According to Reuters, India's economic growth, which has been primarily fueled by urban consumption since the pandemic, is showing signs of slowing. In light of this, Prime Minister Modi is now suggesting the possibility of tax cuts for the middle class ahead of upcoming budget discussions.

Indian Prime Minister Narendra Modi addressed the nation on Friday, expressing his hope that the Indian goddess of wealth, "Maa Lakshmi," continues to bless the country's poor and middle class. His comments came during a session of the Indian Parliament, which was convened to discuss budgetary proposals for the fiscal year starting April 1.

Indian Finance Minister Nirmala Sitharaman is set to present the 2025 budget on February 1.

The significance of these remarks lies in their potential implications for personal tax breaks aimed at India's middle class, as well as measures to strengthen welfare systems for rural populations—both of which are seen as key political and economic demographics.

India's economic growth, which had been largely driven by urban consumption following the pandemic, has begun to slow in recent months. According to the Statistics Ministry, India’s growth rate is expected to dip to 6.4% in the financial year ending in March, the slowest pace in four years.

The urban population has been cutting back on spending due to stagnant wages, high inflation, and steep taxes. This has contributed to growing frustration among the middle class, which was a significant factor in Modi’s weaker election performance last year.

Public spending, which accounts for 60% of India's economy, has taken a hit, negatively impacting the profits of major consumer companies in recent months.

Modi expressed confidence that India will achieve its goal of becoming a developed nation, or "Viksit Bharat," by 2047, when the country will mark 100 years of independence. He further stated that this upcoming budget would provide the nation with new energy and hope.

The "Viksit Bharat" mission, which aims to transform India into a developed nation, was first announced by Modi during a national address in January 2024.