Key initiatives in the budget include an extension of the Jal Jeevan Mission until 2028, with a goal of achieving 100% rural water supply coverage and improving the maintenance of existing infrastructure. Furthermore, the Bharatnet Project will expand broadband connectivity to all rural government secondary schools and primary health centres, ensuring better access to education and healthcare.

India Post will be pivotal in the growth of rural economies, offering services like micro-enterprise credit, digital services, and logistics support to entrepreneurs, MSMEs, and self-help groups. This aligns with the government’s push to empower rural communities through greater economic inclusion.

Another significant announcement is the launch of the Rural Prosperity and Resilience Program, which aims to tackle under-employment in agriculture by promoting skill development, technology adoption, and investments. This program is designed to support rural women, young farmers, marginalized communities, and landless families.

The rural development initiatives have already shown considerable results, such as a reduction in the multidimensional poverty rate from 24.85% to 14.96%. Additionally, rural internet users have increased to 398.35 million, while wages have steadily grown across both agricultural and non-agricultural sectors.

In terms of rural infrastructure, programs like the Pradhan Mantri Gram Sadak Yojana (PMGSY) have provided all-weather roads, and the Pradhan Mantri Awaas Yojana-Gramin (PMAY-G) has delivered housing to those in need. The Mission Amrit Sarovar has rejuvenated over 68,843 ponds, ensuring sustainable water resources, while the National Rural Health Mission continues to offer quality healthcare to rural populations.

The Swachh Bharat Mission (Gramin) continues its efforts in the second phase to maintain open defecation-free status and manage waste, contributing to a cleaner, healthier rural environment. Alongside, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has received Rs. 86,000 crore in the FY 2024-25, securing rural livelihoods and providing much-needed employment opportunities.

The budget also emphasizes programs like the Saansad Adarsh Gram Yojana, PM-JANMAN, Deendayal Antyodaya Yojana, and Gram Nyayalayas Act, all of which aim to further uplift rural India. With these initiatives, the government is steadfast in its vision to build a developed and self-reliant India by 2047.

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The inclusion of cobalt, lithium, lead, zinc, and ion battery scrap in the import duty exemption is expected to reduce production costs for EVs, making them more affordable for consumers. Another significant factor in promoting EV growth is the expansion of domestic lithium-ion battery production. By increasing local production, India could reduce reliance on imports and lower EV costs.

While these steps should boost EV adoption, the industry’s practice of import parity pricing may negatively impact Indian miners of zinc and lead, as they will have to lower prices to remain competitive. Moody’s suggests that a state mining index will enhance transparency in pricing, benefiting miners.

Additionally, the government’s focus on recovering critical minerals from mining tailings is an innovative step toward reducing waste and addressing environmental concerns. However, mining companies may face higher capital expenditures for tailings management.

India’s passenger vehicle industry is forecast to grow at 4% in fiscal 2025-26, supported by economic recovery and increased consumer spending. While EV adoption remains a challenge, the momentum in the automotive sector is expected to continue, driven by the government’s supportive budgetary measures and increasing demand for cleaner vehicles.

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The mission also seeks to reduce India’s dependence on cotton imports, ensuring a steady supply of high-quality cotton for the textile sector, which plays a crucial role in the national economy. With 80% of the country’s textile capacity driven by MSMEs, increasing domestic cotton production will help strengthen the industry, particularly small enterprises.

The Budget also includes a 19% increase in the Ministry of Textiles’ allocation, now at Rs. 5272 crore for 2025-26, reflecting the government’s commitment to sectoral growth. Additional provisions include reduced duties on shuttle-less looms, measures to boost technical textiles, and support for MSMEs, further driving innovation and growth in the textile sector.

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The BJP, which secured 303 seats in the Lok Sabha in 2019, saw its numbers drop to 240 in 2024, forcing it to rely on coalition partners to form the government for a third term. Party leaders believe this setback was due, in part, to voter apathy among the salaried middle class, which had expressed frustration over rising costs and stagnant disposable income.

A senior BJP functionary noted that while the Opposition’s “false campaign” on constitutional issues impacted the elections, middle-class discontent also played a role. “Many salaried individuals felt they had less money in hand, but under PM Modi’s leadership, this concern has now been addressed. The party has shown it listens to the people,” the leader said.

In Bihar, where elections are scheduled for later this year, the budget included multiple infrastructure and employment initiatives aimed at boosting the BJP’s coalition government with the Janata Dal (United). Though no specific schemes were introduced for Delhi due to the ongoing model code of conduct, the increased tax exemption limit of ₹12 lakh is expected to appeal to the city’s large salaried workforce.

