**Executive Summary**
This document is a response to Lok Sabha Starred Question No. †*101 regarding the economic impact of consumption-led growth, to be answered on December 8, 2025. It outlines the government's awareness of the GDP growth rate, initiatives to stimulate consumption, policies to balance rural and urban consumption, and the likely impact assessment. The response, provided by the Finance Minister, Nirmala Sitharaman, was laid on the Table of the House.
**Key Points / Main Content**
* **GDP Growth and Consumption:**
* GDP at constant prices is estimated to grow at 8.2% in Q2 of 2025-26, compared to 5.6% in Q2 of 2024-25 and 7.8% in Q1 of 2025-26.
* Private Final Consumption Expenditure (PFCE) in GDP improved from 62.2% in Q2 of 2024-25 to 62.5% in Q2 of 2025-26.
* PFCE growth in constant price terms improved from 6.4% to 7.9% during the same period.
* **Government Initiatives to Stimulate Consumption:**
* Multi-pronged strategy: Demand-supporting measures, income-enhancing supply-side strategies, and structural reforms.
* New income tax exemption for annual incomes up to ₹12 lakh.
* Recent GST rate rationalisation.
* Continued emphasis on ease of doing business, skilling, employment generation, and infrastructure development.
* Expanded access to credit through schemes like MUDRA and PM-SVANidhi.
* **Balancing Rural and Urban Consumption:**
* Urban livelihood and skilling programs, tax reliefs, and digital payments expansion in urban centers.
* Targeted flagship programs: PM-KISAN, Mahatma Gandhi National Rural Employment Guarantee Scheme, PM Awas Yojana (Gramin), agri-productivity missions, and Self Help Group-based livelihood initiatives.
* **Impact Assessment:**
* Strengthening consumption demand will positively impact overall economic activity.
* Support household incomes, encourage private investment, and reinforce economic growth.
**Impact Analysis**
**Stakeholder: Citizens/Households**
* **Impact:** Increased income through tax exemptions, enhanced access to credit, and improved livelihood opportunities via urban and rural development schemes.
* **Action Required:** Utilize available schemes and opportunities to improve their economic standing and contribute to increased consumption.
**Stakeholder: Businesses/Private Sector**
* **Impact:** Positive impact on economic activity by supporting household incomes, encouraging private investment and reinforcing economic growth.
* **Action Required:** Respond to increased consumption demand with private investment.
**Stakeholder: Government**
* **Impact:** Positive impact on the economy and the need to continually monitor and adjust policies to ensure balanced and sustainable consumption-led growth.
* **Action Required:** Continued policy initiatives emphasizing balance between rural and urban consumption.
Key Entities Referenced
Ministry of Finance: The primary ministry responsible for the economic impact policy.
Gross Domestic Product (GDP): A key indicator discussed in the document to measure the impact of consumption-led growth.
PM-KISAN: Targeted flagship programme for boosting rural incomes.
MUDRA: Scheme for expanded access to credit.
PM-SVANidhi: Scheme for expanded access to credit.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
STARRED QUESTION NO.†*101
TO BE ANSWERED ON MONDAY, DECEMBER 8, 2025 / Agrahayana 17, 1947 (Saka)
Economic Impact of Consumption led Growth
†*101. Shri Ravindra Shukla Alias Ravi Kishan:
Will the Minister of FINANCE be pleased to state:
be pleased to state:
(a) whether the Government is aware that the Gross Domestic Product (GDP) growth rate in
the second quarter of the current Financial Year has remained 7.2 per cent and where as
consumption-led growth is projected to improve further for 2025-26, if so, the details thereof;
(b) the details of the fiscal or policy initiatives proposed by the Government to stimulate the
consumption growth;
(c) whether any new policy is being formulated by the Government to balance the rural and
urban consumption, if so, the details thereof; and
(d) the details of the Government's assessment of the likely impact of consumption growth?
ANSWER
THE FINANCE MINISTER
(SMT. NIRMALA SITHARAMAN)
(a) to (d): A statement is laid on the Table of the House.STATEMENT REFERRED TO IN REPLY TO PARTS (A) TO (D) OF THE LOK
SABHA STARRED QUESTION NO.†*101 RAISED BY SHRI RAVINDRA SHUKLA
ALIAS RAVI KISHAN ON 08.12.2025 REGARDING ECONOMIC IMPACT OF
CONSUMPTION LED GROWTH
(a): As per the National Statistics Office (NSO), Ministry of Statistics and Programme
Implementation (MoSPI), 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 share of Private Final Consumption Expenditure (PFCE) 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.
(b) The Government has undertaken a multi-pronged strategy to stimulate consumption growth
in the economy through a combination of demand-supporting measures, income-enhancing
supply-side strategies and structural reforms. Policies measures such as the new income tax
exemption for annual incomes up to ₹12 lakh, recent GST rate rationalisation, continued
emphasis on ease of doing business, skilling, employment generation, and infrastructure
development, along with expanded access to credit through schemes like MUDRA and PM-
SVANidhi, are expected to boost consumption growth in the economy.
(c) Through various policy initiatives, the Government has emphasised on 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.
(d) 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.
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