Finance Minister Nirmala Sitharaman informed Parliament on Monday that the government has implemented a multi-pronged strategy aimed at stimulating consumption and driving overall economic growth.
This strategy includes a combination of demand-supporting measures, income-enhancing supply-side policies, and structural reforms designed to strengthen GDP growth.
Sitharaman highlighted in her written reply to a Lok Sabha question that the government expects policy initiatives such as the new income tax exemption for annual incomes up to ₹12 lakh, recent GST rate cuts, and continued emphasis on ease of doing business to bolster consumption.
Alongside these, programmes targeting skill development, employment generation, and infrastructure expansion, as well as broader access to credit through schemes like MUDRA and PMSVANidhi, are contributing to economic momentum.
The Finance Minister emphasised that the government has designed its measures to achieve balanced growth in both rural and urban consumption. Urban livelihood and skilling programmes, combined with tax relief and the expansion of digital payments, are driving consumption in cities.
In rural areas, targeted flagship initiatives such as PM-KISAN, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), PM Awas Yojana (Gramin), agricultural productivity missions, and Self Help Group-based livelihood programmes are enhancing incomes and boosting purchasing power.
Impact on Economic Activity
Sitharaman explained that strengthening consumption demand positively influences overall economic activity by supporting household incomes, encouraging private investment, and reinforcing economic growth.
She noted that these measures are designed to create broad-based benefits across the economy, enhancing both supply and demand.
According to figures compiled by the National Statistics Office (NSO), the share of Private Final Consumption Expenditure in GDP rose from 62.2 per cent in Q2 of 2024-25 to 62.5 per cent in Q2 of 2025-26.
Growth in constant price terms improved from 6.4 per cent to 7.9 per cent during the same period.
The National Statistics Office estimates that GDP at constant prices will grow by 8.2 per cent in Q2 of 2025-26, compared with 5.6 per cent in Q2 of 2024-25 and 7.8 per cent in Q1 of 2025-26, reflecting accelerating economic momentum.
Through a combination of consumption-driven policies, income support initiatives, and structural reforms, the government aims to maintain sustained economic growth.
These measures will benefit both urban and rural populations while strengthening India’s macroeconomic fundamentals and investment climate.
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