Image by Getty Images via Daylife

A good IIP number is a good news for the economy. Also because this has showing signs of improvements from some time now, this coupled with a healthy credit growth and ample liquidity will defiantly propel economy forward. I am sure the capex will start again and so the good numbers from companies.
What can really change the consumption in the economy is a proposed plan to change the tax slab from current 1.5, 3 & 5 million to 1.6, 10 & 25 million. I think following will be the implications of the change;

1. this is a fantastic news for the internal consumption, and for FMCG companies.
2. India has about 15% of the world population, and a huge middle class. A change in consumption pattern might lead to inflation
3. Fiscal deficit will surly go up; improving the number of tax payers, that the government is talking about may not be all that easy. So the fiscal deficit will go up.
4. It's a simple rule one gets money, when you have enough of it. All this money will improve savings and investments, which will in turn attracts more investments from FII and FDI.

Related articles by Zemanta

• Deficits don't have to mortgage the future (money.cnn.com)
• World population may hit 7 billion next year (cnn.com)
• Shop and save the Indian way (telegraph.co.uk)