Tax Cuts Aim To Lift Demand, Spur Growth: Nageswaran

Global political and economic uncertainties key drivers behind many of the budget proposals

- Rhik Kundu & Manas Pimpalkhare

Political and economic uncertainties shaping the world today have been a key driver for several budget proposals, including the widely debated tax cut and revisions to tax slabs, chief economic adviser V. Anantha Nageswaran said on Monday.

Speaking at a post-budget interactive session organized by the Confederation of Indian Industry (CII), Nageswaran said the income tax relief announced in the budget would not only boost disposable income but also support the economy, whether directed toward consumption or savings.

"If allocated to consumption, it would strengthen aggregate demand, a key factor in providing demand visibility necessary for capital formation," he said.

"Both would be positive for the economy if it were to be directed towards consumption; it would boost aggregate demand, which is one of the ingredients for demand visibility to be able to undertake capital formation," he added.

Finance minister Nirmala Sitharaman in her budget speech announced an income tax break for individuals earning up to ₹12 lakh.