Will the Finance Minister's headline-grabbing tax cuts revive the growth genie?

Will the personal income tax cuts bring home the consumption bacon?

That's the question doing the rounds following Finance Minister Nirmala Sitharaman's trailblazing tax measures last week.

Preliminary estimates indicate that the Rs 1 lakh crore worth tax revenue foregone due to personal income tax cuts will likely add Rs 14.8 lakh crore worth national output, or add roughly Rs 10 lakh crore to private consumption in FY26.If so, a little, can indeed, go a long way. How?

According to KV Subramanian, Executive Director, IMF India, FY26 consumption will increase at least by about 10% and GDP growth rate will leap to 8% as against the projected 6.3%-6.8%, thanks to the across-the-board tax cuts.

Given that the first advance estimates peg real consumption at 7.3% to Rs 104 lakh crore for FY25, a 10% increase in a base case scenario translates to an additional demand worth Rs 10 lakh crore in FY26, with real consumption printing at Rs 114.45 lakh crore or thereabouts in FY26.