The majority of Indian industry believes relief on income taxes and rationalisation of goods and services tax (GST) leading to an increase in disposable income is the best way to enhance consumption, a Moneycontrol-Deloitte survey of 45 chief executive officers (CEOs) revealed.
The exclusive Moneycontrol-Deloitte CEO survey was conducted between January 10 and January 22 across financial services, consumer goods, technology, and energy sectors.
An overwhelming 86.7 percent of the CEOs surveyed have sought for a simple GST and a reduction in income taxes to spur consumption.
While, 57.8% of the CEOs surveyed said that continued emphasis on infrastructure spending to create semi-skilled opportunities in tier-1 and tier-2 cities is key to boosting consumption, 55.6 percent said measures aimed at job creation would do the trick.
A sizeable 40 percent of the respondents said containing inflation by addressing supply-side challenges would boost consumption, while a smaller 15.6 percent felt direct transfers and subsidies for the marginal sections of the society will be crucial in this regard.
Calls for a reduction in taxes for India’s salaried class have become more pronounced given a slowdown in the government’s expenditure on infrastructure and revenue.
Capital expenditure for the first eight months of FY25 contracted over 12 percent to Rs 5.1 lakh crore, solidifying concerns that the government may miss its record budgeted capex target of Rs 11.11 lakh crore.
The slowdown in consumption, especially in urban areas, have been a matter of concern owing to a spike in food inflation as well, which remained in double digits for most of 2024.
To be sure, since 2024 was an election year spending by the government slowed down, a trend seen especially in the first half of FY25.
The slump in India’s GDP growth rate to a seven-quarter low of 5.4 percent in Q2 of FY25 further led to demands for measures to boost consumption.
In fact, after accelerating to a seven-quarter high of 7.4 percent in Q1 FY25, Private Final Consumption Expenditure or PFCE, slowed down to 6 percent during July-September. PFCE is a key indicator to measure spending incurred by households.
