Tax less for capital growth

It is all a fiscal problem. Effective tax rates have reached a point where there is no economic incentive to invest in the economy, in the absence of which, economic growth will remain a distant dream. Total consumption as a percentage of GDP was almost 100 per cent in 2024-25; the highest ever. Any growth to be driven by consumption will be short-lived. Any sustainable growth requires massive investment in the economy’s production capacity, and that remains constrained by one of the highest effective tax rates in the world, both at a corporate and at an individual level. The country needs an overarching and coherent industrial policy that brings together a stimulating tax policy, a marginal-price-driven power policy, and a savings regime that incentivises formal savings that can provide capital to drive investments in the economy.