Lower taxes & follow fiscal path to drive urban consumption, economists to govt

TO ARREST THE slowdown being witnessed in urban demand, the Centre should announce a slew of targeted measures in the upcoming Union Budget for FY26, economists said.

- PRIYANSH VERMA

Many of them suggest that income tax rates, in the new tax regime, should be eased to give more disposable income to individuals; while some said the fiscal consolidation path should be adhered to for restraining inflation, to subsequently spur consumption.

ICICI Securities Primary Dealership's senior economist Abhishek Upadhyay suggests that the government can increase standard deduction for salaried taxpayers under the new tax regime (NTR) from the present levels (₹75,000 per annum).

He further says that the 30% slab should kick in after an income of ₹30 lakh per annum (and not ₹15 lakh) in the NTR; and a cut in excise duties on fuels can also be considered.

Paras Jasrai, economist, India Ratings and Research (Ind-Ra) said: "Controlling inflation would give a boost to consumption demand, as this increases real wages. By focusing on fiscal consolidation, the government can help reduce inflation and thus boost consumption."