Tag: India GDP

8% growth rate is not unimaginable for India, says former US Treasury Secretary Larry Summers

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

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India should be targeting 8 percent GDP growth as it is an imaginable goal, said former US Treasury Secretary Larry Summers on Saturday. Summers also suggested three factors that would help India generate 8 percent growth rate — free market forces addressing infrastructure needs, particularly in energy, reform in a number of key states and supporting a more effective public sector.

He also highlighted that there are a range of barriers that are impeding the growth of the Indian economy, including issues between national and local governments and restrictions in key regions of the country.

Summers also feels that AI could become an accelerant for India’s economic growth as it is a sector in which India sees a possibility to excel.

India’s GDP grew at 7.8 percent in the April-June quarter of the fiscal year 2023-24, as per the National Statistical Data (NSO) data, which was released on August 31. In the corresponding period of the last fiscal, India witnessed a remarkable growth of 13.1 percent and 6.1 percent growth in the last quarter.

India also registered gross value added (GVA) of 7.8 percent in the quarter that ended in June as against 11.9 percent GVA growth seen in the same quarter last fiscal year. However, India recorded 6.5 percent GVA in the previous quarter.

Summers raised doubts over higher interest rates for a longer period of time acting as a major barrier to growth. However, the recession caused due to central banks’ failure to keep inflation under control could pose a more serious risk, he added.

ALSO READ: The world is on fire both literally and figuratively, Larry Summers explains

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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

Nomura, Morgan Stanley raise India’s FY24 economic growth forecast, BofA cuts

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

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Economists at Nomura and Morgan Stanley on Friday raised their economic growth forecast for India’s fiscal 2024 after data showed the economy grew at its quickest pace in a year in the April-June quarter.

Economists at BofA Global Research, however, cut their estimates as quarterly growth missed their forecast.

Nomura now expects India’s gross domestic product (GDP) to rise 5.9% for the year ending March 2024, up from the 5.5% expected earlier. Morgan Stanley raised it to 6.4% from 6.2%.

Data on Thursday showed India’s first-quarter GDP expanded a more-than-expected 7.8% on an annual basis, buoyed by strong services activity and robust demand.

The print was an acceleration from the March quarter’s 6.1% growth and above a Reuters poll forecast of 7.7% rise.

”We expect the resilience to be sustained,” said Upasana Chachra, chief India economist at Morgan Stanley.

”Stronger balance sheets across economic agents and the government’s proactive supply-side response ushering in structural reforms are likely to provide a secure foundation to a strong multi-year growth cycle,” she said.

BofA economists slashed their fiscal 2024 forecast to 6.3% from 6.5% as the first-quarter number was far below their 9.1% year-over-year (Y/Y) estimate.

”The improvement in Y/Y terms masks a sharp sequential decline seen in case of both GDP and GVA (Gross Value Added),” noted BofA economist Aastha Gudwani.

June quarter real GDP fell 7.4% quarter-on-quarter (Q/Q) compared with a median 4.4% contraction typical of first quarter, she added. ”In fact, versus pre-Covid history (since 2011), this is the sharpest Q/Q fall seen in GDP.”

Both BofA and Nomura flagged below-normal 2023 rainfall predictions hitting agriculture growth.

Nomura lowered the country’s fiscal 2025 GDP growth rate to 5.6% from 6.5%, citing weak monsoons, higher food inflation, likely slowdown in government capital expenditure, and sluggish global growth pressuring domestic demand.

Goldman Sachs and Barclays, meanwhile, kept their forecasts for fiscal 2024 unchanged at 6.4% and 6.3%, respectively, with Barclays seeing a modest upside risk to their forecast.

”Domestic demand is likely to anchor GDP growth, but some moderation may come from weaker manufacturing and exports in a global slowdown. We forecast continued steady GDP growth of 6.5% in FY24-25,” said Rahul Bajoria, Barclays’ head of EM Asia (ex China) economics research.

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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

Moody’s raises India’s 2023 GDP growth forecast to 6.7%

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

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Global rating agency Moody’s Investor Service on Friday raised India’s economic growth forecast to 6.7 percent in 2023 from 5.5 percent pegged earlier. It has, however, slashed India’s 2024 gross domestic product (GDP) growth forecast to 6.1 percent from 6.5 percent earlier since the second quarter outperformance has created a high base this year.

