With the >Union Budget 2014-15 putting more money in the hands of the middle-class by increasing the income-tax exemption limit and the government according high priority to boost manufacturing and infrastructure growth, consumption is expected to get a big boost, say experts.
They said the Finance Minister had provided perfect atmosphere for generating growth, domestic demand, innovation, entrepreneurship and urbanisation. All these would aid consumption.
“This budget will work as a catalyst for economic resurgence in India. From Manipur to Tumkur and from fishermen to young entrepreneurs, everyone has something to gain from this budget,” said Kishore Biyani, Group CEO Future Group.
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“The consumption sector will be a big beneficiary due to the decrease in excise duty on food processing machinery and footwear, the implementation of Goods and Services Tax and the increase in money in the hands of the consumer from the income tax benefits that the budget has announced,” Mr. Biyani said.
He said that the Rs.10,000-crore corpus to fund young entrepreneurs and the long-term investments in urbanisation through smart cities, industrial corridors and urban renewal would build the foundation for creating a more developed, modern and happier India which is a perfect recipe for enhanced consumption.
According to experts, the government’s emphasis to control inflation would ultimately boost consumption.
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“On the one hand the government has ensured that people have more money in their hands through the income tax benefits and on the other hand there is serious effort to control inflation. This can lead to enhanced consumption,” said Rajesh Mokashi, Deputy Managing Director, CARE Ratings.
In times of high inflation consumption gets affected as people find it difficult to afford.
When inflation moderates, people start consuming.
Consumption will also get a boost as the government has made many electronic items cheaper by reducing duties. To boost consumption of premium petrol the government has also reduced excise duty from 7.5 per cent to 2.35 per cent. This is only one example.