In this episode of BusinessLine’s State of the Economy Podcast, Shishir Sinha speaks to Rashesh Shah, Chairman of Edelweiss Group, to explore the key economic trends shaping India and the global landscape.

The conversation begins with a broad overview of the current economic climate. Shah emphasizes the mixed signals emerging from high-frequency indicators like GST collections and the Purchasing Managers’ Index (PMI). While GST collections show year-on-year growth, month-to-month numbers indicate a slowdown, reflecting consumption trends and seasonality. PMI data, meanwhile, points to sluggishness in manufacturing activity, largely attributed to underwhelming capital expenditure (CapEx).

Shah elaborates on India’s economic crossroads, stating, “The Indian economy is at a crossroads where growth can be reignited, but it requires bold fiscal policies and a conducive environment for investments.” He stresses the importance of bold measures to spur growth and restore investor confidence in the economy.

Shah underscores the importance of capital expenditure for long-term growth, pointing out, “What we are seeing is a slowdown in both corporate and government capital expenditure, which is concerning because CapEx is the backbone of long-term economic growth.” This slowdown in spending on infrastructure and development projects is a key factor in the current economic challenges.

Shah also notes the impact of inflation on the economy, explaining that “Inflation has become stickier than expected, and this will force central banks, including the RBI, to reconsider their stance on interest rates in 2025.” As inflationary pressures persist, central banks will likely need to reassess monetary policies to balance growth with price stability,” Shah adds.

Host: Shishir Sinha; Producer: Siddharth Mathew Cherian.

About the State of the Economy podcast

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders.

Published on January 3, 2025