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PM Modi's election Budget unlikely to delay RBI path to rate pause

The new tax rates are unlikely to add to inflationary pressures in the economy in the near-term, said economists including Nirmal Bang Institutional Equities Pvt.'s Teresa John

RBI, Mumbai
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Photo: Bloomberg

Ruchi Bhatia and Anup Roy | Bloomberg
The Narendra Modi government’s $550 billion India budget aimed at boosting consumption by lowering taxes will not stop the central bank from moving toward a pause in interest-rate hikes by the end of this quarter, according to some economists.
 
The new tax rates are unlikely to add to inflationary pressures in the economy in the near-term, said economists including Nirmal Bang Institutional Equities Pvt.’s Teresa John. That’s because the new tax regime offers an opt-in which is more likely to be exercised by entrants to the job market, while current taxpayers will probably choose the structure in place.