India, Feb. 1 -- The headline item on which the finance minister wants us (and Delhi's voters) to focus is the income tax break. The government had long delayed this relief to taxpayers. Economic mismanagement over the last decade has stressed household budgets. In 2023, private consumption fell to a 20-year low while household savings were at a 47-year low.

So, will the income tax cut boost private consumption? Hardly so, since the taxpaying middle class constitutes a small fraction of Indians. If the aim was to provide a broad boost to private consumption, increase demand, and tackle rising prices, it would have made more sense to cut taxes and cesses on petroleum, which burden the common person and farmer alike.

Income taxes contribu...