Union Finance Minister Nirmala Sitharaman along with team members of Finance, outside her office at North Block in New Delhi on February 1, 2025.
| Photo Credit: Shiv Kumar Pushpakar
Finance Minister Nirmala Sitharaman’s Budget speech was possibly the shortest she has delivered in her eight consecutive presentations, but it packed the strongest punch in terms of political implications, marking the possible return of the middle classes to the BJP fold.
On Saturday (February 1, 2025), Ms. Sitharaman announced a major rejig of tax slabs, providing long-awaited relief to the middle class. In the run up to the Assembly election in Delhi, a city that often votes with its wallet, this is a timely intervention as far as the BJP is concerned.
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Traditionally, the BJP has commanded the support of the middle class, but this key votebank has been feeling left out with regard to Prime Minister Narendra Modi’s welfare push demonstrated in the Union Budgets presented so far under his regime, resulting in a dismay that was vocalised after the July 2024 Budget by many on the street. In that Budget, the Finance Minister had announced an increase in the long term capital gains tax rate from 10% to 12.5% and hiked the short term capital gains tax rate from 15% to 20%, affecting the middle classes who invest in mutual funds and shares. The removal of indexation benefits, which adjust for inflation, for individuals selling properties was also protested by middle class voters.
Voter shift
Data from a post poll survey by Lokniti-Centre for the Study of Developing Societies (CSDS) published by The Hindu last year, showed a 3% shift among middle class voters away from the BJP in the 2024 general election, from 38% in 2019 to 35% in 2024; this loss fell into the Congress’s kitty. While the July 2024 Budget did not reflect this learning, very clearly, the February 2025 Budget has.
While the tax rejig came just in time for Delhi which will vote in a few days on February 5, there seemed to be some advance planning for Bihar, the other State that is set to go to the polls later this year, and which isruled by the BJP and its ally, the Janata Dal (United).
Eye on polls
Bihar got a cornucopia of projects from the Finance Minister, including greenfield airports and an expansion of the capacity of the existing airport in Patna, better facilities at the Indian Institute of Technology in Patna, the constitution of a national level Makhana Board for foxnut cultivation, and the establishment of a National Institute of Food Technology, Processing and Innovation in the State.
The Makhana Board will provide hand-holding and training support to Makhana farmers. “The Board will ensure that they [farmers] receive all benefits of government schemes,” she said.
The current Budget comes against the backdrop of great geopolitical uncertainty, with U.S. president Donald Trump threatening to unleash a tariff war. In that context too, the government’s decision to speak to its traditional support base and present a demand-centric Budget is more than politic.
Published – February 01, 2025 05:25 pm IST
