In this episode of State of the Economy podcast, businessline’s  Shishir Sinha discusses various high-frequency economic indicators and their implications on India’s economy with Aditi Nayar, Chief Economist, ICRA. 

The podcast details GST collections, which have been robust, reaching the third-highest level since its inception in 2017. Despite concerns about the pace of growth tapering off due to imported collections, Nayar remains optimistic about the economy’s performance. The upcoming festive season’s impact on GST collections is expected to be seen in the third quarter.

The discussion also elaborates on indicators such as auto dispatches and PMI - Manufacturing, which indicate economic momentum being sustained, with GDP growth expected at about 8.5% in the first quarter. However, the biggest threat remains inflation, with July’s retail inflation figures projected to temporarily cross 6% due to the erratic monsoons and vegetable price shocks. Nevertheless, Nayar expects inflation to stabilise later. 

Regarding interest rates, Nayar dismisses any expectation of rate cuts in the current fiscal year and believes the inflation outlook must be below 4.5% for a few quarters before the MPC considers rate cuts. Fiscal deficit discussions revolve around the positive aspects of front-loading capital expenditure and tax devolution to States, potentially encouraging States to follow suit. 

One concern raised is the lack of private investment. Nayar said she remained hopeful, citing record project announcements last year, expecting private sector capex in various sectors such as cement, steel, electric vehicles and real estate.

 This episode also includes an in-depth discussion on GDP growth estimates. Despite the IMF’s higher growth expectation, Nayar‘s baseline estimate for India’s GDP growth remains 6%. 

(Host: Shishir Sinha, Producers: Anjana PV, V Nivedita)

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