India Inc already seeing signs of consumption recovery, says FM Sitharaman

Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on February 8 said that the central bank's decision to cut the repo rate as well as the income tax rebate provided in the Budget for FY26 would together give a further push to consumption, which is already showing signs of a possible recovery.

This should then trigger private investment, Sitharaman said during a briefing after addresses the Central Board of Directors of the RBI in New Delhi.

"I would expect that (private investment) because the feedback I have got...these are anecdotes, I am not relying on them, but orders for FMCG for the period April to June are already getting booked and industry is clearly seeing signs of a possible recovery in consumption and as a result many of them are looking at reviewing their capacity utilisation itself," she said.

The Reserve Bank of India's interest rate cut of 25 basis points after almost five years comes close on the heels of the Centre's decision to lower the income tax burden on India's salaried class in the Union Budget presented on February 1.

Sitharaman in the Budget for FY26 exempted people earning up to Rs 12 lakh per year from income taxes, raising the threshold from Rs 7 lakh earlier.

She also made changes in the new tax regime across slabs to provide relief to all categories of India's salaried class.

Sitharaman added that according to limited inputs "the triggers for consumption-driven cycle is very clearly being felt by those who have to take the investment decisions. I see it as a positive sign and with yesterday's decisions decisions of RBI. I am sure together. things can move in alignment and required traction that we need in this course"

The need for private sector to step up on investments gains significance at a time when the central government's spending on infrastructure seem to have peaked.

In the Budget for 2025-26, the Centre's outlay for capex was pegged at Rs 11.21 lakh crore, almost flat when compared to the initial estimate of Rs 11.11 lakh crore for the current fiscal.