Economists Prescribe Tax Relief, Higher Capex

Economists want the government to do the heavy lifting in the February 1 budget to support economic recovery amid the wave of Covid infections, proposing higher allocations for capital spending and tax incentives to spur private investment.

Other suggestions include reduction in the goods and services tax (GST) for a limited duration to spur demand, front-loading of transfers to states, income-enhancing or support measures, and subsidized credit to small and medium enterprises and contact-intensive sectors.

ET spoke to economists after a number of them pared their growth forecasts for FY22 and the current quarter following the rapid spread of the highly infectious omicron variant of the coronavirus.

Nomura recently lowered its GDP forecast for the March quarter to 3.2% from 5.2% projected earlier and to 8.7% for FY22 compared with 9.2% estimated earlier.

The government pegged FY22 growth at 9.2% in the first advance estimated released last week, below the Reserve Bank of India’s 9.5% forecast.

“India is in the midst of its third wave of Covid-19,” Nomura said in Thursday. “We expect higher caseloads, but assume a shorter duration for the third wave (one month, from trough to peak), which should mean economic damage is contained within Q1 2022 ad limited to delaying a recovery in contact-intensive services.” S-ET

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *