Double Boost for Common Man: Tax Cuts & RBI Rate Cut

The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 6.25%, aiming to boost economic growth by aiding consumption. This follows Finance Minister Nirmala Sitharaman’s announcement of tax cuts in the Union Budget, providing relief to the common man. No income tax will be paid on income up to ₹12 lakh a year, resulting in a tax foregone of ₹1 lakh crore. The combined effect of these measures is expected to improve household consumption and support economic momentum.

The RBI’s Monetary Policy Committee (MPC) noted that while growth is expected to recover, it remains below last year’s levels. The tax cuts and rate reduction are designed to provide a much-needed boost to the economy, which has seen slowing growth. The second quarter economic growth was 5.4%, with full-year estimates at 6.4%. The RBI projects GDP growth at 6.7% for the next fiscal year.