Prime Minister Narendra Modi described the budget as a “people’s budget,” while BJP leaders emphasized that it reflected the party’s attentiveness to public sentiment. The Rashtriya Swayamsevak Sangh (RSS) and BJP’s grassroots cadres had repeatedly flagged concerns over inflation and rising costs, pushing for tax relief as a crucial step toward easing middle-class financial strain.

“In the last decade, policies focused on infrastructure, employment generation, and economic growth. However, there was growing dissatisfaction among middle-class voters, who felt overlooked in favor of schemes for the poor, youth, farmers, and women,” said a BJP leader.

A Lokniti-CSDS study in 2024 revealed that BJP’s support among middle and upper-middle-class voters declined from 38% in 2019 to 35% in 2024. This data reinforced the need for policy adjustments to win back this crucial segment of the electorate.

Union Home Minister Amit Shah echoed this sentiment, stating, “The middle class is always in PM Modi’s heart. The zero-income tax policy for incomes up to ₹12 lakh will greatly enhance their financial well-being.”

Another BJP leader highlighted the necessity of balancing welfare policies for lower-income groups with measures that benefit the middle class. “Free rations, medical care, and LPG subsidies expanded our support base, but the middle class felt neglected. While they make up 20-30% of voters, their influence is significant. The 2004 elections showed how a dissatisfied middle class could impact outcomes,” the leader said.

Organizations affiliated with the RSS played a pivotal role in shaping the budget, communicating key concerns from various labor unions, MSME groups, and farmer collectives. These groups emphasized tax simplification, gig worker insurance, expanded agricultural support, and policies promoting domestic manufacturing under Atmanirbhar Bharat.

An RSS official acknowledged the government’s responsiveness to these demands. “We conveyed the ground reality—there was a strong call for tax restructuring and middle-class benefits. It is encouraging to see these issues addressed in the budget,” he said.

As assembly elections in Delhi and Bihar approach, the BJP is betting on its middle-class tax relief measures to rebuild voter confidence and strengthen its political standing in key states. Whether this strategy translates into electoral gains remains to be seen.

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Manoj Varshney, a travel agency owner in Delhi, believes this decision will stimulate economic activity. “The middle-class will now have more disposable income, which they will likely spend on travel, shopping, and dining out. This will, in turn, boost various sectors of the economy,” he said.

Beyond financial implications, political analysts suggest that this tax relief could influence the upcoming Delhi assembly elections. The BJP has historically been the preferred choice of the middle-class, and this budget announcement may reinforce that loyalty. Some believe it will also encourage higher voter turnout among Gen Z and millennials, who form a significant part of this demographic.

Delhi has one of the highest concentrations of taxpayers in the country, and according to data from the Periodic Labour Force Survey (PLFS), it also has a substantial proportion of salaried workers. This makes the budget’s tax relief particularly relevant for the city. Political experts argue that while this move could help BJP consolidate its support among the middle-class, it may not drastically alter the overall electoral outcome, as lower-income groups remain a major voting bloc in Delhi.

BS Vohra, president of the East Delhi RWAs Joint Front, emphasized the widespread impact of the tax relief. “Even households earning above ₹12 lakh will feel the effect because nearly every family has at least one member in this bracket. The additional income will provide financial breathing room for many families,” he said.

The budget announcement has also shifted the focus of the Delhi elections, which had been largely dominated by debates on welfare schemes and free services. With elections scheduled for February 5, the Aam Aadmi Party (AAP) is seeking a third consecutive term, while the BJP is hoping to capitalize on voter dissatisfaction with the current administration. The Congress, aiming to regain relevance after poor performances in the last two assembly elections, has yet to make significant inroads.

Praffulit Bisht, an assistant professor at Miranda House, believes the tax announcement could reshape public perception. “There has been a sentiment that the Centre has ignored the middle-class for too long. This budget shows that their concerns are finally being addressed,” he said.

Ashwini Marwah, general secretary of the Lajpat Nagar Traders’ Association, noted that middle-class voters have traditionally been overlooked in the race for votes. “This budget sends a clear message that the government values the middle-class, not just in Delhi but across India. However, whether this translates into electoral gains for the BJP remains to be seen,” he said.

Alka Kapoor, principal of Modern Public School in Shalimar Bagh, echoed similar sentiments. “For too long, the middle-class has been neglected in policymaking. Any move that eases our financial burden is welcome. This tax relief will benefit not just individuals but entire families,” she said.

Delhi BJP chief Virendra Sachdeva praised the budget, stating that it aligns with the aspirations of salaried professionals and young urban workers. “By increasing the income tax relief limit to ₹12 lakh, the Modi government has empowered the middle-class like never before,” he said.

A senior BJP leader, speaking on condition of anonymity, noted that the party already has a strong presence among the middle and upper-income groups. “This budget further strengthens our position. Along with the upcoming eighth pay commission, these measures will help us consolidate our base,” he said.

