New Delhi: Finance Minister Nirmala Sitharaman informed Parliament Monday that the government has undertaken a multi-pronged strategy to stimulate the growth of consumption in the economy through a combination of demand-supporting measures, income-enhancing supply-side strategies and structural reforms, which, in turn, is driving GDP growth.
In a written reply to a question in the Lok Sabha, she said that policy measures such as the new income tax exemption for annual incomes up to Rs 12 lakh, recent GST rate cuts, continued emphasis on ease of doing business, skilling, employment generation, and infrastructure development, along with expanded access to credit through schemes like MUDRA and PMSVANidhi, are expected to boost consumption in the economy.
The Finance Minister further stated that through various policy initiatives, the government has also emphasised achieving a balanced growth in rural and urban consumption.
Urban livelihood and skilling programmes alongside tax reliefs and digital payments expansion in urban centres are boosting consumption in urban areas. Alongside, targeted flagship programmes such as PM-KISAN, Mahatma Gandhi National Rural Employment Guarantee Scheme, PM Awas Yojana (Gramin), agri-productivity missions and Self Help Group-based livelihood initiatives are ensuring broad-based income gains across rural areas.
The strengthening of consumption demand will have a positive impact on overall economic activity by supporting household incomes, encouraging private investment and reinforcing economic growth, Sitharaman said.
She further stated that according to figures compiled by the National Statistics Office (NSO), the share of Private Final Consumption Expenditure in GDP has improved from 62.2 per cent in Q2 of 2024-25 to 62.5 per cent in Q2 of 2025-26, while its growth in constant price terms improved from 6.4 per cent to 7.9 per cent during the corresponding period.
The data also show that the GDP at constant prices has been estimated to grow at 8.2 per cent in the second quarter (Q2) of 2025-26 as against 5.6 per cent in Q2 of 2024-25 and 7.8 per cent in the first quarter (Q1) of 2025-26, reflecting accelerating growth momentum in the economy, the Finance Minister added.
