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Economic Times
02-07-2025
- Business
- Economic Times
India's growth engine loses steam in June, may get back on track soon
Live Events Favourable weather conditions (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The Indian economy hit a soft patch in June with several high-frequency indicators such as goods and services tax (GST), UPI transactions, diesel consumption and car sales showing muted growth or even a contraction from a year the positive side, India's manufacturing activity strengthened and petrol consumption increased at a fast said this was a transitory moderation and growth is expected to gain momentum again, helped by a likely good monsoon, easing inflation and monetary relaxation by the RBI. The central bank has forecast growth at 6.7% in FY26. GST collections expanded at the slowest in the last 50 months at 6.2% in June, car sales dropped 6% in the month from a year ago and the UPI witnessed a slight decline in both transaction volume and value in June from May.'Around 6% growth in GST collections, coupled with less than 4% growth in advance tax collection for first quarter of FY26 does indicate softening of demand and cautious outlook,' said Pratik Jain, partner, Price Waterhouse & Co reported Tuesday that sales of air conditioners and refrigerators dropped sharply in the April-June quarter in the wake of milder-than-expected summer released on Monday showed India's industrial output growth slowed to a nine-month low of 1.2% in May, due to weak manufacturing growth along with contraction in mining and electricity sector companies announced new projects worth Rs 3.5 lakh crore in the quarter ended June, up from Rs 1.4 lakh crore in the same quarter last year, according to data from the Centre for Monitoring Indian Economy (CMIE). However, this was the slowest in four manufacturing activity rose to a 14-month high of 58.4 in June, driven by strong growth in output and new orders. The HSBC Purchasing Managers Index (PMI), compiled by S&P Global, was 57.6 in May and 58.3 in June UPI platform processed 18.40 billion transactions during the month, down from 18.68 billion in May. Transaction value dipped to ₹24.04 lakh crore from ₹25.14 lakh crore in May, according to data released by the National Payments Corporation of India (NPCI) on July consumption dipped 1.5% from a year earlier to 150.04 billion units in expect growth to pick up going ahead.'Despite a potential second-half slowdown, India is poised to grow close to trend, backed by favourable weather conditions, 0.6% GDP worth of policy support for urban consumers, and increased public capex,' said Anubhuti Sahay, senior economist, Standard Chartered the data indicates a mixed picture, the Indian economy is likely to have grown by 6.8% in the June quarter as the base is favourable, she said.
Time of India
02-07-2025
- Business
- Time of India
India's Growth Engine Loses Steam in June, may Get Back on Track Soon
The Indian economy hit a soft patch in June with several high-frequency indicators such as goods and services tax (GST), UPI transactions, diesel consumption and car sales showing muted growth or even a contraction from a year earlier. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads The Indian economy hit a soft patch in June with several high-frequency indicators such as goods and services tax (GST), UPI transactions, diesel consumption and car sales showing muted growth or even a contraction from a year earlier. On the positive side, India's manufacturing activity strengthened and petrol consumption increased at a fast said this was a transitory moderation and growth is expected to gain momentum again, helped by a likely good monsoon, easing inflation and monetary relaxation by the RBI. The central bank has forecast growth at 6.7% in FY26. GST collections expanded at the slowest in the last 50 months at 6.2% in June, car sales dropped 6% in the month from a year ago and the UPI witnessed a slight decline in both transaction volume and value in June from May. 'Around 6% growth in GST collections, coupled with less than 4% growth in advance tax collection for first quarter of FY26 does indicate softening of demand and cautious outlook,' said Pratik Jain, partner, Price Waterhouse & Co reported Tuesday that sales of air conditioners and refrigerators dropped sharply in the April-June quarter in the wake of milder-than-expected summer temperatures. Data released on Monday showed India's industrial output growth slowed to a nine-month low of 1.2% in May, due to weak manufacturing growth along with contraction in mining and electricity sector companies announced new projects worth Rs 3.5 lakh crore in the quarter ended June, up from Rs 1.4 lakh crore in the same quarter last year, according to data from the Centre for Monitoring Indian Economy (CMIE). However, this was the slowest in four manufacturing activity rose to a 14-month high of 58.4 in June, driven by strong growth in output and new orders. The HSBC Purchasing Managers Index (PMI), compiled by S&P Global, was 57.6 in May and 58.3 in June UPI platform processed 18.40 billion transactions during the month, down from 18.68 billion in May. Transaction value dipped to ₹24.04 lakh crore from ₹25.14 lakh crore in May, according to data released by the National Payments Corporation of India (NPCI) on July consumption dipped 1.5% from a year earlier to 150.04 billion units in expect growth to pick up going ahead.'Despite a potential second-half slowdown, India is poised to grow close to trend, backed by favourable weather conditions, 0.6% GDP worth of policy support for urban consumers, and increased public capex,' said Anubhuti Sahay, senior economist, Standard Chartered the data indicates a mixed picture, the Indian economy is likely to have grown by 6.8% in the June quarter as the base is favourable, she said.
