Finance Minister Nirmala Sitharaman reaffirmed on Tuesday that India’s economic fundamentals remain robust and the Indian rupee continues to hold its ground, dismissing any concerns about a structural slowdown. Speaking at the India Today-Business Today Budget Round Table 2025, she emphasized that the recently announced Union Budget 2025-26, which includes significant income tax rebates, is part of the government’s ongoing commitment to strengthening taxpayers’ trust.
Respect for Taxpayers and Economic Growth
“In every Budget, there is a clear intent to respect taxpayers,” Sitharaman stated, highlighting past reforms such as faceless assessment and the introduction of a taxpayers’ charter. She credited these initiatives to Prime Minister Narendra Modi’s continued efforts to build a more transparent and taxpayer-friendly system.
She further noted that these tax measures could positively impact savings and consumption, particularly in light of recent concerns over moderating urban demand. This, in turn, is expected to boost fast-moving consumer goods (FMCG) sales and increase discretionary spending. Additionally, the banking sector could witness higher deposit growth and stronger investment inflows.
Key Highlights from the Union Budget 2025-26
One of the most significant proposals in the Budget is zero tax on annual income up to ₹12 lakh, along with a revamp of the income tax slabs under the new tax regime. Sitharaman also mentioned the introduction of a new Income Tax Act, which aims to simplify compliance for taxpayers. While she refrained from specifying a timeline for its passage, she stated that the Act would first be sent to the Parliamentary Standing Committee on Finance for review.
“If the committee returns it after the second half of the Budget session begins, we will be happy to take it forward,” she said.
Global Developments and Economic Stability
The finance minister dismissed concerns over a structural slowdown, citing India’s strong economic fundamentals and resilient currency despite global uncertainties. She emphasized that fluctuations in the US dollar impact multiple currencies worldwide, not just the Indian rupee.
“When a country’s fundamentals are strong, and its currency remains stable against global counterparts despite volatility against the dollar, it indicates a resilient economy,” she said. She also pointed out that India continues to be one of the fastest-growing economies globally, with projected GDP growth of 6.4% this fiscal and an estimated 6.3% to 6.8% growth in FY26.
The Indian rupee recently breached ₹87 against the US dollar, largely due to US economic policies that have affected multiple global currencies.
Impact of US Tariff Hikes & Foreign Investment
Addressing concerns about the tariff hikes announced by US President Donald Trump, Sitharaman stated that India would closely monitor developments but refrained from speculation.
“We need to assess the impact of these tariffs on China, Mexico, and Canada, and then evaluate how it affects India. However, it’s too early to predict any direct consequences,” she said.
She clarified that the customs duty rationalization measures in the Budget were not a response to the US tariff changes but were planned as early as 2022.
When questioned about foreign portfolio investors (FPIs) withdrawing funds from India, she attributed it to global economic shifts rather than domestic issues.
“Developments in the US, global uncertainties, and Japan’s growing market influence are all factors at play. It’s not just about India,” she explained, adding that the government aims to make India a more attractive investment destination by reviewing the Bilateral Investment Treaty (BIT) model.
Despite global economic turbulence, India’s markets and economic fundamentals remain strong, the finance minister reiterated.
