified as part of the economically weaker section, qualifying for the associated benefits.
The vocal middle class is also the opinion-making grouping that has felt short-changed since 2016 as the Modi government’s focus stayed on the poor. So, the 2025 Union budget marks a subtle shift in the government’s focus. This budget has a large catchment area beyond Delhi. Bihar goes to the polls in November, but Assam, West Bengal, Tamil Nadu, Kerala and Puducherry go to the polls in the first half of 2026. That means the salaried class would have got the benefits of the tax cuts by the time they vote.
Delhi, Bihar and the states going to the polls next year have been tough grounds for the BJP, barring Assam where it had two successful tenures. The pro-poor initiatives had reached saturation levels in these states, and the party needed to win over the young and the aspirational, said party leaders.
Driving spending: The budget’s focus has shifted from spending on infrastructure projects to putting more money in people’s hands to boost consumption | Jinse Michale
Bihar, where the Janata Dal (United)-BJP alliance is in power, has got a double bonanza—tax relief and a slew of projects, including the development of greenfield airports, the establishment of a new food technology institute, the creation of a board for the development of fox nuts (Bihar is the largest producer; these seeds are also a significant export commodity) and the expansion of IIT Patna. “The projects will generate jobs and help the state economy,” said BJP general secretary Vinod Tawade. The announcements may help keep the alliance in Bihar strong till the polls.
“The tax relief is very important for the middle class, but the overall message is the 360 degree effort to put India on the path of development for 2047,” said Gopal Krishna Agarwal, BJP spokesperson on economic affairs. “The focus is on four segments of society—the poor, the youth, farmers and women. Then we have four engines of growths, as one cannot have welfare only through budget announcements—resources also have to be generated. These are exports, manufacturing, agriculture and investment.”
Unlike the previous governments, the Modi government’s political outreach underlines its policy moves. The government has kept the capex spending at Rs11.2 lakh crore, marginally higher than last budget’s figure. But, in terms of revised estimates, it is over 10 per cent more as the entire fund could not be utilised. Meanwhile, the focus has shifted from merely spending on infrastructure projects, as has been the case for the last few years, to putting more money in the people’s hand to boost consumption. This is also a subtle admission that the government’s earlier reduction in corporate tax, in 2019, did not work. “The government had hoped the private sector will invest, but they shied away,” said a finance ministry source. “The income tax cut will increase consumption. The private sector will also get a push to spend.” Consumption contributes 60 per cent to the country’s GDP, the private sector around 30 per cent and government spending 10 per cent.
The budget is also notable for its attention on women, who have emerged as the key differentiator in winning elections. The Centre is expanding the number of women beneficiaries of its various schemes, like the Lakhpati Didi scheme to cover three crore women. Sitharaman also envisions increasing women’s participation in the workforce, targeting the 70 per cent mark.
Another constituent of the country’s population, the tribals, got a leg up in the budget as the allocation for the tribal ministry witnessed a jump of nearly 46 per cent. The funds will be used to bring to fruition schemes in tribal areas by building schools, roads and related infrastructure projects. The government has reached out to the community as the BJP’s hold over it appears to be dwindling as witnessed in the last Jharkhand elections and even in the Lok Sabha polls when its tally dropped by 10 seats.
Budgets always come with an underlying political message. Sitharaman gave a loud and clear message to the middle class asking them to spend while strengthening other constituents.
“Good economics is good politics, too,” said Agarwal. “The finance minister also kept fiscal prudence in mind as the deficit will be 4.4 per cent of the GDP. The budget will impact the upcoming polls. We will get the benefits.”