10 Feb 2017

Some weekend reading, growth through consumption

Then came the Union Budget, which was a model of consistency and stability, clearly aimed at pleasing voters in the run-up to a series of state elections. The overall fiscal deficit target has been set at 3.2% of GDP, a little higher but backed by a conservative fiscal plan. Taxes have been reduced for lower earners and small companies and raised for the wealthy.  Substantial increases were announced for expenditure on capital investment, rural support and healthcare. The government is intent now on stimulating growth through domestic consumption, capital expenditure and infrastructure development. The FY17 GDP forecast is 6.5% to account for the adjustment to demonetization, accelerating to 7.2% in FY18. With the operational metrics of Indian companies improving all the time, commitment to Indian markets looks like being rewarded again.

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