Union Minister Arun Jaitley on Friday said the government's decision to exempt income of up to Rs 5 lakh from tax will benefit the "great Indian Middle Class".
The significant announcement made by Finance Minister Piyush Goyal in his Interim Budget 2019-20 speech will strengthen the purchasing power of the middle class which holds the key for India's future, Jaitley wrote in a Facebook post.
Goyal, who was recently given the charge of the finance ministry temporarily, presented the Budget for 2019-20 in the absence of Jaitley, who is away in New York for medical treatment.
"Piyush Goyal has today made a significant announcement wherein income earners earning upto Rs 5 lakhs have been exempted from payment of Income-tax.
"This effectively strengthens the great Indian Middle Class whose expansion of purchasing power holds the key for India's future," Jaitley said.
He further said the budget marks a high point in the policy directions that the government headed by Prime Minister Narendra Modi has given to the nation.
Jaitley noted that interim budgets are presented in an election year to seek a vote on account for a limited period till the post-election government can decide the further direction of the economy.
However, he added that past precedents have conclusively shown that urgent steps are required in the larger interests of the economy and they can be taken.
"We have the immediate precedents of the year 2009 and 2014 where significant taxation changes were brought about in the Interim Budgets," Jaitley pointed out.
In an apparent reference to the raging controversy over jobs, Jaitley wondered how the Indian economy can grow at an average of 7.5 per cent in the last five years without any job creation.
"The last five years have seen an average of about 7.5 per cent real GDP growth... Is it possible to conceive that such high nominal growth despite controlled inflation will not lead to any job creation," he noted.
Stating that several data points, including the EPFO numbers, have given a detailed indication of the job creation, Jaitley pointed out that if there is no employment generation as alleged, there should have logically been a great social unrest in the country.
"Past five years have passed off without a single major protest movement," he asserted.
Stating that the vision is to make India a USD 5 trillion economy, he said, "By the middle of the next decade we will achieve this and thereafter, target doubling that size of the economy."
Jaitley also said there were no globally established models on the immediate impact of demonetisation on GDP growth.
"The former Prime Minister's statement that it will lead to a 2% drop in the GDP captured the imagination of the Government's critics. Neither the original data for 2016-17 and 2017-18 nor the first revision proved that," he wrote.
Former Prime Minister Manmohan Singh had earlier said demonetisation will lead to a 2 per cent drop in GDP growth.
Jaitley also stressed that 2014-19 has been perhaps the best-performing period in terms of India's macro-economic stability.
"The GDP growth during this five year period will be about 7.5 per cent. The inflation will be in the range of 4 per cent... It is, therefore, obvious that India is being hailed as a bright spot in the global economy," he said.