Davos 2025: Capex, Tax Cuts & Deregulation, EY’s Growth Mantra

resr 5paisa Capital Ltd

Last Updated: 23rd January 2025 - 12:56 pm

2 min read

At the World Economic Forum 2025 in Davos, EY India Chairman Rajiv Memani outlined strategies to revitalize India’s slowing economic growth. Speaking exclusively to, Memani emphasized the importance of increased capital expenditure, a reduction in personal income tax, and deregulation to stimulate consumption, investments, and ease of doing business.

India’s GDP growth has been on a downward trend, with full-year projections at 6.4% amid global disruptions caused by wars, civil strife, and fluctuating commodity prices. Memani attributed the slowdown to these factors, compounded by the impact of general elections and seasonal slumps in key industries.

Driving Economic Growth Through Capex

Memani stressed that boosting capital expenditure (capex) is critical to kickstarting the investment cycle and spurring economic growth. He highlighted that the upcoming Union Budget 2025 is expected to include measures aimed at driving infrastructure development and large-scale investments.

“Capex will not only generate immediate economic activity but also create a multiplier effect across industries,” Memani explained. He added that accelerating disinvestment processes and leveraging capital markets could inject much-needed energy into the economy, provided these initiatives are executed at a faster pace.

Personal Income Tax Cuts to Spur Consumption

To counter declining consumption, particularly among urban middle- and lower-income groups, Memani proposed a reduction in personal income tax.  

“We have faced headwinds in consumption over the last six months. Relief for urban lower- and middle-income groups, as well as rural communities, could provide a significant boost to spending,” he said. However, he cautioned that the government must balance this with its commitment to maintaining a low fiscal deficit.  

Deregulation and Ease of Doing Business

Memani also called for greater deregulation to improve the ease of doing business in India. He pointed to global trends, such as the second Trump administration’s focus on reducing federal oversight, as an example of how deregulation could accelerate growth.

“Streamlining approvals and speeding up capex execution is essential. The delays we currently face hinder the growth trajectory of organizations,” Memani stated. He urged policymakers to reduce bureaucratic hurdles, enabling businesses to grow at a faster pace.

Conclusion  

Memani’s insights at Davos 2025 underscore the need for a multi-pronged approach to revive India’s economic momentum. Increased capex, personal income tax cuts, and deregulation emerge as critical levers to address the current slowdown. While challenges like global disruptions and fiscal constraints remain, a focused strategy could propel India back onto a robust growth path. As India braces for its Union Budget 2025, all eyes are on the government’s plans to implement these recommendations and foster long-term economic stability.

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Krishca Strapping Solutions Limited

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  • Date Range 23 Oct- 27 Oct’23
  • Price 23
  • IPO Size 200