Economic recovery will be slow in coming

Neither the tax cut nor the sector-specific measures will change the near-term growth outlook dramatically

The cut in the corporate tax rate is seen as the boldest of the barrage of measures unleashed by Finance Minister Nirmala Sitharaman. It has sent the stock market soaring. There are expectations that an internationally competitive corporate tax rate will boost investment in the economy, both foreign and domestic, and lead to a massive creation of jobs and incomes. Such expectations need to be tempered by a dash of realism.

Let’s take foreign direct investment (FDI) first. There is little to suggest that FDI has been held back by the higher tax rate that obtained thus far. Gross FDI flows