Thu Jan 30 16:50:23 IST 2025: ## Tax Relief Urged in Upcoming Indian Budget to Boost Stagnant Economy

**New Delhi** – As India prepares for its Union Budget 2025, calls for significant tax relief are mounting amidst slowing economic growth and persistent inflation. With GDP growth projected at a four-year low of 6.4% and private consumption weakening, economists and business leaders argue that tax cuts are crucial to revitalize the economy.

The current economic slowdown is characterized by sluggish private investment (projected at 6.4% compared to 9% last year), weak urban consumption, and high inflation, particularly in essential goods like food (8.39% inflation, with vegetable prices exceeding 26%). While the official unemployment rate stands at 3.2%, independent estimates place it significantly higher at 8.05%, highlighting the need for job creation initiatives. Foreign direct investment has also plummeted, falling to $479 million between April and November 2024, compared to $8.5 billion during the same period last year.

Experts believe tax relief could address these challenges on multiple fronts. Lowering taxes would inject more disposable income into the hands of consumers, boosting demand and overall economic activity. Tax incentives for businesses, particularly in manufacturing and infrastructure, could encourage investment and alleviate uncertainty. Targeted tax breaks for employment-generating sectors could also stimulate job creation. Furthermore, simplifying the tax regime and implementing investor-friendly policies are seen as vital for attracting foreign capital.

Swapnil Aggarwal, Director of VSRK Capital, emphasized the need for a balanced budget that supports both growth and social security. He highlighted the importance of reducing compliance burdens for businesses to foster investment and innovation, and continued support for green technologies and renewable energy. Encouraging investments through favorable tax policies on both short-term and long-term capital gains was also cited as crucial. The upcoming budget, therefore, faces the critical task of balancing fiscal prudence with the urgent need to stimulate economic growth and provide much-needed relief to struggling citizens.

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