In an address on Monday, Finance Minister Nirmala Sitharaman firmly stated that the newly announced income tax exemptions in the Union Budget 2025 do not signal a shift from capital expenditure (capex) to consumer spending. Responding to queries following the government’s decision to exempt individuals earning up to ₹12 lakh per annum from income tax, she clarified that capex continues to be a significant focus. She dismissed speculations suggesting that the tax relief aimed to boost consumption after two consecutive quarters of slow GDP growth. Emphasizing the commitment to infrastructure growth, Sitharaman pointed to a 10.2% increase in capex in the 2025 budget, with a total allocation of ₹11.21 lakh crore, including public sector investments.
Sitharaman highlighted that Prime Minister Narendra Modi supported the ₹12 lakh tax relief initiative, viewing it as a means to stimulate spending, savings, and investments among taxpayers. Addressing the sell-off of Indian shares by Foreign Institutional Investors (FIIs), she reassured that it was largely due to profit booking—a normal response to the robust returns from India’s markets. Finance Secretary Tuhin Kant Pandey explained that FIIs often return to their home markets, especially the US, during global instability. Nonetheless, India remains the fastest-growing major economy, and this trend is expected to persist.
Commenting on market stability, Economic Affairs Secretary Ajay Seth dismissed the need for government intervention, stating that stock market fluctuations result from various global and domestic factors, not merely policy decisions. Sitharaman reiterated India’s growing investor-friendliness, citing customs duty reforms in the budget designed to attract foreign investments. Post-COVID, the government continues prioritizing capital asset creation to ensure long-term economic stability and infrastructure development. With ₹16 lakh crore designated for capex, including PSU investments, she reaffirmed the budget’s growth-oriented approach, balancing infrastructure investments with taxpayer relief.
