Davos 2025: Increased capex, personal income tax cut and deregulation will kickstart economic growth: EY’s Rajiv Memani

EY India Chairman Rajiv Memani

Higher capital expenditure by the union government, deregulation and enhancing the ease of doing business along with a lower personal income tax rate for the middle class will kickstart the economic growth, said audit firm EY India’s chairman and managing partner Rajiv Memani.

“If we focus on capex, looking at increasing consumption, easing up things, deregulating a bit more, trying to see how we create energy through disinvestments or even through the capital markets and if that can be done with pace, I think that is something that will really help,” said Memani, speaking exclusively to Moneycontrol at the Davos World Economic Forum 2025.

According to Memani, the current economic slowdown was due to various factors including the general elections and the seasonalities in some industries. Multiple global disruptions because of wars and civil strife impacted global commodity pricing had an impact on India’s GDP growth as well.

The country’s GDP growth has been slowing down over the last couple of quarters with the full-year growth now projected to grow at 6.4 percent. The upcoming union budget is expected to have a few capex measures that are expected to spur the investment cycle to kickstart growth.

Memani also suggested a reduction in personal income tax could spur consumption.

“We have had some headwinds on growth over the last six months relating to consumption.If they could give some relief especially to the urban lower-income, middle-income side and on the rural side, it will help,” Memani said adding that the government will have to do a tightrope walk as it is committed to maintaining a lower fiscal deficit.

Another key area that could help in GDP growth is deregulation and the ease of doing business, according to Memani pointing to the second Trump administration’s plan to reduce the role of the federal government.

“I think it's going to be increasingly a trend around the world. How do we push ease of doing business and regulation so that organisations that want to grow can accelerate their growth path. I think the time it takes to get all the approvals and the time it takes to even the capex speed gets delayed,” Memani added.