India has managed high government debt-to-GDP, a slowing domestic revenue engine, lower household savings and a more hostile geopolitical environment separately in the past. But together, they threaten to undo the growth narrative on which today's optimism rests, warns Debashis Basu.
Encouraged by the 9.3 per cent GDP growth during April-June period and inflation falling below 4 per cent, Finance Minister P Chidambaram on Friday expressed confidence that economy will expand by about 9 per cent.
The 8.8 per cent growth in gross domestic product (GDP) in the first quarter of 2010-11 (that comes on the heels of 8.6 per cent in the last quarter of 2009-10) should put to rest any doubts about the durability of the economic recovery.
While participants in the domestic financial market are expecting a 25 basis-point policy repo rate cut in the December meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), economists remain torn between a reduction in rate cut and a pause.
With major sectors of the economy showing signs of slowdown, the list of those pegging India's economic growth at below eight per cent in the current financial year is expanding.
Moody's Investors Service on Tuesday lowered India's GDP growth forecast for the 2020 calendar year to 5.3 per cent, on coronavirus implications on the economy. Moody's had in February projected a 5.4 per cent real GDP growth for India in 2020. This too was a downgrade from 6.6 per cent earlier forecast.
Elevated global crude oil and natural gas prices, driven by geopolitical developments in West Asia, could significantly influence the Government of India's fiscal position for 2026-27, according to a report by ratings agency Icra.
Fitch Ratings has revised India's GDP growth estimate to 12.8 per cent for the fiscal year beginning April 1 from its previous estimate of 11 per cent, saying its recovery from the depths of the lockdown-induced recession has been swifter than expected. In its latest Global Economic Outlook (GEO), Fitch said revision is on the back of "a stronger carryover effect, a looser fiscal stance and better virus containment." "India's second half of 2020 rebound also took GDP back above its pre-pandemic level and we have revised up our 2021-2022 forecast to 12.8 per cent from 11.0 per cent," it said. "Nevertheless, we expect the level of Indian GDP to remain well below our pre-pandemic forecast trajectory."
Remonetisation exercise will eliminate cash squeeze by April 2017
The deal shifts the US posture towards India from hostile to neutral, and that matters for growth, points out T T Ram Mohan.
During the six-month period (April-September 2019), the Indian economy grew 4.8 per cent as against 7.5 per cent in the same period a year ago.
The government on Monday revised the GDP growth rate for the 2009-10 financial year upward to 8 per cent from the earlier estimate of 7.4 per cent.
The country's real GDP growth in the first quarter will be better than the Reserve Bank's estimate of 8 per cent, economists said on Tuesday. Economists at the country's largest lender SBI pegged the growth at 8.3 per cent while domestic rating agency Icra estimated it to come even higher at 8.5 per cent. The Reserve Bank of India (RBI), which expects the GDP to grow at 6.5 per cent in FY24, has estimated a growth of 8 per cent in the April-June period.
The EIU said in a report on Wednesday forecast that the real GDP grew by 1.6 per cent quarter-on-quarter in India, but noted that this uptick was largely owing to base effect.
Setting the prescription for a 10 per cent annual economic growth, President A P J Abdul Kalam on Friday asked the Indian industry to sharpen its competitive edge to enhance its share in the global market.
Reserve Bank of India Governor, Y V Reddy presented the Monetary and Credit Policy for 2006-07 on Tuesday.
New Delhi will substantially reduce tariffs on industrial and agricultural goods while continuing to protect sensitive sectors. Tariffs on some agricultural products that are not traditionally considered sensitive will be brought down to zero, while in the case of relatively sensitive items, duties will be reduced in a graded manner and quotas will be imposed.
Despite significant price differences, Indian farmers are increasingly adopting non-subsidised speciality fertilisers, which are seen as a potential solution to the rising fertiliser subsidy burden exacerbated by global supply shocks.
Gross GST collections rose 6.2 per cent to a three-month high of over Rs 1.93 lakh crore in January, indicating increased consumption is making up for rate cuts late last year, sources said on Sunday.
'India's output contraction in the previous year was among the worst in the world!'
Fixed deposits from nationalised banks delivered higher returns than equities, outperforming both inflation and stock market benchmarks.
