Top economists have called on the Indian government to implement income tax rate cuts, streamline customs tariffs, and introduce export-supportive measures in the upcoming Budget 2025. During a pre-budget interaction with Prime Minister Narendra Modi, they emphasized the need for targeted interventions to boost agricultural productivity, skilling, and the continuation of capital expenditure momentum.
Focus on Growth and Employment Generation
Sources close to the discussions revealed that Prime Minister Modi underscored the importance of job creation as a key policy objective for the government. He also highlighted the role of enhanced data quality in shaping better policy outcomes. Modi attentively listened to all suggestions during the meeting, which was centered on maintaining India’s growth momentum amidst global uncertainties. An official statement later affirmed that Modi’s vision for ‘Viksit Bharat’ — a developed India by 2047 — was central to the dialogue. Economists present, including Surjit S. Bhalla, Ashok Gulati, and Sudipto Mundle, proposed sustainable strategies to create jobs, particularly for the youth, and align education with evolving market demands.
Weak Consumption and Persistent Inflation a Concern for Budget 2025
Ahead of the Budget, concerns about weak consumption and persistent inflation have come to the forefront. Recent data revealed that India’s economic growth slowed significantly in the third quarter of 2023, with GDP growing just 5.4%, far below the Reserve Bank of India’s (RBI) projected 7% for the same period. High inflation continues to strain household budgets, leading to reduced disposable income and curtailed discretionary spending. India’s inflation in November surpassed the RBI’s target of 4%, prompting worries about its impact on industry and exports.
Strategies to Tackle Weak Consumption and Inflation
To address these concerns, economists suggested targeted measures such as direct benefit transfers for vulnerable groups, increased public expenditure in rural areas, and incentives for job creation in non-agricultural sectors. Tax relief for lower-income groups could also stimulate spending and revive demand in key sectors. However, managing inflation without stalling growth will be a key challenge for the government as it aims to balance fiscal priorities in the upcoming Budget.
Economists also warned that unchecked inflation could undermine India’s real economy, especially in sectors like industry and exports, where input costs remain high. Supply-side interventions will be essential to ease these pressures and ensure the availability of essential commodities.
