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As deliberations around next fiscal’s union budget are underway, the Industry body Confederation of Indian Industry (CII) in its suggestions for 2025-26 has recommended lowering the excise duty on fuel to boost consumption, especially at the lower income level. It argued that fuel prices significantly drive inflation.
The budget could also consider a reduction in marginal tax rates for personal income up to Rs 20 lakh per annum. According to CII, it would help trigger the virtuous cycle of consumption, higher growth and higher tax revenue.
Emphasising the high gap between the highest marginal rate for individuals at 42.74 per cent and the normal Corporate Tax Rate at 25.17 per cent, it said, inflation has reduced the buying power of lower and middle-income earners.
“The central excise duty alone accounts for approximately 21 per cent of the retail price for petrol and 18 per cent for diesel. Since May 2022, these duties have not been adjusted in line with the approximately 40 per cent decrease in global crude prices. Lowering excise duty on fuel would help reduce overall inflation and increase disposable incomes,” the industry body said.
“Government interventions could focus on enhancing disposable incomes and stimulating spending to sustain economic momentum. Persistent food inflationary pressures particularly impinge upon low-income rural households who allocate larger share to food in their consumption basket”, Chandrajit Banerjee, Director General, CII added.
Increase in wage under MGNREGS, payout under PM-KISAN
In its proposals, CII also recommended a Rs 108 increase in the daily minimum wage under the MGNREGS from Rs 267 to Rs 375 as per suggestions of the ‘Expert Committee on Fixing National Minimum Wage’ in 2017.
Moreover, the industry body also urged the govt to raise the annual payout under the PM-KISAN scheme from Rs 6,000 to Rs 8,000.
Increase in PMAY unit cost, introduction of consumption vouchers
The (CII) also sought an increase in the unit costs under the PMAY-G and PMAY-U schemes, which have not been revised since the scheme’s inception. The CII suggested the introduction of consumption vouchers, targeted at low-income groups to stimulate demand for specified goods and services over a designated period.
The vouchers could be designed to be spent on designated items (specific goods and services) and could be valid for a designated time (like 6-8 months), to ensure spending. The beneficiary criteria can be defined as Jan-Dhan account holders who are not beneficiaries of other welfare schemes.
(With inputs from agencies)
