Replying to a general discussion on the budget for 2026-27 in the Rajya Sabha, Sitharaman said the high personal income tax mop-up does not mean the middle class is being crushed in any manner, as is being alleged by the opposition.
If anything, she added, the middle class is expanding, as reflected in the growing income tax payer base despite last year’s tax slab revision that made incomes up to ₹12 lakh per year tax free.
Sitharaman said a high-level committee on the services sector, proposed in the budget, will suggest steps to expand artificial intelligence (AI), cloud-based services and other new-age technologies and boost such exports.
The panel will focus on segments such as fintech, logistics, healthcare, tourism and creative services on top of doubling down on the traditional Indian edge in software and IT services, she suggested.
India is estimated to grow 7.4% in the current fiscal, against 6.5% a year before, and is projected to remain the world’s fastest-growing major economy at least over the next two years. Retail inflation has eased to 1.7% this fiscal. On a 10-year horizon, retail inflation has remained at its lowest point ever, the minister said, highlighting India’s macroeconomic stability.The budget, she stressed, isn’t just an annual accounting statement of the government; it provides a clear pathway for India to realise its target of emerging as a developed nation by 2047 while addressing both short and medium-term challenges and goals.
No middle-class suppression
Sitharaman refuted the opposition’s charges that the middle class is being suppressed and sandwiched between the rich and the poor because personal income tax collections have exceeded the corporate tax mop-up.
“Actually, there is enough evidence of a historic middle-class expansion, and formalisation driven by the economic reforms that have been undertaken in the last ten years,” she said. “So, the economy is no longer narrow, and it’s not just confined to the elite.”
Between 2013-14 and 2024-25, the number of taxpayers – people filing returns or whose tax is deducted at sources – more than doubled to 121.3 million from 52.6 million.
The taxpayer base is expanding despite the I-T relief announced last year. On top of that, GST cuts, announced in September 2025, have lowered household expenses, she said. “So, somewhere the notion of the suppression of the middle class cannot coexist with real incomes rising and with record low inflation.”
No slashing of funds
Sitharaman rejected charges that the government has achieved fiscal consolidation by compressing expenditure in many social and rural sector schemes.
The government’s revised estimates of spending in 14 such schemes are barely 1% lower than the cumulative budget estimates over the past decade, way below the 6.4% gap during the UPA period, she said.
