Tax Cut To Put Money Into Peoples' Hands, Say Budget Makers

Union Budget 2025-26, presented on February 1, had a bunch of proposals that will have implications down the line. Tuhin Kanta Pandey, Finance and Revenue Secretary, and Arunish Chawla, the Secretary of the Department of Public Asset Management, explain some of these aspects of the Finance Bill. Edited excerpts: Q: This Budget sticks to fiscal consolidation even as it has done something for people who opt for the new tax regime. On infrastructure, has the government shifted away from the capex-driven strategy of the last few years to a consumption driven strategy? Tuhin Kanta Pandey: I think this binary is not in order. In terms of narrative, of course, the tax break has taken the lead. But that is not to say that capex has been ignored. If you look at the capex in the last year, we have got two distinct elements in the Budget. One is the direct capex and the other is indirect capex, which is through states. That means we are giving grants to the states. When we give grants, it is a revenue expenditure for us; it is not treated as capex, but it is capex when it is spent into the economy by the states. For the economy, both are capex. And that figure is not Rs 11 lakh crore, it was about Rs 15 lakh crore. And when you look at the figures in the Revised Estimates (RE), we are going from Rs 10 lakh crore to Rs 11.2 lakh crore, it’s about a 10% increase over the RE. But if you add it together, it is 17% growth over the RE. We had some exceptional circumstances last year, like the General Elections and excessive rains, so we did not really have the full year, in terms of the capex. That is not going to be the case this year. On income tax relief, yes, it is a way of putting money into the hands of the people, especially the middle class. And it can go into consumption, it can also go into investment. Q: How is the government confident of achieving the disinvestment target of Rs 47,000 crore, and where do you see it accruing from? Arunish Chawla: There is no fixed disinvestment target. What you are talking about is an indicative number for asset monetisation as a whole. We do not pursue an asset monetisation strategy in isolation. We have a well-defined road map for value creation and value optimisation. It has five elements: corporate performance, capex policy, communication, consistent dividend policy and calibrated disinvestment. As part of this strategy, we optimise between dividends, regular incomes, further investment for the growth of the economy, and maximising value for small investors. Q: Will the direct tax code make the old tax regime irrelevant? TKP: So far as the present income tax law is concerned, we have got the two regimes as options. But 75% of the people have already shifted to the new regime and we hope that the rest will also gradually shift. The Bill that we are trying to bring in is for a much larger purpose. We want to simplify the law, make the language direct, make interpretations redundant, have more clarity of purpose and language and less litigation. Q: With the measures announced in the Budget, what kind of uptick do you expect in GDP growth? TKP: I would say that despite the global headwinds, India remains one of the fastest growing large economies. But we are not happy with that, and we want to accelerate it. We need to fire on all engines. @Szarabi

Tax Cut To Put Money Into Peoples' Hands, Say Budget Makers

Tuhin Kanta Pandey, Finance and Revenue Secretary, and Arunish Chawla, Secretary of DIPAM, explain the macro philosophy of the Budget.