India's economy faces significant challenges, including a slowdown marked by a forecasted growth of only 6.4%. Just before PM Modi's White House visit, President Trump announced new tariffs and urged India to purchase military goods and negotiate trade deficits, potentially straining India's economic situation. Seeking relief, the Indian government introduced income tax cuts and a central bank interest rate reduction, yet experts like Kaushik Basu highlight ongoing difficulties for the majority below taxable limits, emphasizing the continuing impact of the COVID pandemic on recovery.
At a joint news conference, Trump said India would buy F-35 fighter jets and oil and gas from the US. The two countries would also begin negotiations on the US trade deficit with India.
Economists warn the tax relief may not be enough for the vast majority of Indians, whose income still falls below taxable limits and who may still be reeling from the impact of the COVID pandemic.
Kaushik Basu, professor of economics at Cornell University, noted that recovery has not come back after the pandemic, indicating that agricultural labour has increased.
The Modi government announced income tax relief for the middle class in the annual budget earlier this month, aiming to ease the economic slowdown.
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