“It will be very critical that the investment growth momentum continues and the government will have to take the lead,” wrote Sinha.
Ideally, investment growth could feed into more private consumption growth. Since private consumption accounts for 58 percent of India’s GDP, this is a key indicator.
In an effort to stimulate the economy by improving consumption, the Indian government announced a tax cut for the sale of residential properties. India’s housing market took a hit last year due to the languishing economy and underperforming loans in the banking sector.
“Going forward, if the investment uptick gathers pace, it will result in private consumption growth gaining momentum,” Sinha added.
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