Budget 2025: Industry Calls For Excise Duty Cut On Fuel, Consumption Stimulus

Ahead of Monday's pre-consultation meeting on Union Budget 2025 with Finance Minister Nirmala Sitharaman, the Confederation of Indian Industry has proposed key measures to help stimulate consumption in the inflation-hit economy. The September quarter recorded a seven-quarter low growth of 5.4%, which is the lowest growth rate since the September quarter of 2007. The industry chamber proposed excise duty cuts in petrol and diesel, a hike in key minimum wages, and a lower highest marginal personal income tax rate for earnings up to Rs 20 lakh per annum."Domestic consumption has been critical to India’s growth story, but inflationary pressures have somewhat eroded the purchasing power of consumers," said CII Director General Chandrajit Banerjee, adding that the government must intervene, focus on "enhancing disposable incomes" and "stimulating spending" in a bid to sustain economic momentum.Industry captains, including CII, FICCI, Assocham and PHDCCI, are scheduled to meet Finance Minister Nirmala Sitharaman for pre-budget consultation on December 30 between 11 a.m. and 1 p.m..Union Budget 2025: NSE, BSE To Remain Open On Saturday, Feb. 1.CII, in its budget proposal, suggested that reducing excise duty on fuel is crucial as fuel prices significantly drive inflation, forming a substantial portion of the overall household consumption basket. The central excise duty alone accounts for approximately 21% of the retail price for petrol and 18% for diesel. Since May 2022, these duties have not been adjusted in line with the approximately 40% decline in global crude prices, it said.Furthermore, there is significant disparity between the top individual tax rate of 42.74% and the corporate tax rate of 25.17%, said CII, advocating for reducing marginal tax rates for personal income up to Rs 20 lakh per annum. CII believes this move could ignite a virtuous cycle of consumption, economic growth, and increased tax revenue.CII has also advocated for increasing the daily minimum wage under the Mahatma Gandhi National Rural Employment Guarantee Scheme from Rs 267 to Rs 375 as suggested by the ‘Expert Committee on Fixing National Minimum Wage’ in 2017. CII Research estimations show that this will entail an additional expenditure of Rs 42,000 crore.“While recent quarters have shown promising signs of recovery in rural consumption, targeted government interventions, such as increasing per unit benefit under its key schemes like MGNREGS, PM-KISAN and PMAY, and providing consumption vouchers to low-income households, can further enhance the rural recovery", Banerjee said..Budget 2025: Modi Holds Meeting With Niti Aayog Experts.CII's Other Budget 2025 Recommendations:Raise annual payout under the PM-KISAN scheme from Rs 6,000 to Rs 8,000. Assuming 10 crore beneficiaries, this will entail an additional expenditure of Rs 20,000 crore.Increase the unit costs under the PMAY-G and PMAY-U schemes, which have not been revised since scheme’s inception.Unveil consumption vouchers, targeted at low-income group, to stimulate demand for specified goods and services.The industry body said these vouchers could be designed to be spent on designated items and could be valid for a designated time, such as 6-8 months, to ensure spending. The beneficiary criteria can be defined as Jan-Dhan account holders who are not beneficiaries of other welfare schemes.Highlighting the weakening trend in household savings, CII's Banerjee said that “low returns on bank deposits compared to other avenues such as equities and mutual funds, coupled with a higher tax burden on interest income, have made bank savings less attractive”. Bank deposits as a proportion of a household’s financial assets have declined from 56.4% in FY20 to 45.2% in fiscal 2024. To encourage bank deposit growth, CII suggested taxing interest income from deposits at a lower rate and reducing the lock-in period for fixed deposits with preferential tax treatment from current five to three years. These measures could encourage greater savings in banks, according to CII..Budget 2025: Paras Defence Expects Centre To Introduce DLI Scheme For Defence

Budget 2025: Industry Calls For Excise Duty Cut On Fuel, Consumption Stimulus

Ahead of the pre-budget meeting with FM Sitharaman, CII has argued that fuel prices significantly drive inflation and the cut will help the lower income level.

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