The Aam Aadmi Party, which had earlier advocated for a tax rebate up to ₹10 lakh, argued that the budget did not go far enough. AAP leader Sanjay Singh questioned the lack of relief for small business owners. “This budget favors salaried individuals, but what about small and medium business owners? Where is their relief?” he asked.

Political analyst Sajjan Kumar Singh of PRACCIS highlighted the economic divide in Delhi’s electorate. “The middle-class has always leaned towards the BJP, and this budget will likely reinforce that trend. However, Delhi’s largest voting bloc consists of lower-middle-class and working-class voters. While the BJP may gain in vote share, achieving a clear majority could still be a challenge,” he said.

As Delhi prepares for the upcoming elections, the tax relief announced in the budget is likely to remain a major talking point. Whether it translates into electoral gains for the BJP or simply reinforces existing loyalties remains to be seen.

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Shivam Thakral, CEO of BuyUcoin, appreciated the move to streamline TDS rates, stating that it could enhance clarity and compliance for Web3 businesses. However, he urged the government to establish a committee to review business regulations and create a more startup-friendly ecosystem. He emphasized the need for clear guidelines to encourage domestic and foreign investments in digital assets.

The Bharat Web3 Association (BWA) acknowledged the government’s continued focus on digital transformation but expressed disappointment over the unchanged VDA taxation framework. “Despite data-backed justifications, the government has not introduced changes to the existing tax structure, which affects industry growth and investor participation,” said BWA Chairman Dilip Chenoy.

Avinash Shekhar, Co-Founder & CEO at Pi42, noted that while the budget emphasizes technological advancements, the absence of direction for VDAs has left the crypto ecosystem feeling overlooked. He highlighted concerns over India’s high 30% tax on crypto gains and 1% TDS, which continue to push Indian investors and tech talent toward crypto-friendly nations like Singapore and Dubai.

Ashish Singhal, Co-founder of PeepalCo, pointed out both positives and negatives in the budget. He welcomed the government’s decision to mandate reporting of crypto transactions, which he sees as a step toward regulatory clarity. However, he criticized the continued heavy taxation on crypto trades, making trading in India expensive.

Sumit Gupta, Co-founder of CoinDCX, expressed concern over the lack of parity in tax treatment between Indian and international crypto exchanges. He urged the government to enforce the same TDS obligations on offshore exchanges to ensure fair competition for compliant Virtual Asset Service Providers (VASPs) operating in India.

While the budget introduces minor steps toward regulatory clarity, the Web3 and crypto industries continue to seek comprehensive reforms, including lower tax rates and well-defined regulations to foster innovation and investment in India’s growing digital asset ecosystem.

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A major step towards strengthening domestic manufacturing is the extension of full exemptions on 25 critical minerals, including cobalt and lithium-ion battery waste. This move is expected to lower input costs for manufacturers and foster growth in mining and processing industries. Additionally, the budget proposes exemptions on 35 capital goods used in EV and mobile battery production to reduce reliance on imports and enhance India’s position as a global battery hub.

Shailesh Chandra, President of SIAM, emphasized that the focus on clean tech manufacturing, including batteries and motors, will significantly benefit India’s growing EV ecosystem. Jyoti Malhotra from Volvo Car India echoed this, highlighting the government’s support for battery manufacturing, recycling, and charging infrastructure as key to driving EV adoption.

To further promote sustainable growth, the government introduced a National Manufacturing Mission for Clean Tech, targeting EV components, solar cells, wind turbines, and green hydrogen electrolyzers. This initiative aims to secure India’s place in the global clean energy market.

The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme has also been extended to provide ongoing incentives, particularly for two-wheelers and commercial vehicles. Public-private partnerships will be encouraged to expand charging infrastructure and boost EV adoption.

In addition to boosting domestic manufacturing, the budget cuts import duties on premium motorcycles and cars, making high-end vehicles more affordable. Import duties on motorcycles above 1600cc and CBU cars have been reduced, attracting foreign investments in the luxury vehicle market.

The budget also introduced initiatives to foster electronics and semiconductor manufacturing, with a focus on enhancing domestic production of automotive electronics. Customs duty on interactive flat panel displays has been increased, while duty on LCD and LED TV open cells has been reduced to support local manufacturing.

Exports were another key focus, with an Export Promotion Mission aimed at integrating India’s manufacturing sector with global supply chains. This initiative will be supported by a Digital Public Infrastructure for International Trade and a framework for promoting Global Capability Centers (GCCs) in Tier-2 cities.

Dheeraj Hinduja from Ashok Leyland noted that continued investments in infrastructure and green mobility would fuel long-term economic growth. The budget’s focus on skilling, digitisation, and renewable energy ensures a holistic approach to India’s economic development.

