The latest increase in indirect taxes on commodities like diesel, petrol, and alcohol by the central and various state governments is likely to lead to a further rise in the tax burden on India's Gross Domestic Product (GDP). In FY19, indirect taxes (net of subsidies) accounted for nearly 10 percent of GDP, up from 9.3 percent a year ago and a low of 6.1 percent in FY10. This, say, economists, will negatively impact household disposable income and may hit consumer demand and savings and investments by the household.
Disposable income is the portion of GDP that accrues to households that they consume, save, or invest. If it grows slower than the overall GDP or declines, households will either cut back on consumption, or savings & investments, or both," says experts.
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