Budget 2025: Rahul Bajoria On Addressing Income Growth And Consumption Trends

India's post-pandemic recovery has been robust and broad-based, but growth momentum is showing signs of moderation, particularly in high-value discretionary spending, according to Rahul Bajoria, head of India and ASEAN Economic Research at BofA Securities India Ltd.

"We are not worried about overall consumption slipping, as reflected in GST numbers," Bajoria said in an interview. "However, discretionary, high-value consumption is taking a step back due to income growth settling at high single digits."

Over the past few months, equity markets have seen subdued performance, which, Bajoria said, is creating "negative wealth effects" impacting higher-income households' discretionary spending patterns.

Rahul Bajoria, head of India and ASEAN Economic Research at BofA Securities India. (Photo source: NDTV Profit)

Bajoria also noted that while India's fiscal and monetary policy tightening was necessary, it has had a dampening effect on certain segments of consumption. "Policy tightening on both fiscal and monetary fronts is having a negative impact," he said.

Despite these concerns, Bajoria remains cautiously optimistic, saying, "Is there a need to panic? I don't think so. Do we need to worry? A little bit, yes."

Looking ahead, Bajoria highlighted the importance of policy intervention to sustain growth. "India needs to prioritise growth, and the budget remains an important exercise to improve sentiment," he said. He added that both public and private sector investments in high-income generating areas are crucial for maintaining growth momentum.

While overall consumption remains resilient, Bajoria suggests that addressing income convergence and boosting high-value discretionary spending will be key priorities for policymakers in the near term.