India’s consumer spending experienced a modest growth of 3.5 percent last year, according to government data, marking the slowest rate of increase since 2021 when spending surged by over 18 percent. This trend has raised concerns among citizens and small business owners alike, who are eagerly anticipating the upcoming annual budget for potential relief measures. The backdrop to these concerns is inflation, which stood at 5.22 percent year-on-year as of December last year, squeezing disposable incomes and profit margins.
Bhavesh Brahmadutt, from a typical Indian middle-class family, exemplifies the financial pressures faced by many. Despite being part of a double-income household, Brahmadutt finds it increasingly difficult to manage the rising cost of living driven by inflation. His floor tile and sanitary ware store, Shri Devnarayan Tiles, has seen a decline in profit margins by 15 percent. Brahmadutt hopes the government's annual budget will include a reduction in personal income tax to improve his financial situation.
“My parents are ageing (and) I have childcare expenses – it all costs money. We are thinking about buying a house at some point and maybe having another child,” said Bhavesh Brahmadutt.
“But for all this, we need to have disposable income and we’re barely able to save anything.”
Feroze Azeez, deputy CEO at Anand Rathi Wealth Limited, highlighted the lack of governmental support for small businesses compared to larger enterprises. He advocated for more infrastructure investments in the budget, which he believes could significantly enhance efficiency and reduce logistics costs.
“If you make roads and corridors, logistics cost comes down (and) efficiency of the supply chain goes up,” stated Feroze Azeez.
Pradeep Bhomara, another small business owner, echoed similar sentiments, emphasizing the necessity for easier access to business loans and reduced paperwork. He urged the government to lower GST rates from 18 to 15 percent on non-luxury goods and from 28 to 20 percent on luxury goods. Bhomara also expressed hopes for a reduction in the GST rate on medical insurance from its current 18 percent.
“Getting easier business loans is necessary. The paperwork needs to be reduced so that it’s easier for a lay person to access better funding,” remarked Pradeep Bhomara.
“The kind of support that small businesses need is absent today. But if you look at big businesses, they get a lot more support from the government which allows them to expand their business.”
As India prepares for its Budget 2025 announcement, Finance Minister Nirmala Sitharaman has already introduced several measures aimed at supporting micro, medium, and small businesses through government funding and technological aid. This budget is particularly significant as it is expected to set the tone for the government’s spending priorities during Prime Minister Narendra Modi’s third tenure.
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