Sunil Sinha: Inflation, Low Growth Make Tax Cuts Challenging For Govt

#Budget2025 #FMNirmalaSitharaman #GDPGrowth #IndiaEconomicGrowth #PMModi
India's economic growth is projected to slow significantly in FY25, with the first advance estimate indicating a real GDP growth rate of 6.4%, down from 8.2% in FY24. This deceleration, the slowest since the pandemic, reflects challenges across key sectors, including a sharp decline in manufacturing growth from 9.9% to 5.3%. While agriculture is a bright spot, expected to grow at 3.8% compared to 1.4% last year, other critical sectors like trade, hotels, and financial services are also set to witness slower growth. On the question of the impact on government tax revenue, particularly amidst demands for income tax relief to ease pressure on the middle class, economist Sunil Sinha highlighted the complexities. He noted that while boosting disposable income through tax reductions could stimulate consumption, it remains challenging given the government's focus on capex-driven investments. Addressing inflation, particularly food inflation, and managing geopolitical risks like a depreciating rupee and rising oil import costs, are critical measures. Sinha emphasized that while structural reforms are needed to enhance consumption demand, substantial income tax relief in the upcoming budget may not be feasible. Instead, targeted efforts to control inflation and support key sectors like agriculture might play a pivotal role in stabilizing the economy and encouraging growth.

#SunilSinha #Infation #IndianEconomy #ManufacturingSector #AgricultureGrowth #TradeAndServices
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