Urban Slowdown Hits Hard—Tax Relief & Rate Cuts Set to Boost Recovery!

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India’s urban economy is feeling the strain, with slowing wage growth, weak job creation, and declining consumer spending weighing on overall growth. To counter this, the government has announced ₹1 trillion in income tax relief and interest rate cuts, aiming to revive demand and restore momentum.

Key Highlights:

- Wage growth for listed firms halved to 7.5% in FY25, down from 15% in previous years.
- IT sector hiring shrinks—net job losses of 70,000 in FY24, compared to peak hiring of 293,000 in FY22.
- Urban FMCG sales lag behind rural markets, signaling weak discretionary spending.
- Passenger vehicle sales growth slows to 4.5% in FY25, down from 8.8% in FY24.
- GST collections surge—May saw a 16.4% YoY increase, indicating early signs of recovery.

The Reserve Bank of India’s (RBI) monetary easing is expected to reduce borrowing costs, encouraging consumer spending and business investments. Analysts believe that lower interest rates will help reprice loans, easing financial pressure on households.

With inflation stabilizing and government stimulus measures in place, experts anticipate a gradual recovery, though sustained growth will depend on job creation and wage improvements.

Sources: Zee Business, Economic Times, Inc42