In the latest episode of the State of the Economy Podcast, Shishir Sinha talks to Aditi Nayar, Chief Economist, ICRA, about the strong GDP numbers, and how managing inflation in the coming quarters is crucial for the Indian economy.
One of the central themes of the episode is India’s GDP growth rate, which stands at a remarkable 7.8% for the April-June quarter, marking a significant leap from the previous quarter’s 6.1 per cent.
GDP, GST collections, and the fiscal deficit, collectively paint an optimistic picture, indicating that India’s economy is on an upward trajectory, but what do these mean.
This state of the economy podcast takes a look into the factors behind this robust growth. Aditi cautions against comparing year-on-year growth due to the unique circumstances of Q1 FY24, which followed the initial recovery phase from the pandemic-induced lockdown in Q1 FY23.
Nayar offers a nuanced breakdown of the GDP growth, focusing on the anticipated performance of the manufacturing sector. She says that while corporate sector margins have improved thanks to declining commodity prices, interpreting growth is complex, especially considering the role of unorganised sectors and volume indicators.
Private consumption, investment activity, and government spending are the three pillars of economic stability discussed in detail. Aditi underscores the mixed trends in these areas, highlighting the resilience of private consumption despite inflationary pressures.
With the general election on the horizon, Aditi highlights the government’s efforts to front-load capital expenditure to ensure budget targets are met. Central tax devolution and the capex loan scheme also come into focus as indicators of the government’s commitment to infrastructure investment.
The podcast takes a deep dive into high-frequency indicators like the core sector’s growth and the manufacturing PMI, providing a thorough examination of their significance and potential impact on overall industrial production.
GST collections remain steady and support the fiscal landscape. However, inflation emerges as a concern, with fluctuating food prices and erratic monsoon patterns posing challenges.
Aditi hints at a cautious approach to revising the full-year GDP forecast, maintaining a 6% growth projection while acknowledging the dynamic nature of India’s economic landscape.
(Host: Shishir Sinha; Producer: Anjana PV, 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. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups