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HinduBusinessLine
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The tide could turn for the economy
- The February ‘25 Budget revealed a change in fiscal policy with generous personal tax cuts, benefiting millions of taxpayers.
- The tax cuts are expected to boost consumption, potentially adding 1.5-2% to Private Final Consumption Expenditure.
- A potential spending spree could be triggered by tax cuts and awards from the 8th Pay Commission for Central government employees.
- Inflation concerns driven by food prices have been mitigated due to increased agricultural output and global factors.
- The Monetary Policy Committee has shifted towards a more pro-growth stance, leading to rate cuts and accommodative liquidity measures.
- Lower interest rates have decreased the cost of borrowing significantly, providing potential stimulus for consumption and investment.
- The revival of credit availability and consumer spending could further drive economic growth, particularly in areas like Private Final Consumption Expenditure.
- The focus on targeted regulations and credit availability indicates a potential uptick in aspirational spending as income growth remains modest.
- Overall, the shifts in economic policy suggest a positive outlook for growth in various sectors of the Indian economy.
- While rate cuts may not immediately spur private capex, increased consumption and credit availability have the potential to stimulate economic activity.
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