SHORING UP SLOWING ECONOMY
But some analysts believe that could soon change, with many more people to be added to India’s consumer base over the coming decade.
“If we look at discretionary spending in India, of course it’s been small, it’s been low, because the per capita income in India has still not been a very large number,” said Naveen Kulkarni, chief investment officer at stock broker Axis Securities.
“But the government is doing a lot of things – manufacturing, which will create more jobs, taxation structures (and) direct benefit transfers, which will help wealth distribution,” he added.
“In the next few years, we’ll see more people getting added to the discretionary consumption pie, and more likely we’ll see a very strong growth in discretionary consumption over the next decade.”
The country’s annual gross domestic product (GDP) is expected to grow by 6.5 per cent in the current financial year, according to official projections.
The government is also making efforts to help drive the economy forward.
In February, India’s Finance Minister Nirmala Sitharaman announced major tax breaks for the middle class in its federal budget worth $11.5 billion.
Individuals with annual income up to 1.2 million rupees will effectively be exempt from paying income tax from April, she said, raising the cap from 700,000 rupees.
These tax breaks will affect about 10 million individuals in Asia’s third largest economy, according to Bloomberg.
Source: CNA
