Tag: GDP

India’s economic growth expected to slip below 7% in October-December quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s economic growth probably slipped below 7% for the first time in the current fiscal year in the October-December period, hit by a tepid manufacturing sector and weakness in consumption.

The country is expected to grow at 6.6% in the three months that ended on December 31, a Reuters poll showed, slowing from growth of 7.6% in the previous quarter and 7.8% in the July quarter. India’s fiscal year starts from April 1.

At 1200 GMT on Thursday, India will release the gross domestic product (GDP) data for the quarter, along with the revised estimate for the full year, which ends on March 31.

“Some moderation is expected in October-December GDP growth, with softer growth in manufacturing sector,” said Gaura Sen Gupta, an economist at IDFC First Bank.

Consumption growth in the quarter was “mixed”, with retailers reporting a slowdown in sales growth, Sen Gupta said.

Earlier this month, market researcher NielsenIQ said sales volume growth in the Indian consumer goods sector in the December quarter slowed sequentially.

Retailers have been struggling, mainly in the rural areas, where the recovery from the COVID-19 pandemic has been slow, impaired by the high cost of living and weak wage growth, despite India’s world-beating growth rate.

Companies like Hindustan Unilever and Britannia Industries posted weak quarterly profits, because of subdued rural demand and increased competition.

Fastest-growing economy

Despite slower growth, India is likely to retain its position as one of the world’s fastest-growing economies with estimated growth of 7.3% estimated in the current fiscal year, the government’s first advance estimate shows, amid a faltering China and a eurozone narrowly escaping a technical recession.

The Indian government will revise its full-year growth estimate on Thursday. Economists say India will keep its status as one of the fastest growing economies in the foreseeable future, helped by Prime Minister Narendra Modi’s reforms.

“On a long-term basis, India is likely to deliver minimum 6% to 6.5% real GDP growth and 10% to 11% nominal GDP growth, significantly higher than comparable emerging market countries over the next two decades,” said Kaushik Das, an economist at Deutsche Bank.

Modi sharply raised government spending on infrastructure over the last few years and has unveiled incentives for the manufacturing of phones, electronics, drones and semiconductors to help India compete with likes of Vietnam and Thailand.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s GDP growth to slow down to 6.5% in FY25, projects Ind-Ra

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India Ratings and Research (Ind-Ra) projects a GDP growth of 6.5% for FY25, a modest decrease from the previous fiscal year’s 7.3%. Despite this dip, the analysis suggests a robust economic recovery propelled by consistent government capital expenditure, strong corporate performance, and a balanced banking sector. The prospect of a forthcoming private corporate capex cycle adds a positive dimension to the outlook.

The report flags concerns about consumption demand, particularly in goods and services favored by households in the upper income bracket. While government capex drives aggregate demand, Ind-Ra emphasizes the necessity for a more diversified consumption demand growth, urging a focus on households with lower incomes. Although the private sector’s greenfield capex remains sluggish, the report identifies signs hinting at the potential for a new cycle.

The outlook for global exports in FY25 is challenging due to the growth slowdown in advanced economies and increased trade distortions/geopolitical fragmentation. India’s goods and services exports experienced a negative growth rate of 0.14% during the first 10 months of FY24. Additionally, the rise in Wholesale Price Index (WPI) inflation, similar to the producers’ price index, poses concerns for gross value added (GVA) and corporate profitability in FY25. WPI, which was in deflation from April to October 2023, has shifted to inflation since November 2023.

“A rise in input cost, if is not adequately passed into output prices, will reduce value addition/corporate margin. Given that consumption is not broad-based, producers will find it difficult to pass on the higher input cost to output prices,” says Sunil Kumar Sinha, Principal Economist, Ind-Ra.

Ind-Ra anticipates Government Final Consumption Expenditure (GFCE) to grow at 4.2% YoY in FY25, underscoring the ongoing significance of government capex. Despite a shift in focus, the report projects Gross Fixed Capital Formation (GFCF) to grow at 8.1% YoY, sustained by government capital expenditure.

