The Confederation of Indian Industry (CII) has presented its budget recommendations for the financial year 2025-26, which has made some important suggestions to boost consumer consumption and stimulate economic growth. CII has demanded the government to reduce the prices of petrol and diesel, so that the spending power of common citizens increases and inflation can be controlled.
Recommendation to reduce excise duty on petrol and diesel
CII has urged the government to reduce the central excise duty on petrol and diesel. Currently, the excise duty on petrol is around 21 per cent and on diesel is 18 per cent. According to CII, these excise duties have not been adjusted in line with the 40 per cent fall in global crude oil prices since May 2022. Excise duty cuts can help reduce overall inflation and increase the disposable income of consumers.
Recommendation for relief in personal income tax
CII has also suggested the government to consider reducing the marginal tax rates on personal income up to Rs 20 lakh. He believes that this will increase the purchasing power of consumers, which will accelerate economic activities and also increase tax revenue. CII also said that in the current income tax system there is a gap between the top rate of 42.74 per cent and the general corporate tax rate of 25.17 per cent, which is increasing the economic pressure for people in the middle and lower income groups.
Voucher scheme and other incentive measures
CII also suggested introducing consumption vouchers for low-income groups. Under this scheme, vouchers can be given to spend on particular goods and services, which will remain valid for a certain time period (e.g. 6-8 months). Such measures may prove effective in stimulating consumer demand.
Recommendation for increase in MNREGA and Pradhan Mantri Kisan Yojana
CII has suggested increasing the minimum wage under MNREGA (Mahatma Gandhi National Rural Employment Guarantee Scheme) from Rs 267 to Rs 375, which will boost economic activities in rural areas. However, this will put an additional burden of Rs 42,000 crore on the government. Also, it has been recommended to increase the annual payment under the Pradhan Mantri Kisan Samman Nidhi Yojana from Rs 6,000 to Rs 8,000, which will provide more help to rural agricultural families.
Recommendation for increase in housing scheme
CII has demanded an increase in the amount given for construction of houses under the Pradhan Mantri Awas Yojana (Rural and Urban), as no amendment has been made in it since the inception of the scheme. This will simplify the process of building houses for poor and middle class families.
Recommendation for reforms and incentives in electronics sector
The Electronics and Computer Software Export Promotion Council (ESC) has recommended reforms to boost research and development (R&D) in the electronics hardware sector. CII said electronics companies in India should be given additional income tax exemption on 3 per cent or more spent on R&D and patent/design filing. This will promote domestic research and innovation and help establish India as a global hub of electronics manufacturing.
CII’s overall approach
CII Director General Chandrajit Banerjee said that domestic consumption plays an important role in the growth journey of the Indian economy, but rising inflationary pressure has weakened the purchasing power of consumers. He believes that government intervention can focus on increasing disposable income and maintaining economic momentum, which will improve the consumption cycle and accelerate economic growth.
It is clear from these recommendations that the Confederation of Indian Industry expects policies from the government that not only increase the purchasing power of consumers but also strengthen the overall economy.