“Strong services expansion and capital expenditures propelled India’s 7.8 percent real GDP growth in the second quarter from a year ago. We have accordingly raised our 2023 calendar year growth forecast for India from 5.5 percent to 6.7 percent,” it said in a note.

On lowering the 2024 growth forecast, Moody’s said, “Since the second quarter outperformance creates a high base in 2023, we have lowered our 2024 growth forecast from 6.5 percent to 6.1 percent.”

Given the robust underlying economic momentum, the agency also recognises further upside risk to India’s economic growth performance.

India’s monsoon season, which runs from June to October, could also see below-average rainfall, resulting in higher food prices, Moody’s said. “So far, as of August 29, the India Meteorological Department has estimated a 9 percent rain deficiency across the country. If El Niño this year proves to be particularly strong in the second half of 2023 and early 2024, agricultural commodity prices could shoot up.”

The Reserve Bank of India’s monetary policy committee has left the repo rate unchanged for a third time this month. The recent uptick in food price inflation and uncertain El Niño-related weather conditions will delay monetary policy easing consideration to early next year, Moody’s noted.

The agency further said that domestic demand in India remains buoyant, and as long as core inflation remains relatively stable, rate hikes are also unlikely.

Meanwhile, India’s GDP for the first quarter (April-June) of the ongoing financial year accelerated to 7.8 percent, according to data released by the Ministry of Statistics and Programme Implementation on August 31.

The GDP growth stood at 6.1 percent in the fourth quarter of the previous financial year.

While the number is lower than the 13.5 percent GDP growth in the first quarter of the previous financial year, India’s economy has been growing at a steady pace and is likely to improve further during the upcoming festive season.

Though several economists have expressed concern over the overall impact of inflation and erratic weather on economic growth, India’s manufacturing, services and export sectors have witnessed strong growth, in addition to robust tax collection.

Union Finance Minister Nirmala Sitharaman, in a recent interview, said that India’s economic growth will be robust at least till the end of 2023.

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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

Indian economy grows 7.8% in April-June quarter

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

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India’s GDP grew at 7.8 percent in the first quarter of the fiscal year 2023-24, as per the National Statistical Data (NSO) data, released on Thursday, August 31. This is against 13.1 percent growth  in the year-ago period and 6.1 percent growth in the previous quarter. CNBC TV18 Polls had predicted a growth of 7.9 percent.

India remains the world’s fastest-growing major economy as China’s GDP growth in the April-June quarter was 6.3 percent.

The real gross value added (GVA), which provides a broader picture of the economy’s performance, also registered a similar growth rate of 7.8 percent in Q1 of FY24, marginally higher than the CNBC TV18 Poll forecast of 7.7 percent. This is notably lower than the 11.9 percent GVA growth seen in the same quarter last year but higher than 6.5 percent recorded in the previous quarter.

The manufacturing sector reported growth of 4.7 percent in Q1 of FY24. While this figure reflects a positive trend, it falls short of the previous year’s growth rate of 6.1 percent and is marginally higher than the 4.5 percent growth seen in the preceding quarter.

Also Read: China’s factory activity shrinks for fifth consecutive month in August

The agriculture sector showed steady growth at 3.5 percent in Q1 of FY24, surpassing the previous year’s figure of 2.4 percent. In the previous quarter, the agri sector saw 5.5 percent growth.

The electricity sector’s growth, however, saw a substantial slowdown, recording 2.9 percent growth compared to 14.9 percent in the same period last year and a 6.9 percent in the previous quarter.

The mining sector maintained a growth rate of 5.8 percent, though it was lower than the 9.5 percent recorded last year, and higher than the 4.3 percent in the previous quarter.

The trade and hotels sector registered growth of 9.2 percent, a notable decrease from the 25.7 percent growth recorded in the same quarter last year. However, it remained relatively stable compared to the previous quarter, with a slight increase of 0.1 percent.

Also Read: India’s current account deficit expected to fall to around $10 billion or 1% in Q1: India Ratings

The finance and real estate sector showed robust growth at 12.2 percent, surpassing both the previous year’s figure of 8.5 percent and the previous quarter’s 7.1 percent growth.

Growth in public administration and services stood at 7.9 percent, showing a significant decline from the 21.3 percent growth recorded in the same period last year but an increase from the 3.1 percent growth seen in the previous quarter.

