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Nirmala Sitharaman: Union Finance Minister Discusses Potential Impact of Tax Rebate on GDP Growth

Union Finance Minister Nirmala Sitharaman has addressed the question of whether the tax rebate announced in the Union Budget 2025-26 will contribute to boosting India's GDP growth rate.

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Neha Kumari
New Update
Budget 2025

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Union Finance Minister Nirmala Sitharaman has addressed the question of whether the tax rebate announced in the Union Budget 2025-26 will contribute to boosting India's GDP growth rate. While acknowledging the potential of the new tax proposal, she emphasized that it would primarily empower individuals with more money in their hands. 

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Sitharaman stated, "I wouldn't want to predict something, but certainly this tax proposal will make people have more money in their hands. When people have money in their hands, they make their judgment about whether they want to spend it entirely or spend some out of it, and also make sure that they save something else, some amount from it." She pointed out that the increase in disposable income will likely result in a dual impact—stimulating both consumption spending and savings.

Stimulating Growth Through Consumption and Savings

The Finance Minister also highlighted that the increased disposable income could lead to increased consumption spending, as individuals would have more to spend on goods and services. At the same time, there would be a potential rise in savings, as people may choose to set aside a portion of their income for future needs.

However, Sitharaman clarified that while these measures are expected to influence the economy positively, they are not the sole driver for achieving an 8% GDP growth rate. She stressed that the Union Budget also outlines several other measures that would contribute to India's long-term growth trajectory. According to Sitharaman, the combination of steps outlined in the Budget will have near-term and medium-term implications for the economy, which are essential for maintaining sustained growth.

Budget Measures for Long-Term Growth

The Union Finance Minister added that India’s growth trajectory would be fueled by various other initiatives, highlighting the government’s focus on unlocking avenues for economic expansion across sectors. The collateral benefits from these measures are expected to nurture the country's economic growth, laying the foundation for a strong and stable future.

While the tax rebate is just one of the steps, it is aimed at stimulating both consumption and savings, ensuring that India’s economy remains dynamic and poised for sustainable growth.

Nirmala Sitaraman
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