Narrowly focused GDP growth – financials being led by personal loans and not industrial credit which is a worry
Potential growth is close to 7.1 per cent. January to June we have been growing above potential and this would normalise over the next two quarters.
Signs of economy overheating: core inflation was shooting up which prompted the two rate hikes. Now with growth rates coming down, core inflation will normalise as well
Non-agricultural activity and wages in the rural economy have been picking up led by construction on the government side
Private sector capex intentions have improved but they are probably waiting for elections to get over before investing in new capacity
Exports have been picking up but the acceleration of imports, led by demand for things like smartphones, means the deficit is widening
India’s investment cycle over the years has been increasingly linked to global capex cycle, which has been favourable more recently
Food prices remain low but areas sown at 95 per cent which could lead to strong demand for labour. This would give comfort on rural wages.
Consumption growth looks strong but increasingly been driven by personal loans and the e-commerce effect
GST rebates have become more timely, which is likely to be supportive of exports
Imports are likely to accelerate more sharply. Any acceleration in investments will also lead to higher imports
Our growth differential with the world continues to widen and with increasing imports, this will put further pressure on the current account and the currency
GST collections are running behind expectations but government could meet it some other way. At worst there will be some fiscal slippage
After elections potential growth is likely to rise. Growth inflation mix is healthy with inflation expectations coming down. The monetary policy committee is probably underrated as a reform and has had the impact possibly as great as the GST