With Rs 1 lakh crore given back to taxpayers in the form of an increase in the tax exemption limit and reduction in tax rates, the financial sector is expected to benefit from an expected increase in bank deposits, which will further support lending activity.
"We are likely to get a bump of Rs 40,000-Rs 45,000 crore in deposits, which will help banks in lending," says Nagaraju Maddirala, Secretary, DFS. This rise in deposits is crucial for sustaining credit growth, which fuels business expansion and economic momentum.
Rather than promoting specific savings instruments, the government believes in empowering individuals to make their own choices. "Let people decide whatever their priority is and don’t prompt any particular saving mode," states Ajay Seth, Secretary, Department of Economic Affairs (DEA). This underscores a policy shift towards financial independence and investor discretion, allowing market dynamics to guide savings preferences.
On disinvestment the government is adopting a composite strategy in disinvestment, ensuring that the value of public assets is optimised and shared with the people. "What we have adopted and would pursue going forward is a composite strategy. A composite strategy means we optimise value of public assets and share them with the minority shareholders, which is the people of India," explains Arunish Chawla, Secretary, DIPAM and DPE. This approach aligns with the broader goal of balancing fiscal discipline with public benefit.
Despite global economic disruptions, India has maintained a strong fiscal footing. Ajay Seth emphasizes the importance of country-specific decision-making during crises: "Even during a crisis, each country takes decisions in its own assessment, what is best for that country and for citizens of that country."
A key achievement in recent years has been the reduction of India's debt-to-GDP ratio. "Something which the Government of India had done between 2014-2019 is that it has brought down the debt-to-GDP ratio very significantly," Seth highlights.
On the GST front, the rationalisation of rates continues to be the priority. "Over a period of time, items have been moved to lower rates and now the average GST Weighted Average Rate is only 11%," Sanjay Kumar Agarwal – Chairman, CBIC. He also adds that there is a need for rationalisation of rates for food items.