The report issues a caution regarding challenges for India’s exports in FY25, citing global headwinds such as a growth slowdown in advanced economies and rising trade distortions. Despite the recovery of global supply chains, restrictive trade policies pose risks. Ind-Ra expects goods and services exports to grow at 5.8% YoY, navigating these challenges.

In terms of sectoral insights, Ind-Ra provides a forecast of 7.3% YoY growth in the services sector for FY25. The report notes concerns about monsoon rainfall and industrial growth. On inflation, it expects retail and wholesale inflation at 4.8% and 2.2%, respectively, in FY25. The fiscal deficit target of 5.1% of GDP for FY25 is considered challenging but achievable, backed by better-than-expected revenue collections.

Despite concerns over negative net exports, Ind-Ra expects the current account deficit to remain manageable at 1.4% of GDP in FY25. The agency anticipates an improvement in capital account flows, contributing to a net addition of USD 68.4 billion in forex reserves, providing stability to the Indian rupee.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Jonathan Garner explains why Morgan Stanley prefers India despite the steep valuations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India is in a virtuous cycle of strong nominal GDP growth, strong capital inflows, healthy corporate profits, and a more stable environment for investors than ever seen historically, says Jonathan Garner, Chief Asia and Emerging Market Equity Strategist at Morgan Stanley. “So it is no surprise to us that India is in a persistent secular bull market.”

Comparing India with Japan, which is also among Morgan Stanley’s top picks, Garner said, India is clearly a costlier market with a return on equity (ROE) of about 16% and a price-to-book ratio (P/B) of four times, against Japan’s 10% ROE and a P/B of 1.5.

But despite its high valuations, second only to the United States globally, Garner sees India’s market growth more evenly spread across different company sizes, unlike the concentrated profitability in the US. He believes this broad-based growth underpins the confidence in India’s ability to sustain significant earnings growth, even at a premium valuation.

“The question for India is how much compounding have we got to go because it is worth paying a growth multiple for a growth stock or a growth market if they’re capable of sustaining earnings growth. And at the moment, we have confidence that 20% compounded EPS (earning per share) growth is going to be sustainable for India over a three to five year horizon. So it’s a very interesting story,” he said.

While India has not yet seen ‘true global appeal’, Garner pointed out that India’s share in the emerging market (EM) index or the Asia ex-Japan index is rising steadily.

Explaining why India has so far not seen inflows similar to those seen in Japan, he said, Japan includes globally recognised stocks that have been familiar to investors for years. Also, the Japanese market in index terms is roughly 3.5-4 times the size of India in free float market cap and it’s a developed market (DM). So, it can attract a much broader range of interest. “It’s (India is) still an EM specialist or Asia ex-Japan specialist market from a foreigner perspective,” said Garner.

Also Read | Japan loses its spot as world’s third-largest economy as it slips into recession

Garner also shared his view on India’s financial sector. “The key point is that the financial sector in India is going to benefit from rising economic activity, rising demand for financial products of all forms and growth in household and corporate leverage over time.”

For the entire interview, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Neelkanth Mishra lists key investment themes for next 12-18 months

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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“Themes like defence, electronics, and financials are going to be the areas of interest for us for next 12-18 months,” said Neelkanth Mishra, Chief Economist, Axis Bank, Head-Global Research, Axis Capital in an interview to CNBC-TV18.

Mishra expects investors to remain cautious ahead of elections. However, investments will be back post-elections.

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For the market, the earnings momentum and near-term valuations should play a much more important role and he believes that the Indian economy will continue to outperform the global setup.

Therefore the domestic cyclicals – companies that are more focused on the domestic economies – are likely to do well, he stated.

Sharing his views on banking sector, he said, “Banking sector as a whole seems to be oversold.” This, he said, was largely because of worries over excessive tightening of liquidity conditions. “But at some point, I think given that the credit demand is strong, and the bank as some pricing discipline sets in, I think some of the concerns that have plagued the sector should disappear.”

Also Read | Tata Power shares fall 7% on weak Q3 performance; key variables to watch out for over 12-18 months

He also shared his views on capital expenditure (capex) increase in sectors like railways, urban housing infrastructure, roads is in single digits. Over the last couple of years, the government has done the heavy lifting in terms of spending, and “I think that the government’s withdrawal of support is an attempt to calibrate its own presence in the economy given that the debt to gross domestic product (GDP) levels are higher than comfort levels.”