India's retail inflation, which has stayed below the Reserve Bank of India's (RBI's) 4 per cent target in recent times, is likely to remain benign in the coming months, RBI Deputy Governor Poonam Gupta said in a speech, on Friday, which was uploaded on the central bank's website on Tuesday. Headline inflation dipped to multi-year lows of around 1.5-2.8 per cent in late 2025.
The Reserve Bank on Friday retained the real GDP growth projection at 9.5 per cent for 2021-22 as domestic economic activity has started normalising with the ebbing of the second wave of the virus and the phased reopening of the economy. In the June monetary policy, the RBI had lowered the growth projection for 2021-22 to 9.5 per cent from 10.5 per cent estimated earlier. Unveiling the bi-monthly monetary policy, RBI Governor Shaktikanta Dad said high-frequency indicators suggest that consumption (both private and government); investment; and external demand are all on the path of regaining traction.
Fund managers advise conservative investors to cap midcap exposure at 10 to 15 per cent of their equity portfolio.
Morgan Stanley believes that the factors responsible for the weak GDP growth include poor agricultural growth, weak investment trend, sluggish domestic market growth outlook and weakness in the service sector.
The Confederation of Indian Industry has revised its projection of the GDP growth this fiscal from 6.5 per cent to seven per cent.
Sitharaman's Budget missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared to 3.3 per cent previously planned.
With all-round upturn in economic cycle except in agriculture, Economic think tank NCAER has forecast India's GDP growth rate at 6.5 to 6.7 per cent for this fiscal.
Among Sensex firms, Bajaj Finance, Sun Pharma, Trent, Mahindra & Mahindra, State Bank of India and Bajaj Finserv were the major laggards. However, Tata Motors Passenger Vehicles, Maruti, Bharat Electronics, Kotak Mahindra Bank, Adani Ports and HCL Tech were among the gainers.
A shift appears underway in India's tax landscape. States with relatively smaller tax collections like Odisha and Telangana are emerging as the fastest-growing contributors to indirect and direct tax collections, respectively.
GDP growth during 2018-19 is estimated at 7 per cent as compared to 7.2 per cent in 2017-18.
* Repo rate reduced by 25bps to 5.25 pc; * 4th rate cut, totalling 125 bps, since February 2025; * MPC also decided to continue with neutral stance; * GDP growth forecast for FY26 raised to 7.3 pc from 6.8 pc;
Pakistan will achieve an 8.3 per cent growth rate, the highest GDP rate in its history, this year which will place the country in the top five fastest growing economies of Asia, Prime Minister Shaukat Aziz has said.
India's GDP is estimated to grow at 7.4 per cent in the financial year 2022-23 with rising prices triggered by the Russia-Ukraine conflict posing as the biggest challenge to the global economic recovery, Ficci's Economic Outlook Survey released on Sunday said. According to the survey, the Reserve Bank of India (RBI) is likely to start a rate hike cycle in the second half of 2022, while a repo rate hike of 50-75 bps is expected by the end of the current fiscal. The RBI is expected to continue supporting the ongoing economic recovery by keeping the repo rate unchanged in its April policy review, the survey said.
Fitch Ratings on Thursday slashed India's GDP growth projection for FY23 to 7 per cent, saying the economy is expected to slow against the backdrop of global economy, elevated inflation and high interest rate. In June, it had forecast 7.8 per cent growth for India. "We expect the economy to slow given the global economic backdrop, elevated inflation and tighter monetary policy. "We now expect the economy to grow 7 per cent in the financial year to end-March 2023 (FY23) from 7.8 per cent previously, with FY24 also slowing to 6.7 per cent from 7.4 per cent before," Fitch said in its September edition of the Global Economic Outlook.
The Reserve Bank on Thursday said that the overall stance of its monetary policy for this fiscal would continue to accord a high-priority to price and financial markets stability and well-anchored inflation expectations.
Agriculture and allied activities are likely to grow at 5.4 per cent in 2010-11, compared to just 0.4 per cent in 2009-10, according to Advance Estimates released by the Central Statistical Organisation on Monday.
The Reserve Bank on Wednesday retained the GDP growth forecast at 9.5 per cent for the current fiscal but cautioned that the economic recovery is not yet strong enough to be self-sustaining and durable.
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