The broader industrial sector, encompassing manufacturing, mining, and utilities, posted a growth rate of 5.5 percent in the first quarter of FY24. While this growth is positive, it pales in comparison to the 9.4 percent growth recorded in the same period last year and the 6.3 percent growth in the previous quarter.

Also Read: India’s Q1 fiscal deficit widens to Rs 6.06 lakh crore

Conversely, India’s services sector continued to be a standout performer, maintaining robust growth at 10.3 percent in Q1 of FY24. Although this growth rate marks a decrease from the exceptional 16.3 percent growth seen in the same quarter last year, it’s an improvement over the 6.9 percent growth in the previous quarter.

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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 likely grew 7.9% in June quarter of FY24: CNBC-TV18 poll

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

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India’s gross domestic product (GDP) is expected to have grown 7.9 percent in the April-June quarter of this fiscal (Q1FY24), a step up from 6.1 percent in the previous quarter and 13.1 percent in the year-ago period, according to CNBC-TV18’s poll of economists.

Despite weak global conditions, the Indian economy remained resilient in the first quarter of FY24 on the back of domestic demand, government capex and improved investment activity.

Gross value added (GVA) is expected to rise 7.7 percent, compared to 6.5 percent in Q4 of last fiscal and and 11.9 percent a year ago. GDP data for Q1FY24 will be released by the National Statistical Office (NSO) on Thursday (August 31) evening.

The agriculture sector is estimated to grow at 4.1 percent in Q1, compared to 2.4 percent a year ago and 5.5 percent in the previous quarter. Apart from agri, other strong performers include construction and trade and hotels.

Barclays has estimated Q1 GDP growth at 7.8 percent, while SBI Research and ICRA have pegged Q1 growth at 8.3 percent and 8.5 percent, respectively.

The Reserve Bank of India (RBI), which expects the GDP to grow at 6.5 percent in FY24, has estimated a growth of 8 percent in the April-June period.

ICRA attributed the faster growth to a supportive base and also a recovery in the services sector. Though its estimate is higher than the RBI’s forecast of 8.1 percent, ICRA’s Chief Economist Aditi Nayar said the second half of the fiscal is likely to witness headwinds, which will prove a dampener.

Nayar said erratic rainfall, narrowing differentials with year-ago commodity prices, and a possible slowdown in momentum of the government capex as the country approaches the parliamentary elections, will limit the growth.

SBI Research said the economic activity remained resilient mainly driven by the services sector. “More importantly, there has been a surge in capital expenditure in Q1, with Central government spending 27.8 percent of (the) budgeted (amount), while states at 12.7 percent of budgeted (amount). States like Andhra Pradesh, Telangana, Madhya Pradesh where are elections are due have registered capital expenditure growth up to 41 percent,” Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, said in the report.

Meanwhile, Barclays India, in a note said the construction sector will stand out in April-June GDP data, as it is likely to post its second straight double-digit growth amid front-loaded capital expenditure by both central and state governments, and a pickup in non-financial corporate investments.

“Some drag to growth is expected from weaker momentum in mining, and exports, the latter given external headwinds and ebbing reopening demand. We think robust domestic demand is anchoring economic growth, with strong momentum in areas such as construction, underpinned by government capex… this should ensure that growth remains anchored close to trend levels, giving enough room for RBI to be on a long pause. We continue to believe that the window for rate cuts is closed for now, and the RBI is likely to be on hold for the rest of the fiscal year, in our view, with only a strong growth shock likely to stir it into action,” said Rahul Bajoria, MD & Head of EM Asia (ex-China) Economics at Barclays.

Kaushik Das, Chief Economist, Deutsche Bank told CNBC-TV18, “Eight percent (for April-June) could be a good number, but you could have a positive surprise higher than 8 percent as well and probably that will show that the resiliency is still there in the economy but after that, you could expect a slowdown.”

Watch: Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank and Kaushik Das, Chief Economist at Deutsche Bank discuss what to expect from Q1FY24 GDP data

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank told CNBC-TV18, “Trade and hotels are going to be the key. We are looking at about 12 percent plus number growth in the trade and hotels component. Agriculture is about 5.4-5.5 percent and consumption is where I remain worried. It’s again, a patchy segment and we have been seeing sub-3 percent YoY growth in the previous two quarters as well. And private consumption is where I will be watchful about.”

