India, Mumbai -Premasalgaoncal wakes up a few hours before dawn and begins to sell and sell food at Mumbai’s house in the suburbs. Her son, Amer, returned from work only when the sun was far above, and she finished making parasa packed with almost 100 vegetables.
Almost a year ago, Salgaonkar lost his job in a non -profit organization, and his 35 -year -old son Amar sold a mobile phone and data plan six months ago. Because the retailer was not hired, he finally started a temporary work, traveled at night on a transport truck, and helped drivers negotiated with police and other officials.
This week, when Finance Minister Nirmara Citaraman presented a budget on February 1, she was struggling to find a stable job while maintaining a fiscal deficit target. You need to find a way to promote growth and employment.
“We are not sitting at home,” Prema says. She immediately lists how the price of vegetables has been shot, filling the cost, and leaving almost money to save for Amar’s wedding.
India’s gross domestic product (GDP) decreased to 5.4 % in the quarter of September 2024. It is expected that growth will slow down to 6.4 % in the fiscal year until March 31. This is the slowest in four years. However, “there is no room for financial tolerance” or the increase in expenditures for the increase in government expenditures to start growth, said DHIRAJ Nim, an ANZ bank economist.
With an increase in government expenditures in pandemic, Indian budget red ballooning was 9.3 % in the fiscal year ending in March 2021. Citalamanan has said that it will be reduced to 4.9 % this year and will be below 4.5 % next year.
Economists say that low -consumer demand and low capital investment by private companies are dragged by the economy.
“Some economists, including me, are flagging that the demand after Cobid is a problem,” said Snil Sinha, a professor of economics in the development and communication research institute. 。
Sinha says the demand for products and services collected at the level of pandemic only in specific areas, such as wealthy Indians, international sightseeing, luxury cars, and other luxury products. However, the demand for mass consuming products such as soap, shampoo, and biscuits has been low in the past quarter.
Aman, who has been working in the mobile sales department, which has been booming India, has been working for nine years, making it difficult to sell mobile phones and data plans after pandemic, and it is difficult for friends and colleagues to be fired from work and find new jobs. I understand that it is.
“Restrictions” for government expenditure
Narendra’s Prime Minister Modi -led Prime Minister has raised growth and employment in the last decade, which has been the administration, and has spent funding on the construction of highways, bridges, and other large -scale infrastructure projects. However, considering the financial expenditure goals, it may be impossible anymore.
“There is a limit on how much the government can promote growth,” said Nikhil Gupta, Chief Economist, Chief Economist, a Mumbai -based securities company. “We are too many things to expect the government to greatly increase growth.”
The investment in the private sector in India’s architectural ability remained low, despite the tax rate in 2019, which was reduced from 30 % to 22 % of companies.
Sinha says that it is weak, with only the visibility of demand in corporate spending.
A walk on the crush, which encourages demand without excessive expenditures, has become difficult in the new administration in the United States.
“The government will stick to the (budget deficit) target in order to show the trust that the capital flow is unstable due to changes in policies around the world, especially in the world.”
Trump threat
Foreign investors sold more than 8 billion dollars in the Indian stock market in January this year. President Donald Trump has been appointed to strengthen the dollar, promising that Trump will support US companies rather than offshoring to other countries. During this period, Indian foreign currency preparation decreased.
The Trump administration has doubted the need for an H-1B visa for advanced experts, threatening tariffs on imports and affecting Indian technical sector.
“Trump camps on skilled worker visas have a very lively debate. Rick Rosso, the chair of India, a Sink tank based in Washington DC, and Rick Rosso of the Emerging Asian Economic Center (CSIS). I say like.
Trump tariffs on Chinese products can lead to the manufacturing industry in India, which India has been encouraging in the past few years of the trade war between Washington DC and Beijing. But New Delhi has a variety of success.
“With the promotion of the United States to reduce excess dependence on the Chinese manufacturing industry, India has landed some technical manufacturing investments in sectors such as semiconductors and solar power, but in Trump, India is India. There is an expectation that the US government will not be able to encourage the American companies of these sector to encourage India for “friends.” India needs to earn investment based on the status of the domestic market, and needs aggressive reforms (federal) and the state level, “Rosso said.
Sinha says that many of these bottlenecks for investors, including land acquisition, water, and power supply, are now in the hands of the state government. Many of them deal with high unemployment and consumer demand by providing election SOPs such as cash distribution. This is likely to have a negative effect on the state budget deficit.
For example, Salgaonkar has benefited from the Mahara Stadium government scheme, which provides women with 1,500 rupees ($ 17) cash distribution materials. It helped her balance unstable households.
But Motilal OSWAL GUPTA said, “We need to ask, do you need these schemes? What is the basis for these schemes? Are they just political tools? Structure. To put it simply, we do not like these, and there are restrictions on how much they can grow. “
Necessity of planning
Sinha says that if the state government spends money on small -scale road construction and other capital spending, it may lead to employment rather than a large -scale infrastructure project of the federal government.
The government also needs to improve labor, land, and capital, which helps to create employment, saying Deloitte Majamdal.
According to GUPTA of MOTILAL OSWAL, the growing construction department in India is the second largest employer after agriculture, but it could support the budget.
There have been several discussions on whether the income tax rate can be relieved, but economists do not completely agree that this could increase the demand from the lower level of India.
The declining demand has increased economic problems, but Citaraman states that deceleration is not systematic. The deceleration in the previous quarter was due to the slowdown in public investments in the year of election, when the government was banned to affect the election results by the Indian Election Committee. Citaraman expects growth to recover in the next quarter.
Salgaonkar has its own prescription for Sitharaman. Reduce prices and increase your purchase ability by creating employment.
Inflation in October has increased to 6.2 %, reaching 14 months, exceeding 4 % of the central bank, and salgaon cures have increased wheat, cooking gas and clothing prices. I’m talking while it is decreasing.
Despite financial constraints, investment in physical infrastructure is likely to continue, but Anz’s Guupta “establish visions and roadmaps to improve Indian human capital (). I think that improving skills and education will be a welcome step. ” This may be the only long -term method that promotes the fifth largest economic growth in the most population and the world.