By Atmadip Ray

Copyright indiatimes

The tax reforms and policy push should lay a foundation for a sustained consumption demand side while boosting ease of doing business in the supply side, the Reserve Bank of India said in its monthly state of economy report.These, along with manufacturing and services activity at a decadal high in August and higher pass-though of the accommodative monetary policy, raises the growth optimism for the second half of the fiscal despite the tariff-related headwinds.”Coupled with income tax relief for households and employment augmenting measures, the stage is set for a sustained pick-up in consumption demand in H2 and potentially for a virtuous cycle of higher investments and stronger growth impulses, overcoming persistent global uncertainties,” the central bank said in the report, which was prepared by its economic researchers.”The landmark GST reforms should progressively result in a sustained positive impact through significant gains in ease of doing business, lower retail prices and strengthening of consumption growth drivers,” they said.Beyond rate simplification, the GST council addressed challenges relating to inverted duty structure and made processes business-friendly, particularly benefiting micro, small and medium enterprises, and startups.Live Events”Overall, these reforms are expected to boost tax buoyancy, improve compliance, and contribute to greater ease of living as well as ease of doing business.”The central bank researchers said that the growth outlook for the second half of the fiscal year is one of optimism. Healthy corporate balance sheets and the focus on structural reforms by the government are the bright spots of the economy.Earlier, RBI projected real GDP growth for 2025-26 at 6.5 per cent, with Q1 at 6.5 per cent, Q2 at 6.7 per cent, Q3 at 6.6 per cent and Q4 at 6.3 per cent.The first quarter GDP growth print was seen at 7.8% exceeded all expectations. Last week, the country’s chief economic advisor V Anantha Nageswaran exuded confidence on a likely 7% growth in the second quarter, backed by the carry-forward momentum of the preceding quarter.In the financial market, liquidity turned surplus since August, facilitating the pass-through of the 100 basis points policy rate cuts since February.”While the imposition of high US import tariff brought in some headwinds to the domestic macro-outlook, the developments since then have underscored the resilience of the economy,” RBI said.Meanwhile, a higher kharif sowing is expected to translate to a sustained growth momentum in the agriculture sector, while also keeping food prices under check. The headline inflation measured by Consumer Price Index, although inched up, remained below the target 4% rate for the seventh consecutive month, helping the demand grow.Add as a Reliable and Trusted News Source Add Now!
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