Ahead of the Union Budget 2025-26, the government is expected to introduce measures to aid small businesses, farmers, and the export sector. Finance Minister Nirmala Sitharaman recently held her fourth pre-budget consultation, where she discussed key economic policies and priorities with stakeholders. Sources suggest that the government may announce tax relief for middle-class citizens to help revitalize the slowing economy, along with support for micro, small, and medium enterprises (MSMEs). A new financing model for MSMEs and additional tax incentives are being considered, including a potential 25% income tax slab for MSMEs structured as partnerships, LLPs, or sole proprietorships.

Further support for MSMEs could include tax sops to encourage the adoption of sustainable energy practices, with the introduction of a 100% depreciation policy for solar power investments. The export sector may also see relief, with suggestions to increase the cap under the interest equalization scheme to Rs 10 crore, providing more financial support for MSME exporters. High production costs, such as steel, which constitutes 60% of MSME production, make them vulnerable to international competition, prompting calls for further government intervention.

The budget may also include measures to address key challenges such as high food inflation and a slump in exports, both of which have affected consumer demand in urban and semi-urban areas. The middle class, in particular, has voiced concerns over high taxes and stagnant wages. The government is expected to offer tax relief to alleviate these concerns, thereby boosting consumer spending and contributing to India's economic growth. These discussions are part of the government's ongoing consultations to finalize the Union Budget, which will be presented in Parliament on February 1.