Modi Government’s Fiscal Policies: Will New Income Tax Slabs Boost Economic Growth?

The Indian government, under Prime Minister Narendra Modi, has often been criticized for its approach to fiscal policies. While there are reports of new income tax slabs being prepared with the aim of increasing private consumption, many believe that the benefits will be minimal, if at all.

Modi's Boldness in Policy Making

Many observers argue that Modi seldom makes radical decisions regarding the budget. Instead, the Finance Minister (FM) acts merely as a puppet to implement Modi’s ideas. Although Modi often speaks about bold changes, the actual policies often fall short, often resembling outdated Congress tactics or even worse, communist approaches.

Some critics argue that rather than putting more money into the hands of the common man, the government is more inclined to direct funds towards cronies and corporates. These financial measures often do not translate into significant benefits for the majority of the population.

Promises Unfulfilled

Historically, reports of new tax slabs and rate reductions often lead to disappointment as nothing materializes apart from occasional superficial gestures that have zero impact. In this context, the Modi government is following a familiar pattern.

The government has been known to offer tax breaks to incompetent corporations and industries, which often result in significant tax collection deficits and keep consumer demand at an all-time low by limiting direct tax benefits.

Moreover, the governance style of the Modi government is often criticized for its focus on major that may not directly benefit the common man, such as tax exemptions for housing loans or special exemptions for high-income earners.

Government’s Clarity and Ambition

It is noteworthy that BJP ministers have grand promises but often fail to translate those promises into substantial actions. The recent budget, as reported by Nirmala Sitharaman, was a game-changer, demonstrating that significant progress can be made even with minor policy changes.

The government’s efforts to make things affordable and economically beneficial for the common man have shown that taking tangible steps can lead to positive outcomes. The passage of reforms such as the Citizenship Amendment Act (CAA) and the recent changes in tax slabs could be more readily accepted by the public if they directly address economic concerns.

Should Income Tax be Abolished?

Some people argue that income tax should be completely abolished to encourage free investment and boost economic growth. Removing income tax would potentially liberate individuals to invest their money more freely, leading to better economic outcomes.

Conclusion

The effectiveness of new income tax slabs in boosting economic growth in India remains uncertain. While the government has shown the potential for significant change with minor policy adjustments, the path ahead will depend on its ability to prioritize the well-being of the common man through concrete, actionable steps.

As the government continues to grapple with economic challenges, it would be prudent to focus on measures that ensure affordability and economic stability, paving the way for a more prosperous future.