Time of India
01-06-2025
- Business
- Time of India
RBI expected to ease rates to spur demand amid growth optimism
Mumbai: The Reserve Bank of India is expected to cut interest rates for the third straight monetary policy meeting this week amid easing price pressures, according to economists. They are now keenly awaiting the central bank's commentary on inflation and growth to get an idea about how long it would continue with the easing cycle to fuel demand in an economy growing faster than expectations despite faltering consumption. All 12 financial institutions in an ET poll predicted a quarter-percentage-point cut in the policy repo rate, or the rate at which the central bank lends to banks, to 5.75% at the June 4-6 RBI Monetary Policy Committee meeting. But the views on growth and inflation were divergent. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Just apply "this" flying off the Japan's drugstore shelves... isn't it incredible? YUKINOUE雪之上 Learn More Undo "The GDP print reassures that growth is not falling apart, but the underlying demand - the household demand - has slowed down significantly and remains a sore point even though the headline number looks better," said Anubhuti Sahay, head of India economic research at Standard Chartered Bank. "From the MPC perspective, focus has to be on the weak consumption demand, private sector investment and external sector uncertainty. Growth is looking okay, but not as good as the headline number suggests." RBI, after falling behind other central banks in the rate-reduction cycle last year due to inflationary pressures, is now getting room to even go beyond the conventional quarter-point rate cut as inflation measured by the Consumer Price Index is below its target. The MPC is mandated to target inflation at 4% in a band of two percentage points on either side. Retail Inflation for April slowed to 3.16% from 3.34% in March, marking its lowest level since July 2019. On the other hand, GDP grew 6.5% in fiscal 2025, according to data released on Friday, exceeding the market expectations of 6.3%. While interest rate reduction is a given, economists would be looking at what RBI does to growth and inflation forecasts, and in how detail governor Sanjay Malhotra answers questions about these factors. Live Events The market doesn't expect growth forecasts to be downgraded, but the inflation forecasts are what would be more interesting to watch out for, said Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership. "But I do expect RBI to give lower inflation forecasts." The central bank's current predictions are for the economy to grow 6.5% in FY26 and inflation to average 4%. Since it issued the forecasts in April, the growth and inflation outlook got muddled as the global tariff war has gone directionless with rollbacks and additional tariffs leaving economists perplexed. Although this may have an impact on growth, the inflation outlook may have improved. India's inflation index, where food products have an overwhelming weight, may be under the target band as weather forecasters have predicted above normal rains this monsoon season, which may translate into higher agricultural output in the largely rainfed country, keeping a lid on prices. But given the global uncertainty over trade and tariffs, RBI could be cautious in giving out a rosy picture on inflation that may raise rate cut expectations. Its commentary could be to temper expectations. "If the governor chooses to underplay softer inflation over the next few months and talks about the need to look at a longer-term inflation trajectory, which is expected to be a little higher, then that would be a sign that RBI is not looking for deeper cuts," said Upadhyay. (Institutions Polled: Barclays, HDFC Bank , Bank of Baroda , Bank of America Securities, IDFC First Bank , Standard Chartered Bank, Ujjivan SFB , Kotak Mahindra Bank , ICICI Securities PD, CSB Bank , Union Bank of India , and MUFG Bank)
Time of India
01-06-2025
- Business
- Time of India
Rate cut expected, RBI's views in focus with economy near a sizzle
Mumbai: The Reserve Bank of India is expected to cut interest rates for the third straight monetary policy meeting this week amid easing price pressures, according to economists. They are now keenly awaiting the central bank's commentary on inflation and growth to get an idea about how long it would continue with the easing cycle to fuel demand in an economy growing faster than expectations despite faltering consumption. All 12 financial institutions in an ET poll predicted a quarter-percentage-point cut in the policy repo rate, or the rate at which the central bank lends to banks, to 5.75% at the June 4-6 RBI Monetary Policy Committee meeting. But the views on growth and inflation were divergent. "The GDP print reassures that growth is not falling apart, but the underlying demand - the household demand - has slowed down significantly and remains a sore point even though the headline number looks better," said Anubhuti Sahay, head of India economic research at Standard Chartered Bank. "From the MPC perspective, focus has to be on the weak consumption demand, private sector investment and external sector uncertainty. Growth is looking okay, but not as good as the headline number suggests." RBI, after falling behind other central banks in the rate-reduction cycle last year due to inflationary pressures, is now getting room to even go beyond the conventional quarter-point rate cut as inflation