I-T relief, policy rate cut to boost growth, says FM

The recent tax relief in the Union Budget and the Reserve Bank of India's (RBI) first policy rate cut in five years will trigger a consumption-driven growth cycle, finance minister Nirmala Sitharaman said on Saturday, highlighting the "good coordination" between fiscal and monetary policies.

- Rajeev Jayaswal

NEW DELHI:

"Yes, I would expect that," Sitharaman said when asked about revival in private investments following the ₹1 lakh crore direct tax relief announced in the budget on February 1 and RBI's 25 basis point rate cut to 6.25% on February 7.

The finance minister said preliminary inputs suggest positive momentum. "Orders for fast moving consumer goods for April to June are already getting booked. Industry is clearly seeing signs of possible recovery of consumption and many are looking at reviewing their capacity utilisation," she told reporters after her customary post-budget interaction with RBI's Central Board of Directors.

The Budget emphasised "demand" as a key support pillar for achieving 'Viksit Bharat' by announcing zero income tax up to ₹12 lakh under the new regime. Experts estimate that direct and indirect tax reliefs will leave over ₹1.26 lakh crore in people's hands to boost consumption.