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The current results season (1QFY26) has been rather underwhelming so far. The market expectations for this quarter were already muted. The consensus estimates projected 1QFY26e Nifty50 revenue and profits to grow around 5% yoy, while the broader market earnings were expected to grow at a better 11-12% yoy rate. However, the results declared so far indicate an aggregate revenue growth less than even the nominal GDP growth of ~10%. Besides, the 1QFY26 season reflects a patchy recovery. Select large-cap and government-driven sectors (infrastructure, defense and PLI beneficiaries) have reported decent numbers and growth, while several small and midcap, IT, consumer and media companies have reported below expectation results. In their post results commentary, the management of IT and consumer companies in particular, have highlighted global and macro challenges they are facing, sounding cautious about near-term growth. Banking & Financial Services and IT Services are the most crit...

  While the 7.4% GDP growth number for 4QFY25, and claims of continuing strong growth momentum in April 2025 are encouraging, the RBI assessment of FY26 growth and aggressive policy stance raise some doubts. A careful analysis of the GDP data released by the NSO also leaves some doubts about the consistency and sustainability of the 4QFY25 growth numbers. Many economists have noted discrepancies and incongruencies in the data, as well as comparisons with other economic indicators and external analyses. For example, I found the following noteworthy. Discrepancy Between GDP and GVA Growth Rates In Q4 FY25, GDP growth is 7.4%, while GVA growth is 6.8%. The divergence between GDP and GVA growth rates is notable, as GDP includes net taxes (taxes minus subsidies), which can distort the picture of underlying economic activity captured by GVA. The gap suggests that tax revenues or subsidy adjustments may have inflated GDP growth relative to GVA. For instance, higher GST collections or redu...

The National Statistical Office (NSO) released provisional estimates (PE) of the annual growth statistics for the Indian economy, last Friday. The data indicates that the Indian economy grew at a rate of 7.4% (real GDP) in 4QFY25 and at a rate of 6.5% for the full year FY25. The key highlights of the growth data could be listed as follows: FY25 Growth Real GDP:  Estimated at  ₹ 187.97 lakh crore at constant (2011-12) prices. Growth rate:  6.5% compared to  ₹ 176.51 lakh crore in FY 2023-24 (8.2% growth in FY24). Nominal GDP:  Estimated at  ₹ 330.68 lakh crore. Growth rate:  9.8% compared to  ₹ 301.23 lakh crore in FY 2023-24. Real Gross Value Added (GVA):  Estimated at  ₹ 171.87 lakh crore at constant prices. Growth rate:  6.4% compared to 7.2% in FY 2023-24. Nominal GVA:  Growth rate: 9.5% compared to 8.5% in FY 2023-24. Quarterly GDP Estimates for Q4 FY 2024-25 (January-March 2025) Real GDP:  Estimated at  ₹ 51.35 l...

As per the latest national accounts data released last week, the economic growth of India appears to be normalizing in 6.5% +/- 0.3% band. Optically, this growth rate may appear decent; but is insufficient for achieving the target of catapulting the Indian economy into a higher orbit and sustaining the status of a middle-income economy. After recording a higher growth rate of 8.8% CAGR for three years (FY22 to FY24) on a low base of Covid affected FY20 and FY21, the FY25 growth is estimated to be 6.5%. The consensus estimates for FY26e growth are also hovering around 6.5%. From the internals of the economic data, it appears that growth trajectory of the Indian economy is settling in the current band, just like we spent decades in the 3-4% growth band in the pre-reform (1990s) era. Any effort to accelerate the economic growth would require transformative socio-economic reforms in the next five years.   Some critical points that need to be watched closely from the perspective of grow...

India’s real GDP grew by 5.4% yoy during 2QFY25 (July-Sep); the slowest growth rate recorded since 3QFY23. The Reserve Bank of India had forecasted a growth of 7%, just a month ago, while the market consensus was less sanguine at ~6.5%. For the argument’s sake, some of the slowdown in 2QFY25 could be attributed to a high base (2QFY24 GDP grew at 8.1%). However, it is tough to deny that the Indian economy has been growing below potential in most of the post global financial crisis (GFC-2009) period. In fact, it will not be totally perverse to argue that in the past one decade or so, the potential growth curve itself has moved lower. For record, the Indian economy has grown at an average rate of 5.8% during the past decade (FY15-FY24). Even normalizing for the Covid-19 lockdown impact, the Indian economy has grown at an average rate of 6.0%, much below the estimated potential growth rate of over 8%. The real GDP had grown at an average rate of 7.8% during the preceding decade (FY05-FY14)...

The Reserve Bank of India (RBI) has issued its latest assessment of the state of the economy . The paper notes the marked slowdown in the global economy; it exudes confidence in the sustainability of 6.7%-7% GDP growth in India. In particular, the assessment sounds buoyant on manufacturing, and household consumption, while taking cognizance of resilience in the services sector. The inflation is forecasted to stay close to the lower bound of the RBI tolerance limit (4-6%). Global economy slowing The RBI paper highlights some areas of concern for the global economy. In RBI’s assessment global growth has lost some speed in the first half of 2024 relative to the preceding semester, and momentum has slackened further in the third quarter. The paper notes, “All around, indicators point increasingly to slowing global economic activity, more so on the eastern shores of the Atlantic, which vindicated the ECB’s September rate cut to secure a soft landing. In the US, the now famous remark –...

Last week the National Statistical Office (NSO) released its first advance estimates (FAE) of the national income for the current financial year 2023-24. The growth in real GDP during 2023-24 is estimated at 7.3% as compared to 7.2% in 2022-23. This projection of growth is higher than the latest forecast of the Reserve Bank of India (7%) and professional forecasters (6.0 to 6.9%). Given the economic momentum, it is likely that growth for the next financial year FY25, currently pegged ~6.5%, may also get revised upwards. As per FAE, the Nominal GDP (GDP at Current Prices) in the year 2023-24 is estimated at ₹ 296.58 trillion (USD 3.56trn), as against the Provisional Estimate of GDP for the year 2022-23 of ₹ 272.41 trillion. The growth in nominal GDP during 2023-24 is thus estimated at 8.9%, much slower than 16.1% in 2022-23. It is critical to note that most statistical numbers relevant to the financial market investors are benchmarked to the nominal GDP. For example, corporate pro...

WPI in Contraction for the Sixth Month; core inflation higher (Centrum) WPI inflation witnessed a yet another contraction in the month of September and registered a deflation of 0.26% YoY, down from -0.52% in August. The print came in slightly lower than the estimates as the general consensus was around -0.5%. This was the 6 th month where we have seen a contraction. All the segments witnessed a deflation in prices, except for the Primary Articles. However, on a monthly basis primary articles contracted while Fuel & Power and Manufactured products saw rise in prices. Core inflation rose in September India’s WPI based inflation witnessed a further contraction in August. The persistent moderation in WPI since May-22 has been mainly because of constant decline in mostly all the major sub-indices. Although at a slower pace than previous month, this month’s fall in the wholesale prices can be mainly attributed to all the sub-indices except for the primary articles, as food prices...