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(Bloomberg) — India cut taxes for the country’s middle class, putting about $12 billion more in their pockets as the Narendra Modi-led government aims to bolster consumption spending.

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Indians with annual income up to 1.2 million rupees ($13,854) will effectively be exempt from paying income tax, Finance Minister Nirmala Sitharaman said Saturday in her budget speech, raising the cap from 700,000 rupees. 

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The tax changes will lead to the federal government foregoing 1 trillion rupees ($11.6 billion) in tax revenue, Sitharaman said, spotlighting the quantum of extra income that’ll be left in the hands of Indian households.

The minister also narrowed the budget deficit for the coming fiscal year through March 31, 2026 to 4.4% of gross domestic product. The NSE Nifty 50 Index plunged over 300 points from the day’s high of 23632.45 while the budget speech was on, before trimming losses. 

The budget aims to uplift household sentiment, enhance spending power of India’s rising middle class and boost private investment to “unlock greater prosperity,” Sitharaman said at the start of the speech.  

Indians have been hit hard by a double whammy of falling wages and rising prices, as the economy is set to log its weakest growth since the pandemic in the year through March.

The announcements show the revised priority of the government as allocation for infrastructure spending was nearly flat at 11.21 billion rupees over the estimates in full budget last year. 

Here are the key winners and losers from budget 2025: 

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WINNERS

Consumption 

Tax sops, which Sitharaman saved as the last bit in her budget speech, aims to tackle head-on the consumption malaise in the world’s most-populous nation and cheered the stocks of India’s consumer-facing firms. 

The 77-member BSE Fast Moving Consumer Goods Index, which includes hotels, cookie makers to school supply makers rose the most since June. 

Ahead of the budget, firms from Tata Motors to Hindustan Unilever had sought measures to boost consumer spending.

Insurance Sector 

The government raised foreign direct investment limit to 100% in the sector from 74% at present. 

“This is expected to bring in more players and more capital from existing players,” Balamurugan Shanmugam, Chief Investment Officer at Aviva India said after the budget. 

Agriculture 

The government will facilitate credit for 17 million farmers, and also announced a six-year mission for self reliance in pulses. Kaveri Seeds Co., Godrej Agrovet were among the stocks that surged after the announcement.

The finance minister also announced setting up a board for fox nuts — considered a super-food — in Bihar as well as setting up of a fertilizer plant in Assam, a North Eastern state ruled by Modi’s party.

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Manufacturing 

The budget aims to make the country a global manufacturing hub of toys, and announced measures focused on small and medium businesses, calling them a second engine for growth in the country. Footwear makers including Relaxo rose after the government announced a policy to boost production in the sector.

Startups 

The country has planned a 100 billion rupee-fund for startups to boost entrepreneurship in the country, which already has the third-largest ecosystem in the world for new businesses.

Nuclear Power 

Finance Minister Sitharaman said that India will amend its Atomic Energy Act, paving way for private investment in nuclear power projects, and also tweak the Civil Liability for Nuclear Damage Act that has held back investments in the sector. 

She also outlined plans to boost nuclear power by over 12-fold to 100 GW by 2047, which will help nuclear gear makers like BHEL, Walchandnagar Industries.

LOSERS

Infrastructure 

India’s largest construction firm Larsen and Toubro, and others including Siemens, Indian Railway Finance Corp. were among the biggest underperformers in the Nifty 100 index as the government’s increased allocation on capital expenditure by less than 1% from a year ago. The government also reduced planned capital spending for the current fiscal year ending March 31, 2025.  

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Cement makers like UltraTech, Ambuja and ACC were among the firms trading down as their fortunes are closely linked to infrastructure projects. 

Refineries 

Shares of Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroluem Corp fell after the budget did not have any provision for compensating state-owned retailers for selling cooking gas below cost, something the oil ministry had been seeking.

Also, the overall subsidy for the petroleum sector has been cut to 121 billion rupees for the year ending March 31, 2026 against 147 billion rupees in revised estimates for the current fiscal. 

India’s largest firm Reliance Industries Ltd., which earns a big chunk of revenues from its oil business, was trading lower. 

Fertilizer Firms

The government will slash fertilizer subsidy to 1.68 trillion rupees next year in an attempt to narrow its budget deficit. Shares of Indian crop nutrient producers like National Fertilizers Ltd., Rashtriya Chemicals & Fertilizers Ltd., Chambal Fertilisers and Chemicals Ltd. fell.

Health Care 

Lack of measures to boost health care spending by India’s government sent drugmakers shares lower. The country is among the lowest spenders on healthcare globally at about 3.3% of its GDP. This compares with about 5.4% in China and about 16% in the US, according to latest data from the World Bank. 

—With assistance from Mihir Mishra, Ashutosh Joshi and P R Sanjai.

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