India’s economic trajectory faces sharp criticism as startup founders and industry veterans highlight the pressing issues strangling growth and progress. Akshat Shrivastava, founder of Wisdom Hatch, recently raised alarms over India’s lag behind nations like China, Singapore, and the US. His critique points to unaddressed structural problems that could hinder India’s growth ambitions.
Shrivastava’s Concerns: A Call for Structural Reforms
In a scathing post on X (formerly Twitter), Shrivastava compared India’s policies to those of thriving global economies. Key takeaways include:
- China’s Infrastructure Supremacy:
Shrivastava notes that even smaller Chinese cities surpass India’s metropolitan hubs in infrastructure. This disparity highlights India’s slow pace in modernizing essential frameworks. - Singapore’s Rigorous Growth Policies:
Singapore’s advanced economy now selectively allows high-net-worth individuals to settle, emphasizing quality over quantity. - Tourism Leadership in Asia:
Thailand and Vietnam outpace India in tourism, threatening long-term revenue opportunities for a sector ripe with potential. - Focus on Merit in the US:
The US prioritizes attracting talent to build companies and create jobs, a strategy India struggles to emulate effectively.
Taxation and the Middle-Class Burden
Shrivastava criticizes India’s reliance on taxing the middle class to fund subsidies, describing it as a short-sighted approach. He states, “Our game-plan seems to be: tax people to death, use their money to support freeloaders, and then expect them to stay and build the nation.”
Former Infosys CFO TV Mohandas Pai echoes these concerns, urging for significant reforms in the Budget 2025-26. Key points raised include:
- Surging Tax Burden:
Individual tax collections have skyrocketed by 114% in just three years, from ₹4.8 lakh crore in FY21 to ₹10.4 lakh crore in FY24. - Subsidy Spending:
Over ₹9 lakh crore is spent annually on subsidies for the bottom 60%, leaving the middle class strained with little return on their contributions. - Tax Dispute Backlog:
Pai suggests resolving ₹12.5 lakh crore locked in tax litigations to ease systemic inefficiencies.
Economic Impacts: Consumption and Savings in Decline
India’s middle class, historically the backbone of its economic growth, faces mounting challenges:
- Household Savings:
Savings rates are at a 50-year low, eroded by stagnant incomes and rising household debt. - Consumption Slowdown:
Major FMCG companies report plummeting growth:- Nestlé India’s food and beverage sector growth has dropped to 1.5%-2% from double digits.
- Hindustan Unilever observes muted urban demand, particularly in metro cities.
- Automation and Job Losses:
Automation is replacing traditional jobs, reducing employment opportunities and further suppressing disposable income.
Reforms Needed: A Roadmap for Progress
Shrivastava and Pai advocate bold reforms to rejuvenate India’s economic outlook:
- Revamping Tax Slabs:
Lowering tax rates for the middle class to provide relief and boost disposable income. - Encouraging Exports:
Incentivizing industries to expand exports and reduce dependency on domestic consumption. - Infrastructural Development:
Prioritizing large-scale infrastructure projects to compete with global standards. - Tourism and Innovation:
Investing in tourism and fostering innovation to diversify revenue streams.
Conclusion: The Need for Bold Leadership
Shrivastava’s critique is a clarion call for India to address systemic issues holding back its growth potential. With the middle class increasingly squeezed by high taxes, inflation, and dwindling savings, it is imperative for policymakers to implement meaningful reforms. Without a strategic pivot, India risks being overshadowed by global peers in infrastructure, innovation, and economic stability.
Disclaimer
This article is intended for informational purposes only and does not constitute financial or policy advice. Readers are encouraged to consult experts or relevant authorities for accurate assessments.
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