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The focus on consumption is expected to drive economic growth. The UN report forecasts India’s economy to grow by 6.6% in 20257. Deloitte expects India to grow between 6.7% and 7.3% in fiscal year 2025 to 2026.
Think of the Indian economy as a flywheel. Consumption acts as the initial push that starts the wheel turning. When people spend more, businesses see increased demand, leading to higher production, job creation, and further economic activity.
How Tax Relief Fuels Consumption:
- Increased Disposable Income: Tax relief, like the kind given up to ₹12 lakhs, directly puts more money in the hands of consumers. This additional income can then be used for discretionary spending, which drives demand across various sectors, including retail, entertainment, and consumer goods.
- Boost to Consumer Confidence: Tax relief measures often improve consumer sentiment and confidence. When people feel financially secure, they are more likely to make purchases, take vacations, or invest in big-ticket items, all of which stimulate economic growth.
- Multiplier Effect: Increased consumption has a multiplier effect on the economy. As businesses respond to higher demand, they invest in expanding operations, hiring more employees, and increasing wages. This, in turn, leads to even more consumption and further economic growth.
- Revival in Consumption Growth: The Economic Survey 2024-25 noted a revival in consumption growth, with Private Final Consumption Expenditure (PFCE) at Constant Prices witnessing a growth rate of 7.3 percent during FY25, compared to 4.0 percent in the previous financial year.
Personal Finance
- Is $1 Million Still a Lot of Money? Inflation has eroded its past power, but it still holds value. Once a ticket to the top 5%, today it places you in the top 19%. Wealth is relative, but opportunities have never been better! Curious how much you really need to feel rich today? Read here
- How will RBI’s rate cut affect your EMIs? The RBI recently reduced the repo rate. How does this affect interest rates on vehicle loans? Should you expect your monthly payments to decrease? With the RBI’s recent repo rate cut, we may expect lower lending rates for retail loans such as home loans and vehicle loans. Read here
- Why RBI’s latest liquidity boost is a big win for homebuyers: RBI’s latest moves, including a repo rate cut and ₹40,000 crore liquidity infusion, are set to lower home loan EMIs, boosting affordability and stimulating housing demand. Read here
Investing
- He Made $171 Trading Futures When He Was Only 13–Now He’s Worth $1.2 Billion: Chris Sacca’s investing journey began at 13 with a $171 profit—his first taste of venture capital. He later struck gold with early bets on Uber, Twitter, and Stripe. Now, he’s doubling down on the future, funding game-changing climate-tech startups. Read here
- What the RBI rate cut means for fixed income investors: The RBI’s 25 bps rate cut is set to boost fixed-income investments, with bond yields expected to ease. Long-term debt funds may benefit, while short-term debt remains steady. Investors should focus on short-to-medium duration products for optimal returns. Read here
- This too shall pass: How to navigate market movements in turbulent times: Nifty fell 10% to 26,216; Nifty Next 50 dropped 18%; Midcap 150 declined 12%. Key factors: weak Q2FY25 earnings, FIIs shifting to China, stronger USD-INR. SIP inflows remain strong. Staggered investments, large-cap exposure, and quality stock focus are key. Read here
Economy & Sectors
- India To Remain World’s Fastest Growing Economy, Says Nirmala Sitharaman: Finance Minister Nirmala Sitharaman emphasized India’s strong economic growth, increased capital expenditure, inflation control, and reduced unemployment. She refuted opposition claims on debt and state allocations, highlighting prudent fiscal management, infrastructure investment, and food security measures to sustain economic momentum. Read here
- India’s wholesale inflation eases to 2.31% in January: India’s wholesale inflation eased to 2.31% in January, with food and fuel prices declining. Retail inflation fell to 4.31%, below estimates. The RBI expects inflation to average 4.8% this fiscal year and drop to 4.2% next year while monitoring economic pressures. Read here
- India needs an ambitious agenda for higher growth: India needs bold economic reforms to sustain high growth and achieve its 2047 development goal. Challenges include slowing expansion, high unemployment, and inflation. The budget focused on consumers but lacked structural changes. Policy shifts in labor, land, and trade are essential for long-term progress. Read here
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That’s it from our side. Have a great weekend ahead!
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