WTM Podcast: India's Growth, Reforms, And The Road Ahead With Prof Prasanna Tantri

"The three tax cuts have been very clean. The corporate tax cut, along with the individual tax cut and GST reforms, has been substantial enough to make a real difference.

The corporate tax cut, however, was overshadowed by the fact that it did not lead to investments at the time. This was because the government simultaneously increased tax collections and expanded its size. Government expenditure went up to about 15% of GDP, and tax collection rose. But in the last two years, that number has been brought down. If you look at the data, the government’s share of GDP has fallen from 15.5% to less than 14%.

This is a BIG achievement, though it rarely gets mentioned in public discussions. After this year’s budget, if spending stays around ₹52 lakh crore and GDP is roughly ₹400 lakh crore, the government’s share will be about 12.5%.

For context, in the 1920s, before the Great Depression, the US had its best decade when government spending was nearly 10% of GDP. You really cannot get more “minimum government” than that.

People often don’t realise that India is among the least taxed countries in the world. Yes, the burden is concentrated on certain groups, which is why complaints are common, but at an economy-wide level, the tax take is very low.

The last two years of tax cuts, combined with expenditure cuts, send a clear signal: the government wants to leave more money with private players and make things simpler. I believe this will spur growth, and that’s why I remain very optimistic."

Prof Prasanna Tantri, Associate Professor of Finance and Executive Director at the Centre for Analytical Finance at the Indian School of Business, in this episode of 𝗪𝗵𝗮𝘁 𝗧𝗵𝗶𝘀 𝗠𝗲𝗮𝗻𝘀, shares his takeaways on Q1 GDP numbers, GST reforms, and the next-gen reforms.

• You can listen now on Spotify and on Apple Podcasts. (Also available on our App, Amazon Music, and Pocket Casts.)

He says: "One thing the government should focus on more than "Build in India" is to "Innovate in India". And bring back innovators living abroad who are frustrated with what’s happening in the US and Australia and want to return. Create campuses where they can stay and work. They will be the job creators, and that will be a game changer."

Tune in now!