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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

Citi India’s extensive study finds 13.8% increase in corporate wage cost in first quarter

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

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Citi India has published a thought-provoking report that sheds light on the prevailing economic landscape. Led by Economist Samiran Chakraborty, the Citi India team has conducted an extensive study of the first quarter results of 3,500 companies, and found that wage cost of companies in the country has seen a decline during the April-June quarter as compared to the previous year.

Samiran Chakraborty, Chief India Economist at Citi, who elaborated on these findings during an interview with CNBC-TV18, noted; “There is a slight year-over-year moderation in the wage cost of the companies, hovering around 13-13.8 percent in the previous quarter. However, when we examine the sequential momentum, it’s clear that it has surpassed historical trends.”

This seemingly contradictory data prompts an intriguing question: why does the job market appear to be under more pressure than wage data would suggest? One possible explanation lies in the fact that urban consumption has outpaced rural consumption for some time now. Chakraborty predicted that this trend is likely to persist in the foreseeable future.

Chakraborty did acknowledge a degree of caution regarding urban consumption. He pointed out that this caution stems from both the employment side and the expenditure of excess savings accumulated during the pandemic. Nevertheless, he remains optimistic about the trajectory of urban consumption, asserting that it will continue to outperform rural consumption for the time being.

Later this week, India will eagerly await the release of its Gross Domestic Product (GDP) figures for the April-June quarter.

Chakraborty predicts that the decline in GDP for the April-June quarter will be more pronounced than is typically observed in the first quarter. Traditionally, the first quarter tends to be a weaker period for GDP growth.

For more details, 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

Dean Kim of William O’Neil predicts India’s GDP growth to outshine China; Unveils preferred stocks

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

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India’s economic growth is projected to be stronger not only in the coming year but also in the foreseeable future. This indicates that China needs to put in more effort to stimulate its economy. If China decides to implement additional stimulus measures, it could positively impact the market and potentially attract more liquidity towards their economy. However, as things stand currently, India stands as a promising and well-performing market.

In an interview with CNBC-TV18, Dean Kim of William O’Neil + Co expressed optimism regarding India’s economic growth in comparison to its neighbour China. He revealed that the GDP growth forecasts for India were anticipated to be more robust for the next year, indicating promising prospects for the country’s economy.

He said, “I was looking at the GDP growth forecast for China versus India and India is still stronger in terms of GDP growth headline into next year and beyond. So, China has more work to do in terms of providing more stimulus to its economy. If they were to come out with more stimulus – that could be good news for the market and perhaps that could sway the liquidity over to China, but as we are currently sitting, I still see India as a good performing market.”

In addition to discussing macroeconomic trends, Kim also provided valuable insights into the stock market. He disclosed several stocks that William O’Neil + Co. was closely monitoring and identified some high-potential investment opportunities in various sectors.

Kim highlighted Titan, an Indian retail company renowned for its diverse product range, including watches, jewellery, eyewear, and more, as one of the best picks. The company’s consistent growth and strong market position make it an attractive pick for investors seeking exposure to India’s booming retail sector.

With the rise of e-commerce in India, Indiamart Intermesh has emerged as a prominent player in the online marketplace segment. Kim recognised the company’s potential to capitalise on the increasing digitalisation of businesses, making it an exciting prospect for investors interested in the technology and e-commerce sector.

Kim also suggested considering investments in Siemens and SKF India, the  companies heavily involved in the infrastructure sector. As India continues to invest in its infrastructure development, these companies are likely to benefit from increased demand for their products and services.

Shifting the focus to the automotive sector, Kim pointed out Ashok Leyland as a company worth considering. With India’s ever-expanding transportation needs, Ashok Leyland, a major player in the commercial vehicle industry, stands to gain from the country’s growing infrastructure and logistics demands.

Minda, a leading player in the auto components industry, was another stock recommended by Kim. As the automotive sector evolves and advances, the demand for reliable and innovative auto components is expected to rise, presenting opportunities for Minda and its investors.

In the technology sector, Kim identified Coforge as a stock with considerable potential. Coforge’s expertise in providing IT solutions and services could position the company to benefit from India’s expanding digitalisation initiatives and the global tech industry’s growth.