Mishra expects the industrial sector to be driven primarily by the private sector capex and pickup in construction, both in residential and commercial spaces, over the next three years.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI Monetary Policy Committee projects India’s real GDP growth at 7% for FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has kept its growth projection for India’s GDP at 7% for the 2024-25 financial year, Governor Shaktikanta Das announced on Thursday, February 8. For the first three-quarters of FY25, the GDP growth rates are estimated at 7.2%, 6.8%, and 7%.

“This is the 3rd successive year of growth above 7%, FY24 momentum is expected to continue in FY25,” Das said. The governor stressed that the risks to growth are evenly balanced. The central bank governor said that private investments are picking up, and rural demand is gathering pace.

The consumer price index inflation target of 4% is yet to be reached, Das stated, noting that the monetary policy committee has to remain vigilant to ensure a successful last-mile navigation of disinflation. “Stable and low inflation at 4% will provide the bedrock of economic growth,” the Governor said.

The Reserve Bank of India did not hike its lending rate (repo rate), in line with the consensus expectations of market watchers and economists. The repo rate was left at 6.5%, unchanged for the sixth quarter in a row.

Catch all the live updates from RBI MPC announcement here 

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2024: NK Singh says fiscal deficit target ‘daunting’, signals commitment to macro stability

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In her Budget 2024 address on February 1, Finance Minister Nirmala Sitharaman outlined the government’s fiscal deficit target of 5.1% in the upcoming fiscal year (FY25). This goal aligns with a broader fiscal consolidation strategy aimed at bringing the deficit down to below 4.5% by FY26, Sitharaman said.

Fiscal deficit for the current financial year (FY24) is expected to be 5.8%, lower than the 5.9% budgeted estimate.

According to NK Singh, Chairperson of the 15th Finance Commission, the 0.7% expected fiscal consolidation is a “fairly daunting target’ in absolute terms.

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“It’s a clear signal on the government’s continued commitment to a path of macroeconomic stability, and fiscal consolidation, and I have no doubt that the debt numbers will also show this kind of fiscal resolve and look in a southward direction,” he told CNBC-TV18 discussing his key takeaways from the six budget by FM Sitharaman.

This fiscal resolve, Singh noted, is very important as a signal to investors and rating agencies on India’s continued adherence to its goals even in an election year.

Singh also referred to Finance Minister Nirmala Sitharaman‘s emphasis on Trust, Confidence, and the Blessings.

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He discussed a notable shift in the states’ approach to fiscal management pointing out that states have purposefully utilised funds, with expenditure patterns showing a switch towards long-term multiplier growth.

Singh lauded this as a decisive move towards “Viksit Bharat,” emphasising the states’ crucial role in contributing to the nation’s long-term growth story.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China hits GDP growth goal as focus turns to support in 2024

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China reached its economic goal for 2023 as industrial production and investment climbed in the final stretch of the year. Now the focus is turning to what policymakers will do to support growth going forward.

Gross domestic product grew 5.2% last year, data released by the National Bureau of Statistics showed  onWednesday, matching the rate that economists had expected in a Bloomberg survey. Beijing’s official target was “around 5%.” In an unusual move, Premier Li Qiang revealed the headline number a day earlier in Davos, Switzerland.

For the October-December period, the economy expanded 5.2% from a year earlier and rose 1% from the previous quarter. Other indicators were mixed in the final month of 2023:

Industrial output rose 6.8% in December from a year ago, compared with a 6.6% increase projected by economists
Retail sales grew 7.4%, compared with a forecast for an 8% gain
Fixed-asset investment climbed 3% in the year, better than a predicted 2.9% rise
The urban jobless rate was 5.1% last month, up from 5% in November
“China’s economy withstood external pressures and overcame domestic challenges to rebound and improve in 2023,” the NBS said in a statement accompanying the data. The agency warned, though, that economic development “still faces some difficulties and challenges.”

The Beijing-set growth target was deemed conservative by many economists when it was set last March. But persistent deflationary pressures and the prolonged property slump proved major challenges through 2023, eventually spurring authorities to roll out more stimulus in the form of rate cuts and fiscal support to help achieve that goal.

