Fiscal Illusions: The Reality Behind India's Middle-Class Tax Cut

Former MP M V Rajeev Gowda criticizes the government's 'middle-class tax cut' as a diversion from India's declining growth rate. He argues that the tax benefits only a small elite, while most Indians struggle economically. Gowda highlights inadequate investments in crucial sectors and warns of ongoing economic uncertainties.

Former Member of Parliament and Chairman of the All India Congress Committee's Research Department, M V Rajeev Gowda, has called attention to what he describes as a diversion tactic employed by the government. The 'middle-class tax cut', he claims, distracts from the country's diminishing growth rate, which has fallen from 8.2% in the last fiscal year to 6.4% currently.

Gowda criticized the Union Budget 2025-26, explaining that despite raising the no-tax bracket to Rs 12 lakh, it fails to spur economic growth. He pointed out that the tax cut benefits only about three crore urban taxpayers, leaving the majority of the population, suffering from stagnant wages and heavy loan burdens, unable to increase their spending. Instead, he suggested that a cut in petroleum taxes or GST could potentially enhance consumption.

According to Gowda, the government's economic strategy is skewed towards a select group of favored companies, leaving private sector investment lacking. High-net-worth individuals are opting to invest overseas rather than in India. Gowda also criticized budget cuts in allocations for disadvantaged communities and expressed concerns over insufficient state funding for necessary infrastructure projects.