India’s 7.8% GDP growth sparks optimism, but sustainability faces key tests
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Looking ahead, Sengupta flagged urban consumption and exports as critical areas needing policy attention. The government’s recent income tax cuts and expected GST reductions on durables by mid-September or October could provide a demand boost. On the external front, India’s labour-intensive export sectors—such as textiles, leather, footwear, garments, and gems & jewellery—face significant pressure from the latest round of U.S. tariffs, which run as high as 50%. “These MSMEs form nearly 40–50% of India’s exports, operate on thin margins, and need fiscal support to sustain,” Sengupta noted, adding that ensuring easy credit access and working capital will be crucial. Growth Momentum May Ease in H2 Despite the strong Q1 numbers, economists expect growth to cool in the coming months. The base effect, which magnified first-quarter growth, will fade. Similarly, both the central and state governments front-loaded capital expenditure, growing ...