Li stressed in Davos that last year’s target was reached without resorting to “massive stimulus,” adding to speculation about what support may look like this year as the government tries to retain economic momentum.

The biggest threat to the economy remains the property slump, which has weighed on business investment, undermined job creation and curbed consumer spending. Home prices fell the most since 2015 in December. The People’s Bank of China has made use of a lending program to boost property investment and construction, though it has so far refrained from taking bold steps such as cutting interest rates further.

Fiscal policy is seen taking a big role in driving growth this year. China is considering 1 trillion yuan ($139 billion) of new debt issuance under a so-called special sovereign bond plan, only the fourth such sale in the past 26 years.

Also Read: HDFC Bank’s US-listed shares fall 7%, most since April 2022 post Q3 results

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2024: Economists weigh in on expectations for fiscal deficit, divestment, and more

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditi Nayar, Chief Economist at ICRA, and Devendra Pant, Chief Economist and Senior Director of public Finance at India Ratings & Research shared their expectations from Budget 2024 in a conversation with CNBC-TV18.

“We are penciling in higher revenues on direct taxes, encompassing both income tax and corporate tax. The goods and services tax (GST) has been performing well, although there are some lags, particularly on the excise side,” noted Nayar.

She said while non-tax revenues are buoyed by substantial funds from dividends and profits, a shortfall on disinvestment may somewhat offset the gains. Consequently, she anticipate a modest upside on the net receipts to the center, amounting to approximately half a trillion rupees.

Pant echoed a similar sentiment, projecting an optimistic outlook for net tax revenues. “We expect net tax revenues to surpass the budget estimates by ₹1.2 trillion, reaching around ₹24.5 trillion. Non-tax revenues are also anticipated to exceed the government’s initial estimates by approximately ₹700 trillion,” he stated.

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However, Pant expects disinvestment to be the key contributor to the higher fiscal deficit. Despite an expected marginal increase in the overall fiscal deficit, it aligns closely with the budgeted figures, he explained.

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He expects fiscal deficit of around 6% of the GDP this year.

Budget Day approaches.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global economy faces weakest half-decade performance in 30 years: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

NSO projects India’s FY24 GDP growth at 7.3% – decoding the numbers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The National Statistics Organisation (NSO) has released its first advance forecast for India’s gross domestic report (GDP) growth in financial year 2024 (FY24), expecting the economy to grow at 7.3%, higher than the Reserve Bank of India’s (RBI) latest 7% forecast. CNBC-TV18 had estimated growth at 6.8%.

The RBI had forecast a growth of 6.5% in their first estimate in April 2023. However, the Street was not as optimistic back then, projecting growth at only 6%. This has led to multiple upward revisions of late.

What does this mean for the Budget? The advance estimates are released to ensure that the Budget keeps the fiscal deficit target, which was set at 5.9% for FY24. Now, in nominal terms — inflation plus real — the GDP growth is slower, at 8.9% versus the estimated 10.8% growth. So, the GDP value is at ₹296 lakh crore as of March 31 versus the expected ₹302 lakh crore. This means that the fiscal deficit will now have to be lower by around ₹37,000 crore compared to the Budget.

Also Read | India’s circular economy likely to touch $2 trillion by 2050

The headline revision by the NSO has been possible largely because of the robust industry growth at 7.9%. This has been aided by growth of over 8% in electricity and mining, and in services at over 7.7%. Within services, finance did well at 8.9%. And all this is also buttressed from the expenditure side by the huge government capital expenditure, which is growing at 10.3%. It has been growing in double-digit for the 2-3 years, which augurs well.

There are also some challenges. The growth in the employment-heavy sectors has been slow, with agriculture and allied services, horticulture, and forestry, growing at just 1.8%. Within services, trade, hotels, and transport are growing at only around 6.3%, much lower than the overall growth rate.

Also, while the capital expenditure is pushing up the economy, consumption has not been good, growing by only 4.4%. This means the growth is not trickling down and leading to overall improvement in consumption. If consumption continues to lag, the capex might stop at some point, which could become a worry.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow