'Corporate tax cuts aimed to boost investments haven’t delivered'
Consumption is down, private sector lacks confidence to invest in current economic climate, says The Federal's Editor-in-Chief in an analysis of Economic Survey
The Economic Survey 2024-25 sets the stage for India's financial blueprint, projecting a GDP growth of 6.3% to 6.8% for FY26. However, private investments remain sluggish, rural demand recovery is slow, and inflation continues to impact everyday expenses.
S Srinivasan, Editor-in-Chief of The Federal, offers insights into the key highlights and challenges revealed in the comprehensive report.
AI and job security
The Economic Survey underscores that AI will augment rather than replace jobs. Srinivasan explains, "While some jobs will become redundant, AI also boosts efficiency and creates new opportunities. Reskilling is the key to meeting these challenges."
The focus on education and engineering highlights the need for India’s workforce to adapt to evolving technologies.
Inflation and the common man
Despite claims of inflation being under control, essentials like tomatoes and pulses remain expensive. Srinivasan clarifies, "CPI (Consumer Price Index) weights heavily on daily essentials, and seasonal disruptions like extreme heat or rain play a big role. Measures like TOPS (Tomato, Onion, Potato Supply Chain) aim to stabilise prices, but the progress is slow."
Rising housing costs
For middle-class families, owning a home feels like a distant dream. Srinivasan points out the tug-of-war between the RBI’s cautious approach to repo rates and the finance ministry's push for easing rates. "Interest rates may remain high unless fiscal discipline aligns with growth-focused policies," he notes.
Corporate profits vs salaries
Big companies have reported record profits of 22-24%, yet wages grew by a mere 1.5%. Srinivasan highlights the disparity: "Corporate tax cuts aimed to boost investments haven’t delivered. Consumption is down, and the private sector lacks the confidence to invest in the current economic climate."
Energy transition and AI in GCCs
The Survey emphasises India’s commitment to renewable energy, aiming to achieve 50% from renewables by 2030. However, Srinivasan warns, "India still depends on importing cost-effective solar components from China. Investment and technology upgrades are crucial to meeting these goals."
On the GCC front, while AI might disrupt some roles, India’s potential as a global back-office hub remains strong. "We need to focus on areas AI can't replace, like creative problem-solving," he suggests.
Fiscal discipline and freebies
Srinivasan praises the government for maintaining fiscal discipline, with the deficit likely at 4.8%. Yet, he raises concerns about election-driven freebies and welfare schemes impacting fiscal health. "The middle class bears the brunt of this. Striking a balance is key," he emphasises.
The Economic Survey reveals India’s ambitions and challenges — be it adapting to AI, tackling inflation, or achieving energy goals. As the Union Budget approaches, the critical question remains: Can India balance growth with inclusivity and sustainability?
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