Middle-class tax cut a diversion to mask fall in growth: Ex-MP Rajeev Gowda

Bengaluru, Feb 3 (PTI) Former MP and Chairman of the All India Congress Committee’s Research Department, M V Rajeev Gowda, said on Monday that the 'middle-class tax cut' was a diversion created to conceal the decline in growth from 8.2 per cent last year to 6.4 per cent this year.

Gowda said that despite the brouhaha over raising the no-tax bracket to Rs 12 lakh, Union Budget 2025-26 will not boost growth.

"The government claims that the tax cut will drive consumption. However, the tax cut will have an impact only on 3 crore taxpayers, mainly in urban India. The majority of Indians will still not be able to spend more, as they are hurting from stagnant real wages and bearing the burden of increased loans," said Gowda, in a press release.

According to him, the masses need a reduction in petroleum taxes or a cut in GST to increase consumption.

He also said that the private sector is not investing enough in India because the government favours only a few companies that dominate 40 sectors of industry.

"Thousands of high-net-worth individuals, instead of investing in India, are moving abroad," he added.

Gowda also said that the allocations for SCs, STs, OBCs, and minorities have been cut considerably, showing that the government’s priorities lie with urban, upper-class, and upper-caste Indians.

He also pointed out that the government did not even spend its budgeted capital expenditure this year.

"It is running out of major infrastructure projects to invest in, but it will not provide enough to states for them to increase their capital expenditures. Instead, it keeps offering loans or conditional transfers," he said.

He gave the example of Karnataka to drive home his point.

"No AIIMS has been allotted to Raichur. The Upper Bhadra project and other irrigation schemes have not been funded. Also, funding for the Suburban Rail has been kept stagnant at Rs 350 crore, delaying its progress," said Gowda.

He said that although the budget projects a real GDP growth rate of 6.3 per cent, even this is not going to be achieved as we are entering a period of tremendous uncertainty in the global economic landscape.

"The government’s own Economic Survey states that India needs to grow at eight per cent in a sustained manner over decades to reach Viksit Bharat by 2047. But the Economic Survey shows that over the last decade, growth has been stuck in the six per cent range," he added. PTI JR SSK ROH