According to a Deloitte report, India’s economic trajectory
faces two counterbalancing forces that will shape growth
outcomes. The tax incentives introduced in the Union Budget
2025, designed to stimulate consumer spending, serve as a
significant positive catalyst. These incentives, amounting to
approximately Rs 1 lakh crore, primarily benefit the middle
class and are expected to boost domestic demand.
Deloitte India Economist Rumki Majumdar emphasised that
“the tax exemptions announced during the budget will increase
disposable income in the hands of the young population with
higher income elasticity.” Despite these tax concessions, the
report suggests that heightened economic activity should help
offset revenue declines, allowing the government to maintain
its fiscal deficit targets.Counterbalancing these positive
domestic developments are uncertainties in the global trade
environment. The report indicates that reciprocal tariffs could
range from a moderate 10 percent to a substantial 26 percent,
depending on how effectively India navigates upcoming
bilateral agreements. Majumdar noted that trade tariffs might
potentially reduce India’s growth by 0.1-0.3 percent, contingent
on the country’s negotiation capabilities. The outlook
specifically highlights the importance of establishing a
bilateral trade agreement with the United States by autumn.
Such an agreement would enable India to identify new
opportunities and gain access to the American market amid
global trade uncertainties. Deloitte’s analysis suggests that the
interplay between domestic tax stimulus measures and
international trade challenges will ultimately keep growth
within the projected 6.5-6.7 percent range for the current fiscal
year.