GANDHINAGAR: The latest episode of the State of the Economy podcast🎙 delves into the potential impact of extreme weather events and upcoming elections on 📈India’s economic growth prospects. Host Shishir Sinha engages Devendra Kumar Pant, Chief Economist at India Ratings and Research, in a thought-provoking discussion.
The podcast opens with an analysis of two key economic indicators:
- GST Collections: Surpassing ₹2 trillion for the first time, this signifies improved compliance and 🔌plugged leakages in the Goods and Services Tax system.
- Purchasing Managers’ Index (PMI) for Manufacturing: A recent dip could be attributed to seasonal trends or a wait-and-see approach by manufacturers before making investment decisions due to the upcoming elections.
🗳Elections and Economic Activity: A Cautious Outlook
The conversation explores the potential effect of elections on economic activity. While a significant demand boost is less certain, both experts acknowledge the potential impact of heatwaves and monsoon variations on sectors like agriculture and tourism. Here, mitigating factors like increased agricultural efficiency and government food distribution programs are highlighted.
Inflation and Interest Rates: A Balancing Actâš–
Retail inflation for April is projected to hover around 4.75% with minimal decline. This is due to government-subsidized food grains. However, vegetable inflation could exert upward pressure. Regarding interest rates, the consensus leans towards the Reserve Bank of India (RBI) maintaining a steady approach considering India’s consistent 7.6% growth. Any rate cuts are expected to be nominal.
Growth Forecasts: A Wait-and-See Approach
The discussion delves into revised growth forecasts, emphasizing the unexpected resilience of the Indian economy. Tax policies and monsoon patterns are identified as key factors. Pant advises waiting for post-election data to gain a clearer picture, reflecting a cautious stance on economic projections amidst current uncertainties.
The State of the Economy podcast offers valuable insights into the interplay of various factors influencing India’s economic trajectory.