For more details, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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

Deep localisation, skilling key to tapping India’s potential, say experts

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

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The coming decade presents a crucial opportunity for India’s economic growth and Standard Chartered has forecast the country’s GDP will double by the end of the decade, reaching a significant $6.5 trillion, believes Ankur Khurana, MD & Co-Head of Corporate, Commercial & Institutional Banking at Standard Chartered Bank – India.

This growth will propel India to become an upper middle-income economy, driving both domestic consumption and globalization opportunities, she said during the panel discussion at the Standard Chartered Bank CNBC-TV18 Leadership Collective Chennai Edition.

Ravichandran Purushothaman, President of Danfoss India, Elango P, MD, Hindustan Oil Exploration, and S Chandramohan, President & Group CFO Tractor & Farm Equipment Ltd (TAFE), were among those who spoke on the occasion.

‘Policy reforms, cooperative federalisation led to economic success’

Khurana attributed the success of India’s economic progress to policy reforms and cooperative federalisation, where both the central government and states work together. States are embracing the opportunity and engaging in healthy competition to attract capital, which has been beneficial for the country’s economic development.

She also mentioned the private sector’s role in increasing employment opportunities and enhancing employability for the workforce. A stable and skilled labour force is essential for deep localization and a well-established supply chain, especially considering India’s vast working-age population of around 50 crores.

An increase in per capita consumption will drive household consumption to nearly match India’s current GDP, amounting to a significant $3 trillion, she said. This substantial domestic consumption will have a profound impact on various sectors, including FMCG companies, consumer durables, two-wheelers, and electric vehicles.

India is set to become a dual-purpose economy, serving as a robust domestic consumption market while also positioning itself as a hub for exports. This dual focus will enable India to tap into both its domestic demand and global markets, offering tremendous opportunities for various industries.

‘Demographics, digitization, decarbonisation offer vast opportunities’

According to Ravichandran Purushothaman, President of Danfoss India, India presents compelling trends that no global company can afford to ignore. The country offers vast opportunities driven by demographics, digitization, and decarbonisation. For companies like Danfoss, which specialise in energy efficiency, cooling, heating, and electrification, these trends open up huge possibilities.

In boardroom discussions, the focus is not on whether to be in India or not, but rather on how to be present and successful in India. Ravichandran emphasizes that India is more like a continent than just a country, and to tap into its potential, one must truly understand its diverse market. Despite being present in India for 25 years, Danfoss has only covered 46 cities out of 80 potential locations, indicating ample room for growth and expansion.

Also read: Our superwomen make us a superpower, says Tamil Nadu Industries Minister TRB Rajaa

To thrive in India, Ravichandran believes that companies need to optimize their portfolios and deeply localize their operations. Merely importing and selling in India is not sufficient; establishing a strong local presence is essential.

Danfoss took a unique approach by not only focusing on sales but also investing in research and development (R&D) in India. Collaborating with universities, they built competency within the country, facilitating deep localization, with a focus on Environmental, Social, and Governance (ESG) principles.

This has led to shortening supply chains and achieving decarbonization goals, which enables them to envision doubling business every three years, and reaching the Rs 5,000 crore turnover mark.

‘Policy stability a necessity’

According to Elango P, the Managing Director of Hindustan Oil Exploration Co. Ltd, the oil and gas sector requires substantial risk capital, making it essential to attract investments from sources beyond the domestic sector. To achieve this, continuity in policy is crucial, as the government faces the challenge of balancing the interests of consumers and producers. Frequent changes or tweaks in policy can send mixed signals to potential investors, hindering their willingness to commit.

However, there have been recent positive developments where the Indian government has demonstrated its ability to turn geopolitical challenges into opportunities. The handling of the Russia and Ukraine crisis is a notable example, he mentioned. India has skillfully managed the situation, leading to a significant increase in oil imports from Russia, with nearly 2 million barrels of Russian crude now being imported at a discounted price. The country has leveraged this opportunity by processing the crude oil and re-exporting it to Europe, resulting in substantial value addition for the entire nation.

One commendable aspect is the government’s growing confidence in its future prospects and its adeptness at transforming challenges into advantages, he said. This approach bodes well for the country’s economic development and its ability to attract critical investments in the oil and gas sector, leading to further growth and prosperity.

