Do it yourself

  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 Reserve Bank of India’s (RBI) monetary policy statement on June 6, 2025 marked a significant shift in India’s monetary policy framework, reflecting a bold approach to stimulate economic growth while navigating global uncertainties and domestic inflation dynamics. Policy rates cut by 50bps to support growth The Monetary Policy Committee (MPC) reduced the policy repo rate by 50 bps to 5.50%, a larger-than-expected cut compared to market expectations of a 25bps reduction. This was the third consecutive rate cut in 2025, following reductions in February (6.5% to 6.25%) and April (6.25% to 6.00%). Consequently, the Standing Deposit Facility (SDF) rate was adjusted to 5.25%, and the Marginal Standing Facility (MSF) rate and Bank Rate to 5.75%. This sharp cut in rates is aimed at accelerating the growth. Pertinent to note that FY25 real GDP grew by 6.5% yoy, and is expected to grow at a similar or lower rate in FY26. Considering the fragile global conditions, it is imperative to sup...

The Indian economy has indubitably shown brilliant resilience and sustained the base growth rate of ~6%. In the current year FY26 also the real GDP is expected to grow in the range of 6.3% to 6.6% (vs 6.5% in FY25). It is expected that the tax incentive offered in the budget for FY26 may support urban consumption demand, that has been lagging for the past couple of years, while the rural demand has shown some pick-up. Good monsoon may further stimulate rural demand. Benign inflation and below potential growth trajectory shall keep the RBI on the monetary easing path. Rates may fall further and liquidity may remain supportive. Continued focus on capacity building by the government may however continue to remain the mainstay of the growth. The global environment remains challenging with trade related uncertainties and geopolitical tensions persisting. However, a resolution of trade and geopolitical conflicts could provide strong impetus. In my view, 6% (+/- 50bps) may now be the ba...

Resilient growth despite disturbance and challenges The full year FY25 growth (6.5% vs 9.2% in FY24) came in line with the second advance estimates of NSO; 4QFY25 growth rate (7.4% on a high base of 8.4% in 4QFY24) is much better than the estimates of the market professionals, though in line with NSO advance estimates. The higher Q4 growth is mostly attributable to— (i)     High gross investment (GCFC) led by the construction sector (4QFY25 10.8%), reflecting strong government capex. Investment (Gross Fixed Capital Formation or GFCF) grew 9.4% yoy in 4QFY25, marginally above the long-term average. However, the higher public capex seen in 4QFY25 could be due to slow 1HFY25, as government functioning was impacted by the model code of conduct implemented during the general; elections. (ii)    Farm sector growth of 5.4% in 4QFY25 (on a low base of 0.9% in 4QFY24). On a full year basis (FY25) also, the sector was up 4.6%, compared to 2.7% in FY24. If we c...

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...

The macro environment in India looks stable and resilient, despite the scare of war and trade uncertainties. The south-west monsoon has started on a buoyant note, and IMD reconfirmed its forecast of above normal (106% of LPA) for the current season. Enhanced dividend payout by the RBI has lessened fiscal slippage concerns. Concerted efforts by the RBI to improve system liquidity have also yielded positive results. Fiscal strength, benign inflation outlook, and improved liquidity have resulted in the benchmark 10yr bond yields falling to the lowest level since 2021; reversal in FPI flows since March 2025; stability in currency and improved growth outlook. Despite notable stability there are few areas of concern that investors should be mindful of. In particular, I shall be watching the development of external situations closely. External situation - not worrying presently, but could deteriorate India's external sector has shown resilience in recent years, but there are signs o...

The 2025 season of the Indian Premier League (IPL) has entered the final phase. Four teams – Gujarat Titans, Punjab Kings, Royal Challengers Bengaluru and Mumbai Indians, shall now play for the coveted trophy. This session of the IPL has some valuable lessons for investors, in my view. In particular, I found the following most interesting. ·          Two out of the top four teams have never won the IPL trophy previously. Mumbai Indians, has won it five times (2013, 2015, 2017, 2019, 2020), while Gujarat Titans won it once (2022). Five-time winner Chennai Super Kings (CSK) finished the 2025 season at the bottom of the league table. Three-time winner Kolkata Knight Riders ended at 8 th place. ·          Several of the most successful players of the previous two seasons were either retained or bought at aggressive prices in 2025. Many of these players failed to perform in the current season. Some of...

The script in the US is playing mostly on the expected lines (see   here   and   here ). Department of Government Efficiency (DOGE) – crash landing Department of Government Efficiency (DOGE) is apparently on its way to crash land, with the pilot (Elon Musk) ejecting himself out shortly after taking off. DOGE’s actions have faced multiple lawsuits, with critics arguing that Musk and his team have violated federal laws, union agreements, and civil service protections. A federal judge halted parts of USAID’s shutdown, and courts have restricted DOGE’s access to payment systems. Despite Musk’s goal to cut $2 trillion from the federal budget, 2025 spending is slightly up from 2024, per Brookings Institution data. Mandatory spending (e.g., Social Security, Medicare) limits achievable cuts. Over two million federal employees were offered buyout deals, with some agencies facing mass layoffs. However, some fired staff have been rehired, indicating implementation challenges. Though...