Union Budget 2025: Tax Break will give a fillip to Slowing Economy, Says Center -

Union Finance Secretary Tuhin Kanta Pandey. , Photo credit: the Hindu

The centers’s decision to significantly slash the income tax payer’s burden was aimed at addressing With a broad-based boost to demand, Savings , And investments, Finance Secretary Tuhin Kanta Pandey Told The Hindu On Sunday (February 2, 2025).

While The Government will Forego ₹ 1 Lakh Crore of Revenue through the Move to Make Annual Incomes Up to ₹ 12 Lakh Tax-Free and Rejig the tax slabs and rates across the boy, Mr. Pandey Told The Hindu That in Aggregate terms, this will spur the economy in a manner which “probally can’t even be fathomed”.

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“The fact is that there was also angst, which I think the government noticed. The second is also the economic reason [slowdown]This is a good and a new deal, “The secretary said.

‘Trust People’s Wisdom’

“Normally, we say an investment multiplyer is more than the consumption multiplyer… but the state of economy that we have today, its requires all kinds of engines to be fired. Therefore, Agnostic of that, I Think We Should Really Be Trusting The People’s Wisdom, Whatever they want to do. It will come back and the economy will get a boost, “He said, adding that”Lakshmi baantne se badhti hai (Distributing Wealth also increase wealth) “.

“If the money come to the government, it will be put in a certain way. If the money goes back to people, the money is distributed in a more equitable way and i’ll explain why. If i give the money to you, you have three choices. You can consume, as per your choice-be it on travel, dining, services, or consumer durables-which will be much more broad-based and not just be in steel and cement, “He POINTED OUT.

Save, Spend, Invest

If People Choose to Save INTEAD OF Consuming, that would also help, as India’S Savings Rate Needs to Go Up and Bank Deposits Need to Grow to Support Credit Flows to Critical SEGMENTICAL RISES (MSMES), The Finance Secretary said .

“Third, you may choose to invest directly. Have we forgotten about household investments? Millions of Houses are being made or rebuilt by people on their own across small towns. They raise the money, order on their own, get a contractor to build or rebuild their Own Houses. That’s how it used to be and still is in many places, “Mr. Pandey underlined.

Asked if there was an assessment of how much this tax stimulus could Lift Growth, The Secretary Said: “What Kind of Multiplier will operate will depend up . In eater case, in the current situation that we are here, whitever you would do, it helps. ” Consumption will spur demand and help private investments, Savings will boost bank deposits, and so on, he explained.

So it is a reliable and it is also a policy choice that government has exercised in order to see that this extra disposable income will come back to the economy and lift the Spirits. This would enhance the weakening growth engines of demand and address the slowdown concertn too, “The Finance Secretary Said.

RBI Rate Cut Possible

Asked Whether an Interest Rate Cut by the Reserve Bank of India (RBI), Whoose Monetary Policy Committee Meets This Week, Will Help Revive Growth Furter in Tandem with the Center’s Stimulus, Mr. Pandey said: “Let’s wait for Friday. They will decide autonomously. I will not hazard any guess on what the rbi will do but its stance has been that inflation is coming down… Now, what is the level they will be comfortable to announs a rate cut, is for the deac

The budget, he said, is “absolutely non-inflationary”, with the fiscal deficit reined in at 4.4% of GDP. He dismissed suggestions that public capex has not been pushed this time, saying “Reflect indequate understanding”.

“Our Effective Capital Expenditure is Kept at ₹ 15.48 Lakh Crore, Not just the ₹ 11.21 Lakh Crore to Be Directly Spent by the Centre, As Government Funding will help states’ campxx! On top of that, there is another 5 lakh crore from public sector firms, so Total Capex is about ₹ 20 Lakh Crore, ”He explained.

Published – February 02, 2025 10:04 pm IST