‘Cost competitiveness fundamental to attracting investments’

According to S Chandramohan, President & Group CFO of Tractor & Farm Equipment Ltd (TAFE), being cost competitive is a fundamental requirement for attracting investments, both at the state and country levels. Without cost competitiveness, it becomes challenging to attract businesses and drive production. Moreover, lacking cost competitiveness can hinder a state or country’s ability to remain competitive in the global market.

States need to focus on improving their ease of doing business to create a conducive environment for investments. He cited Tamil Nadu and Gujarat as examples of states that have made commendable progress in terms of ease of doing business, which has likely contributed to their attractiveness for investments.

In addition to cost competitiveness, the competitiveness of the labor force is equally vital. For a state to be appealing to businesses, it is essential for the labor force to be skilled and continuously upgraded. Skilling initiatives become critical for states to ensure that their workforce remains capable of meeting the evolving demands of industries and businesses.

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

India growth rate likely to be above 7% for nearly a decade, says Axis Bank chief economist

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

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India’s growth rate of more than seven percent is likely to persist for nearly a decade even as some forecasts have pegged the economy’s growth as slightly lower, Axis Bank chief economist Neelkanth Mishra said on July 19.

“India is at the cusp of an inflection and I think the growth rates will be 7 percent plus for nearly a decade,” he told CNBC-TV18, noting that the longer term and medium term outlooks are quite positive even as growth forecasts as per consensus are more or less in-line with what India has delivered over the last 15 years or so.

His remarks come over a month after India posted world-beating GDP growth of 6.1 percent in the January to March 2023 quarter and 7.2 percent in the 2022-23 financial year. This prompted several analysts to revise their projections for the current fiscal.

Mishra, who is also Head-Global Research, Axis Capital, in fact, thinks that seven percent may not be enough, India should be growing much faster.

However, for the near term over the next year or so, he sees significant risks on the horizon.

He explained that goods exports are already falling very sharply but what he’s more concerned about is the risk of dumping. “If India – which is about 3 percent, give or take of the global economy – is pretty much the only economy with reasonable demand, then India’s manufacturing competitiveness will be tested. We will start to see weak demand in China, US, Europe and elsewhere, and that will start to show up in India.”

Axis Bank Chief Economist asserted that services will be more resilient than goods. “There is a significant pricing element to the decline in goods exports. But price declines are much more damaging to margins, which is the value add proportion than just volume decline. And if rice prices are falling a lot, it is actually a big concern, because then our incomes start to fall,” he noted

He said he has no doubt that services will be far more resilient than goods as in case of services, it is very hard to see inventory cycles. Therefore, growth will be positive in the medium term.

Also Read: UK’s inflation rate falls to lowest in over a year

Mishra, however, highlighted that if growth slows from 15-20 percent to 5-10 percent, the economy looks at a clear 1.3 percent erosion in overall GDP growth. That’s the concern, even as he doesn’t expect services to decline substantially.

Reflecting on the US, he said that many economists including him were expecting significant weakness in the economy by now but it seems the US debt-to-GDP is going to keep climbing over the next decade. And that is the reason why there is resilience in the economy. However, that also means that the implications for global markets will be very different from the aftermath of the GFC

Watch the accompanying video for more

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

Fitch raises India’s GDP forecast to 6.3% from 6% for FY24

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

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Ratings agency Fitch has raised India’s GDP forecast for the financial year 2023-24 to 6.3 percent from 6 percent, following a near-term momentum and a strong outturn in the first quarter.

“India’s economy has been showing broad-based strength — with GDP up by 6.1 per cent year-on-year in 1Q23 (January-March) and autosales, PMI surveys and credit growth remaining robust in recent months — and we have raised our forecast for the fiscal year ending in March 2024 (FY23-24) by 0.3 percentage points to 6.3 per cent,” the rating agency said.

Earlier, in March, Fitch had reduced its rating for India to 6 percent from 6.2 percent after considering challenges due to high inflation and interest rates besides a weak global demand.

The growth forecast compares with 7.2 per cent GDP expansion in FY23. In the previous fiscal year (FY22), the economy had grown 9.1 per cent.

Inflation has moderated since and the domestic economy has picked up.

Stating that GDP growth in January-March was higher than expected, Fitch said there has been a recovery in manufacturing after two consecutive quarterly contractions, a boost from construction and an increase in farm output.

In expenditure terms, GDP growth was driven by domestic demand and a boost from net trade.

(With agencies’ inputs)

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