The Worst Phase of Economic Slowdown is Over

Different indicators are signalling that the worst phase of economic slowdown in Indian economy is possibly over. These indicators are either becoming stable or stronger. However, these are still very weak to give strong indications about reversal in trend. Now, it all depends on budget presented by the government on 1st Feb 2020. If the budget is able to instill the confidence in the psychology of economy, economy would be back on growth trajectory. 

Cutting Personal Taxes Would Increase Demand in Economy

Many news reports suggest that the Indian government is considering revising personal tax structure by cutting tax rates as well as altering tax slabs with the purpose to increase disposable income in the hands of consumers. This obviously would be a right decision in reviving demand to some extent for Indian economy which is slowing down due to shrinking demand. However this would not be enough. There is need to increase the income of workers engaged in rural and informal economy also. But the problem is that government cannot ask to increase wages as it would also have direct negative impact on supply side as the increase in wages would not be received positively by the economy so cutting personal tax rates and changing tax slabs would be viable option.