Finance Minister Nirmala Sitharaman told Parliament that the government is using a multi-part strategy to boost consumption through demand support, higher incomes, and reforms, helping GDP growth.
In a written reply to the Lok Sabha, she stated that policies like the new income tax exemption for incomes up to Rs 12 lakh, recent GST rate reductions, focus on ease of doing business, skill development, job creation, infrastructure projects, and wider access to credit through schemes like MUDRA and PMSVANidhi are expected to increase consumption in the economy.
Balanced growth in urban and rural areas
The Finance Minister also said that the government’s policies aim to ensure balanced growth in both rural and urban consumption.
Urban households are spending more, aided by initiatives for employment and skill improvement, tax benefits, and the growth of digital payments in cities, with rising job opportunities, improved access to loans, and enhanced infrastructure providing additional support to consumer spending.
Rural income gains through key schemes
In rural areas, focused initiatives like PM-KISAN, MGNREGA, PM Awas Yojana (Gramin), agricultural productivity programs, and Self Help Group livelihood projects are driving widespread income growth.
Positive impact on GDP and economic momentum
Sitharaman stated that higher consumption demand will boost the economy by supporting household earnings, encouraging private investment, promoting overall growth, and driving industrial production, creating jobs, increasing business confidence, and strengthening domestic markets.
She added that, based on data from the National Statistics Office (NSO), Private Final Consumption Expenditure’s share of GDP rose from 62.2% in Q2 of 2024-25 to 62.5% in Q2 of 2025-26, while its growth at constant prices increased from 6.4% to 7.9% over the same period.
The Finance Minister added that GDP at constant prices is estimated to have grown by 8.2% in Q2 of 2025-26, compared with 5.6% in Q2 of 2024-25 and 7.8% in Q1 of 2025-26, showing a strengthening growth momentum in the economy.
Leave a Reply