In summary, the Union Budget 2025-26 lays a solid foundation for India’s automotive sector, prioritising EV adoption, clean technology, and manufacturing localisation. These measures, along with export growth and power sector reforms, will support a self-reliant and globally competitive automotive industry in the years to come.

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The Nifty 50 index opened at 23,746.65 points, registering a slight gain of 38.75 points or 0.16 percent. Similarly, the BSE Sensex started the day on a positive note at 78,319.56 points, climbing by 120.45 points or 0.15 percent. However, these early gains quickly faded as the markets faced consistent selling by Foreign Portfolio Investors (FPIs).

Experts have noted that the near-term outlook remains challenging for the Indian markets, with corporate earnings and the upcoming Union Budget expected to play a crucial role in shaping market sentiment.

Ajay Bagga, a noted Banking and Market Expert, highlighted the challenges plaguing the markets. “Indian markets are grappling with lowered GDP growth estimates of 6.4 percent for FY2025, compared to 8.2 percent in FY2024. Additionally, major financial institutions have provided moderate operating updates for the October-December quarter, contributing to ongoing FPI selling in key sectors like financials. The overall mood remains cautious, and a turnaround will largely depend on individual corporate earnings and the Union Budget,” Bagga explained.

Sector-wise, selling pressure dominated, with only Nifty Pharma and Nifty Oil and Gas showing gains during the opening session.

Among the Nifty 50 stocks, 13 opened with gains, while 37 saw declines, and one stock remained unchanged at the time of this report. Top gainers included Dr. Reddy, ONGC, Reliance, Cipla, and Maruti. Conversely, the biggest losers were Trent, Shri Ram Finance, Adani Ports, BEL, and Tech Mahindra.

Commenting on the market trends, Akshay Chinchalkar, Head of Research at Axis Securities, noted the technical patterns observed in the previous session. “The Nifty’s rally yesterday traced a bullish harami pattern, but the long upper shadow indicates ongoing nervousness. Bulls need to push the market above the previous high of 23,795 to validate this formation. Moreover, the resistance area created by the falling 100-day and rising 200-day averages, between 23,915 and 24,100, poses a challenge. This resistance coincides with the high concentration of the 24,000-call strike for this week’s expiration,” Chinchalkar explained.

On the global front, Asian markets exhibited a mixed trend during Wednesday’s opening. South Korea’s KOSPI index surged by more than 1.2 percent, and Singapore’s Straits Times rose by 0.5 percent. However, other markets remained under pressure, with Hong Kong’s Hang Seng index down 1.3 percent, China’s Shanghai Composite dropping by over 1 percent, and Japan’s Nikkei 225 falling 0.35 percent.

While the domestic markets struggle with selling pressure and cautious sentiment, all eyes remain on the upcoming corporate earnings season and the Union Budget to provide a much-needed boost.

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Sectoral indices showed mixed trends, with banking, IT, pharma, healthcare, and financial services emerging as the day’s top losers, according to data from the NSE.

Ajit Mishra, SVP of Research at Religare Broking Ltd, commented, “The markets paused after a three-day rally, shedding over half a percent. Sectoral trends were mixed, with energy and FMCG sectors ending in the green, while IT and pharma sectors closed in the red. Broader indices reflected the benchmark’s movement, registering a nearly half a percent decline.”

He further explained that the current pullback is a natural pause following recent gains, which may continue until the Nifty surpasses the next resistance level at 24,250 points.

Religare Broking advises investors to focus on stock-specific opportunities aligned with sectoral trends. “In the near term, FMCG, auto, and energy sectors are likely to outperform, and positions should be adjusted accordingly,” the firm suggested.

The Indian stock market started 2025 on a strong note, with the Sensex and Nifty posting solid gains on January 1 and 2. Notably, the benchmarks recorded their best session in six weeks on Thursday.

Krishna Appala, Senior Research Analyst at Capitalmind Research, highlighted the optimism, saying, “The year has begun positively, with the Nifty gaining 1.25% and the Nifty 500 advancing 1.4% in the first week. This broad-based rally sets a stable foundation for 2025. While market valuations appear stretched, especially in mid- and small-cap segments, history suggests such conditions can persist longer than expected. Investors should prioritize businesses with steady earnings growth and adaptability to changing trends.”

Looking ahead, the upcoming Q3 results season is expected to play a crucial role in determining market direction. Following this, attention will likely shift toward the Union Budget and policy decisions under the Trump 2.0 administration.

Currently, the Sensex is nearly 6,000 points shy of its all-time high of 85,978.

In terms of annual performance, the Sensex and Nifty delivered gains of 9-10% in 2024, following a stellar 16-17% rise in 2023. However, 2022 saw only modest gains of 3% amid challenges like weak GDP growth, foreign fund outflows, rising food prices, and sluggish consumption, which continued to weigh on investor sentiment through 2024.

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