Cong apprehensive about GDP growth after income tax cut, pitches for GST cut
This story was originally published at 20:32 IST on 10 February 2025
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NEW DELHI – The Congress party on Monday expressed apprehension about the government's stance that cuts in the income tax rate will revive growth in the Indian economy. The Congress has, instead, pitcheed for deductions in Goods and Services Tax or in petrol and diesel prices, saying such a move will impact everyone.
In the Budget for 2025-26 (Apr-Mar), Finance Minister Nirmala Sitharaman announced that there would be no tax on personal income of up to INR 1.2 million, a move aimed at reducing the tax burden and increasing disposable incomes. Sitharaman also tweaked the income tax structure to aid savings and investments of individuals across the income strata.
Former finance minister and senior Congress leader P. Chidambaram, while speaking on behalf of the party in the Rajya Sabha on the Budget, said the government made cuts on income tax rates in view of elections in Delhi.
"The revised tax slabs will lead to the government forgoing revenue to the tune of INR 1 trillion per annum. The finance minister claimed that this INR 1 trillion would revive GDP growth. It wouldn't if the beneficiaries go into consuming imported goods. The GDP will only grow if the people increases consumption of domestic goods and services," Chidambaram said.
"The finance minister could have cut the GST. The finance minister could have cut the tax on petrol and diesel. Everybody pays GST. ...Petrol and diesel prices impacts everyone...," he said.
Chidambaram said unemployment was the gravest challenge before the country. The youth unemployment rate is 10.2%, while graduate unemployment rate is around 13%, he said. Referring to the Economic Survey 2023-24, Chidambaram said that the country needs to create 7.85 million jobs every year until 2030 in the non-farm sector to cater to the rising workforce. "The government must tell its plan to create 7.8 million jobs every year," he said.
Chidambaram raised questions over the success of the government's Make in India initiative and voiced concern over the deportation of Indian illegal migrants from the US, asking whether the government would send an Indian aircraft to bring back the remaining illegal Indian migrants from the US.
In the Lok Sabha, Revolutionary Socialist Party member N.K. Premchandran alleged that the Budget did not address the basic problems in the economy such as lack of purchasing power, mass unemployment, and shrinking wages. "Instead of mobilising resources by taxing the rich and big corporate houses and expanding public that would help generate employment and ensure minimum wages, the government opted to go in the wrong direction," he said.
The discussion on the General Budget in the Rajya Sabha started on Monday, while in Lok Sabha it started on Friday. The finance minister will reply on the Budget discussion in the Lok Sabha on Tuesday. End
Reported by Kuldeep Singh
Edited by Avishek Dutta
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