India's growth unexpectedly slowed to 5.4 per cent in the second quarter, due to low capital formation, weak consumption, besides adverse weather impact.
"We anticipate the government will continue to prioritise and enhance efforts towards skill development and employment generation, maintaining the positive momentum. This would help harness the demographic dividend, drive economic growth from both supply and demand sides and boost consumption through higher incomes," said Rumki Majumdar, economist, Deloitte India.
In the July Budget, Finance Minister (FM) Nirmala Sitharaman announced initiatives such as employment-linked incentives and internship programmes.
Economists reckon the upcoming Budget has to continue support to the MSME sector and industrial clusters with export potential and high labour intensity.
"I also feel there is a need for some consumption stimulus. FM may reinforce some of the reforms agenda announced in the last budget," said Rajani Sinha, chief economist, CareEdge.
While a comprehensive review of the Income-tax Act has been on the cards, economists believe that in order to boost consumption the FM must consider tax breaks to put more money in the pockets of people.
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