Consumption, not calculations.

"India's GDP is projected to grow 6.4% in 2024-25, down from 8.2% in 2023-24, due to reduced investment, impacting fiscal and monetary policies ahead." HT. In January 2021, "India's gross domestic product (GDP) growth in 2019-20 revised to 4% from 4.2% estimated earlier," while "Nominal GDP grew by 7.8% compared with the provisional estimate of 7.2%." Mint. So, in 2019-20, the nominal GDP was revised upwards while the real GDP was revised downwards, meaning the GDP deflator (Investopedia) was increased to compensate for high inflation. As recently as in October 2024, the Reserve Bank of India (RBI) projected GDP growth at 7.2% and headline inflation at 4.5%. BS. The State Bank of India, a public sector bank, is now projecting growth rate at 6.3% with a downward bias. TNIE. The Household Consumption Expenditure Survey (HCES) released in February 2024 showed that, "Indians are spending less on food, particularly staples like rice and wheat, and more on discretionary items such as processed food, as well as durables like televisions and fridges, government data showed." Reuters. Since the low GDP growth is because of inflation and food and beverages contribute over 50% to the consumer price index (CPI) basket (pib.gov.in), "The government is reportedly considering reducing the the weight of food items in the CPI basket to address inflation concerns (BS) in view of the changing consumption habits of Indians. What if changing the consumption basket actually shows an increase in CPI inflation rate? While fresh vegetables and unpacked food grains are not taxed, processed food and fruits carry a goods and services tax (GST) at 12%, ice cream and pasta at 18% and consumer durables such as AC and fridge at 28%. cleartax. GST on bakery items such as cakes and cookies is at 18%. My GST. Pizza eaten in a restaurant is taxed at 5% while one delivered to the customer's home is taxed at 18%. cleartax. "The traditional nutritious home-cooked meals in Indian households are increasingly being replaced by processed and packaged food items." "According to the HCES, the monthly per capita expenditure on beverages and processed food has risen from 8.98% and 7.9% (2011-12) to 11.09% and 9.84% (2022-23) in urban and rural areas, respectively." DH. If people ease their hunger with anything legally edible, it may be described as food. And, since pre-cooked and packaged foods are much more expensive, often with very high GST added on, the share of food and beverages in CPI inflation could actually increase even if their weightage is reduced. A report by Nuvama says "The income outlook for both rural and urban households remain bleak for FY26," and "rural consumption may increase as it was weak for few years but urban consumption may further slow down." ET. As a result, "Calls for middle-class tax relief have been growing louder." BT. High taxes are hitting consumption and high inflation is bringing the Real GDP lower. Changing the base year may not help. Lowering taxes may send the fiscal deficit shooting skywards. The world is watching.