measured by the Consumer Price Index is below its target. The MPC is mandated to target inflation at 4% in a band of two percentage points on either side. Retail Inflation for April slowed to 3.16% from 3.34% in March, marking its lowest level since July 2019. On the other hand, GDP grew 6.5% in fiscal 2025, according to data released on Friday, exceeding the market expectations of 6.3%. While interest rate reduction is a given, economists would be looking at what RBI does to growth and inflation forecasts, and in how detail governor Sanjay Malhotra answers questions about these factors. The market doesn't expect growth forecasts to be downgraded, but the inflation forecasts are what would be more interesting to watch out for, said Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership. "But I do expect RBI to give lower inflation forecasts." The central bank's current predictions are for the economy to grow 6.5% in FY26 and inflation to average 4%. Since it issued the forecasts in April, the growth and inflation outlook got muddled as the global tariff war has gone directionless with rollbacks and additional tariffs leaving economists perplexed. Although this may have an impact on growth, the inflation outlook may have improved. India's inflation index, where food products have an overwhelming weight, may be under the target band as weather forecasters have predicted above normal rains this monsoon season, which may translate into higher agricultural output in the largely rainfed country, keeping a lid on prices. But given the global uncertainty over trade and tariffs, RBI could be cautious in giving out a rosy picture on inflation that may raise rate cut expectations. Its commentary could be to temper expectations. "If the governor chooses to underplay softer inflation over the next few months and talks about the need to look at a longer-term inflation trajectory, which is expected to be a little higher, then that would be a sign that RBI is not looking for deeper cuts," said Upadhyay. (Institutions Polled: Barclays, HDFC Bank , Bank of Baroda , Bank of America Securities, IDFC First Bank , Standard Chartered Bank, Ujjivan SFB , Kotak Mahindra Bank , ICICI Securities PD, CSB Bank , Union Bank of India , and MUFG Bank)
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Business Standard
26-05-2025
- Business
- Business Standard
India GDP growth likely picked up in Q4 on strong rural spending: Poll
Indian economic growth likely picked up last quarter, a Reuters poll of economists found, in part from strength in rural spending related to better agricultural output even as urban spending likely remained more subdued. Gross domestic product (GDP) in Asia's third-largest economy likely grew 6.7 per cent year-on-year in the January-March period up from 6.2 per cent the previous quarter, according to the median forecast from a May 19-23 Reuters poll of 56 economists. Forecasts ranged from 5.8 per cent to 7.5 per cent. "If you look at the real growth momentum ... we are seeing some signs of a pickup on the rural side, by the fact that crop output is better, followed by moderation in inflation pressures," said Gaura Sengupta, chief economist at IDFC First Bank. Economists at Citi wrote "resilient (agricultural) activity continues to bode well for rural consumption," adding that they "remain bearish on urban consumption" in the first half of the current fiscal year, with a recovery driven by policy stimulus. The Reserve Bank of India is expected to cut interest rates for a third consecutive meeting in June. But Standard Chartered's head of India economic research, Anubhuti Sahay, said any growth improvement was mainly driven by the positive impact of net indirect taxes as subsidy payments were significantly lower during the period. Economic activity as measured by gross value added (GVA), considered a more stable gauge of growth and excludes indirect taxes and subsidies, expanded a modest 6.4 per cent in the first three months of 2025 compared to 6.2 per cent the previous quarter. Without stronger domestic demand, GDP growth will continue to rely heavily on government spending, as it has for years. "The recovery is possibly more in numbers than in real improvement in activity. Weak investment prospects, exacerbated by struggling manufacturing suggest a growth recovery is multiple quarters away," said Kunal Kundu, India economist at Societe Generale. "There was some sense of improvement in rural demand but real wages are still not showing signs of meaningfully moving up. Rural demand is ... not strong enough to be an important growth driver on its own as it's just showing some signs of moving up from a weak base, while urban demand continues to be weak." Economists also cautioned that erratic US trade policy since the start of the year presents a shaky backdrop for future growth prospects. A separate Reuters poll taken last month found US tariffs had negatively hit business sentiment, which bodes poorly for a long-expected pickup in corporate spending. "Private investments ... whatever interest rate cuts you do, I don't think will move significantly higher simply because private investments will be determined more by a relatively certain atmosphere," said Indranil Pan, chief economist at Yes Bank. "It's ultimately the outlook from the demand and overall sentiment ... that can help, which currently is unfortunately not getting any help because of the uncertainty that is there in the global system."
