New Delhi: India plans to reduce income tax rates for individuals to stimulate the middle -class spending power, the Minister of Finance Nirmala Sitharaman said on Saturday, when she announced an annual budget that was looking for also to increase private investments to strengthen growth.
The fifth world economy is expected to display its slowest growth in four years next year in the middle of fragile urban demand and low private investments, while stubbornly high food inflation has bumped available income.
Measures to help the poor, young people, farmers and women were also included in the 2025-26 budget, said Sitharaman, highlighting the “tax transformative reforms”.
The government said that people earning up to 1.28 million pounds sterling ($ 14,800) per year will not have to pay taxes, which increases its threshold by 700,000 ₹. He also lowered the tax rates for people earning over the new threshold, the measures to cost around 1 Billion of dollars in tax revenue, said Sitharaman.
The government, however, continued to improve its finances, targeting a budget deficit of 4.4% of GDP in 2025-2010, against 4.8% of revised GDP during the current year.
The government will borrow 14.82 sterling books (171 billion dollars) via the bond markets to finance this year’s budget deficit.
To balance lost income, the government has planned a modest increase in capital expenses this year, which will increase to 11.21 billions of sterling books in 2025-2026 against $ 10.18 billions of dollars during the current year .
Reforms sought
The country’s chief economic advisor, in a report published on Friday, provided that the economy of India would remain slow during the financial year from April 1, advocating long -term reforms in areas such as land and work to stimulate growth in the medium term.
Although short -term growth is in accordance with average at 10 years, India needs a growth rate of 8% to achieve its longer -term economic objectives and to create enough jobs for its young population and young.
Economists have suggested that the government facilitate the burden of individuals through tax reductions on income and energy products and to rely on the $ 24 billion program in job creation plans announced in the first Post-electoral budget in July.
The NIFTY 50 and the BSE SENSEX have changed between the gains and the losses while the Minister of Finance presented his budget. They both failed 0.1% to 23,491 points and 77,443 points, at 12:23 p.m. respectively.
Focus on the farm, manufacturing and the financial sector
India has faced high food inflation in the past year. Detail inflation in December has December a four -month of 5.2%, but food inflation, which represents almost half of the consumption basket, continued to remain high at 8.39 % in December.
To stimulate productivity in the agricultural sector, the government will launch a national mission to push high -efficiency crops, with particular emphasis on pulses and cotton production.
To help farmers, the subsidized credit limit has been increased to 500,000 ₹ Indian ($ 5,778), against 300,000 ₹ earlier.
The government will also launch missions to push manufacturing and exports, said Sitharaman, without going into details.
India has long aimed to strengthen the share of manufacturing and exports in its economy, but has had little success. The share of manufacturing in the economy has remained almost 17%, less of its long -standing target of 25%.
To deepen the penetration of insurance into the economy, the direct foreign investment limit on insurance has been increased to 100%, against 74% currently.