The year 2025 stands out as a landmark in India's reforms journey-one that decisively placed the middle class and the common man at the heart of policymaking. Guided by the vision articulated by Prime Minister Narendra Modi, this period witnessed a series of interconnected reforms spanning taxation, labour, investment, and ease of living. Together, these measures have reshaped India's economic landscape by strengthening household finances, boosting consumption, and reinforcing confidence in long-term growth.
In his Independence Day address, the Prime Minister underscored the central role of the middle class in nation-building, noting that while this segment contributes significantly to the country, it also aspires to a better quality of life. That vision found concrete expression within months through policy actions that directly touched lives. From the new income tax framework to GST 2.0, the reforms of 2025 signal a shift from complexity to clarity, and from burden to empowerment.
Among the most impactful steps has been the restructuring of the direct tax system. By exempting incomes up to Rs 12 lakh and enhancing the standard deduction to Rs 75,000, the government has delivered meaningful relief to a vast majority of taxpayers. As a result, nearly 90 per cent of taxpayers-around seven crore individuals-now fall within the tax-free bracket. The financial gains are tangible: an individual earning Rs 12 lakh saves Rs 1 lakh in taxes, with total savings rising to Rs 1.75 lakh after accounting for the standard deduction. Higher income brackets also benefit, while retirees gain from the doubling of deductions on savings to Rs 1 lakh.
This increase in disposable income has significant macroeconomic implications. With middle-class households typically spending about 80 per cent of additional income, the tax relief alone is projected to inject nearly Rs 5 lakh crore into the economy. Economists estimate that this could lift private consumption growth beyond 10 per cent and push overall GDP growth above 8 per cent in FY26, reinforcing India's position as the world's fastest-growing major economy.
Complementing direct tax reform is the introduction of Next-Generation GST, or GST 2.0. Building on the unification achieved since 2017, the new framework focuses on simplification and affordability. By abolishing the 28 per cent and 12 per cent slabs and consolidating the structure around two principal rates of 5 and 18 per cent, the government has made the tax regime cleaner and more citizen-centric. Everyday essentials such as paneer, milk, rotis, and parathas have been fully exempted, while personal care items like soaps, shampoos, and toothpaste now attract just 5 per cent GST instead of 18 per cent.
The benefits extend to key areas of household expenditure. Two-wheelers, small cars, and three-wheelers-once taxed at 28 per cent-are now under the 18 per cent slab, making mobility more affordable for young professionals and families. Cement has seen a rate cut from 28 to 18 per cent, lowering housing and construction costs. For rural households, tractors, harvesters, and irrigation machinery are now taxed at 5 per cent, reducing input costs and supporting agricultural productivity. Students benefit from exemptions on notebooks, pencils, maps, and erasers, easing education expenses.
Healthcare affordability has been another priority. Life-saving cancer drugs and medicines for rare diseases have been placed in the zero-tax category, while medical oxygen, diagnostic kits, and thermometers are taxed at minimal rates. These measures directly reduce out-of-pocket expenses for families and reflect a policy approach that aligns fiscal decisions with social well-being.
The reform momentum of 2025 extends beyond taxation. Labour code reforms have simplified compliance while enhancing social security, contributing to formalisation and job creation. FDI liberalisation has strengthened capital inflows and investment, supporting growth across sectors. At the same time, targeted steps such as raising the TCS threshold on foreign remittances and removing TCS on education-related remittances funded through loans have reduced compliance burdens for families investing in education and global opportunities.
Recent reforms such as permitting 100% FDI in the insurance sector, the introduction of the SHAANTI Bill, and the strengthening of digital infrastructure through investments like Google's data centre reflect a distinctly futuristic policy direction. Allowing full foreign investment in insurance is expected to deepen competition, improve capital availability, and accelerate the use of advanced underwriting and claims technologies, making insurance more affordable for ordinary consumers. The SHAANTI Bill-aimed at modernising India's nuclear energy framework by enabling private participation under a unified, transparent regulatory regime-signals a broader shift towards capital-intensive, future-ready sectors. Meanwhile, global digital investments enhance efficiency, cybersecurity, and scale across industries, reinforcing a technology-driven, consumer-centric growth ecosystem.
The impact of these reforms is evident in India's evolving economic profile. According to income data highlighted in recent reports, the middle class and upper middle class have expanded significantly between 2015 and 2023, while multidimensional poverty has declined sharply, with over 24 crore people escaping poverty in less than a decade. Financial participation has deepened as well, with demat accounts rising from 2.1 crore in 2013 to a projected 18.5 crore by 2025, and systematic investment plan contributions reaching record levels.
What makes 2025 distinctive is the coherence of its reform agenda. Direct tax relief boosts disposable income, GST rationalisation lowers the cost of living, labour and investment reforms strengthen employment, and fiscal discipline sustains confidence. Together, they reflect a governance philosophy focused on ease of living, economic aspiration, and inclusive growth.
By placing the middle class and the common citizen at the centre of reform, 2025 has reinforced a simple yet powerful idea: when households prosper, the nation moves forward with confidence.
(The author is National Spokesperson of the BJP)
Disclaimer: These are the personal opinions of the author
