Budget 2026: The salaried class is reshaping the economy & expects GoI to focus on its demands

The Rise of India's Salaried Middle Class

India's economy is undergoing a quiet revolution, powered by its burgeoning salaried workforce.

Over the past nine years ending in 2023-24, the number of salaried taxpayers in the ₹10-15 lakh income bracket has surged more than sixfold, jumping from about 8.3 lakh to over 50 lakh.

Similar explosive growth has occurred in the ₹15-20 lakh slab, marking a structural shift as millions climb into these middle-income tiers.

What's striking is that average salaries in these brackets have held steady or dipped slightly, like in the ₹10-15 lakh group where it fell marginally from ₹12.11 lakh to ₹12.05 lakh.

This expansion is fueled by fresh entrants clustering at the lower ends, signaling broader upward mobility among professionals, IT workers, and urban employees.

These changes are reshaping consumption, with households now prioritizing discretionary spending on housing, electronics, and lifestyle upgrades, fueling sectors like automobiles and premium real estate.

Key Demands from the Salaried Class

As Budget 2026 approaches, the salaried class is vocal about its expectations, seeking measures to boost take-home pay amid rising inflation and living costs.

Top on the wishlist is hiking the standard deduction under the new tax regime from its current ₹75,000 level, with calls to raise it to ₹1 lakh or even ₹1.25 lakh to offset medical, transport, and daily expenses that have climbed 10-12% in cities.

There's strong pushback against bracket creep, where salary hikes from potential 8th Pay Commission implementations could shove more people into higher tax nets without slab adjustments.

Experts advocate widening tax slabs, lifting the 30% slab threshold from ₹24 lakh to ₹40 lakh, and allowing deductions for health insurance, home loans, and life insurance even in the new regime.

Other reforms include raising the basic exemption limit, moderating surcharges, and simplifying TDS compliances by limiting rates to just 2-3 levels and merging low-yield sections.

"Rising inflation and higher commodity prices have put pressure on household finances, intensifying demands for direct tax relief. An increase in the standard deduction is the most talked-about expectation, with a strong case for raising it to at least ₹1 lakh," says Sumeet Hemkar, Partner at Deloitte India.

These tweaks aim to make the new regime more appealing, as over 75% of individual taxpayers have already shifted to it, potentially paving the way to phase out the old system.

Economic Implications and Government Response

This growing salaried cohort, now the bulging center of India's income diamond, wields significant influence on policy.

Unlike extremes of poverty or billionaire excess, these middle-income earners demand fiscal discipline over populism, prioritizing ease of living, stable reforms, and opportunities for growth.

Their expanded spending power supports Viksit Bharat goals by driving consumer sectors, but they expect the government to reward honest taxpayers with disposable income boosts to sustain momentum.

Finance Minister Nirmala Sitharaman faces the challenge of balancing these personal tax reliefs with fiscal prudence, manufacturing support via customs tweaks, and broader growth objectives.

Adjustments like higher advance tax thresholds to ₹50,000 and inflation-linked deductions could ease compliance while stimulating demand.

The salaried class's skin in the game means Budget 2026 will be scrutinized not just for headlines, but for tangible improvements in daily finances and quality of life.

In summary, the salaried middle class's rapid expansion is transforming India's economy through heightened consumption and tax contributions, while their demands for slab revisions, higher deductions, and simplified compliance set the tone for Budget 2026. Addressing these could unlock further growth, rewarding this vital demographic and aligning with long-term visions of prosperity.