- CII recommends cutting income tax rates and excise duty on fuels to boost disposable incomes and curb inflation.
- Social welfare schemes like MGNREGS and PM-KISAN need significant funding increases.
- Targeted reforms in banking and technology sectors aim to address savings decline and foster innovation.
The Confederation of Indian Industry (CII) has urged the government to adopt measures in Budget 2025-26 to enhance disposable incomes and drive economic growth. Recommendations include lowering excise duty on fuels, which significantly impacts inflation, and reducing the marginal tax rates for personal incomes.
Social welfare demands like higher wages under MGNREGS and increased payouts in the PM-KISAN scheme underline the need to address rural and low-income challenges. These initiatives, while demanding higher expenditures, promise multiplier effects on consumption and economic stability.
Driving Innovation and Consumption Through Policy Reforms
Industry leaders anticipate targeted policies to sustain momentum in the technology sector, bolstered by a $6.5 billion VC influx in 2024. Enhanced funding for cleantech, EVs, and digital infrastructure will be pivotal in advancing India’s green and digital economy.
Proposals like consumption vouchers targeted at low-income groups aim to stimulate demand for essential goods and services. Such time-bound mechanisms could provide an immediate economic uplift.
Bank deposits have become less attractive due to high taxation and competition from equities. Reforms to reduce taxes on interest income and shorten fixed deposit lock-ins could reverse the declining trend in household savings.
The previous year’s success in promoting digital startups, D2C brands, and SaaS companies has fueled expectations for continued financial innovation and credit support models. The government has the opportunity to further catalyze these sectors through adaptive fiscal policies.
Budget 2025-26 represents an opportunity to implement transformative policies that balance immediate fiscal needs with long-term economic resilience. Strategic reforms in taxation, social welfare, and innovation are key to sustaining growth and ensuring inclusivity.
“Consumption is the sole end and purpose of all production.” — Adam Smith
