Growth had indicated a slowing trend as we headed into the Budget for FY26. This was largely being ascribed to a slowing capex cycle where not only the private sector capex had failed to pick up, but government’s capex cycle also was weak due to Union elections and some State elections. Having said, trends in private consumption expenditure indicated that the average growth in the post Covid phase is still weaker compared to the average growth in the pre-Covid phase.
Thus, a critical challenge for the government was to enhance the private consumption demand. True, with inflation having come down, real wage growth would become better. And RBI is also expected to start its rate cutting cycle soon, that would benefit private consumers whose loans are mostly linked to an external benchmark, mostly the repo rate.
However, the Budget did not want to leave this to chance and delivered a disposable income boost to the consumers by reducing income taxes. Salaried income upto Rs 12 lakh now would not attract any taxes. The tax slabs were also changed to benefit even persons at the higher tax brackets. Now a person earning Rs 12 lakh will see his tax burden reduced by Rs 80,000 while for a person earning Rs 50 lakh, the savings on tax outgoes will be Rs 1,10,000.
+ There are no comments
Add yours