By Govindraj Ethiraj

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A wave of tax cuts on daily-use products and discretionary items like cars, air conditioners, and refrigerators will take effect in a week. The prevailing expectation—including in the stock markets—is that this will trigger a major consumption boom.But what if it doesn’t?Certainly, consumers prefer lower prices. However, their willingness to buy more, or upgrade their purchases, depends on a host of other factors that are not being prominently discussed.The mixed reception to these cuts was summed up by former Finance Minister P. Chidambaram.In a recent column in The Indian Express, he asked: “If a 5% GST on toothpaste, hair oil, butter, infant napkins, pencils, notebooks, tractors, sprinklers, etc. is good today, why was it bad for the last eight years? Why did people have to pay exorbitant taxes for eight years?”Of course, we cannot know whether the opposition would have reduced rates had they been in power.But the core issue isn’t high prices—it’s constrained household incomes.Stagnating Incomes Across the Country Before discussing incomes, let’s break down the purchases. High-priced items…