Well-begun

The income tax and GST rate cuts have resulted in better consumer demand

- 

THERE IS HOPE in the air about gathering economic momentum after a cracker of a festive season. Maruti Suzuki India Chairman RC Bhargava notes that retail sales this time around were driven by a 30% rise in dispatches of small cars, as against 4-5% growth in sales of big cars. He also foresees many car makers, including Maruti Suzuki, going back to the drawing board to revise their product mix. That signals a broad-basing of consumer demand in mass-consumption durables, which the economy has long been waiting for. While demand for high-end and premium products undoubtedly helps, an economy in a relatively early phase of a high growth cannot rely too much on it. The 4.6% gross increase in the goods and services tax (GST) mop-up in October (sales in September), despite the massive cuts in tax rates effected on September 22, is encouraging. Middle-income households, despite being constrained by low savings and high debt, have given in to their aspirations.