00:00Joining me now is Professor Rajiv Kumar, economist, author and former vice chairman of Neeti Ayog.
00:06Professor Rajiv Kumar, really appreciate your patience here, sir.
00:10You heard Mr. Manish Tiwari, a lot of allegations coming in that this is not really the real picture of
00:15the Indian economy
00:16and that it's only for a select few.
00:19And as far as the lived realities are concerned, it is about inflation and other challenges.
00:26Well, hi, Maida, and wonderful to be here and good to have heard Manish saying what he did.
00:34But, you know, let me just start by sort of saying that, you know, in this January to June period,
00:40our exports, you know, grew at least about eight or nine percent per, you know, over the previous year.
00:47Why I bring in exports is because exports are generally employment intensive.
00:52And when exports increase, you get, you know, employment growth as well,
00:56because those are the sort of commodities that we export.
00:59So to say that this growth is only benefiting the top layers and so on and not reaching down,
01:05I don't think that's a fair statement to make.
01:09Moreover, what's happened now is that our manufacturing growth this quarter has shown an increase of 9.2 percent
01:18and 7.8 percent in the previous quarter.
01:21Now, when manufacturing increases as well, despite the automation and the AI, et cetera,
01:26employment increases as well.
01:28So manufacturing and same thing for services, you know, a double digit 10 percent growth rate of services sector.
01:36You just can't be wished away as saying that it doesn't matter to anybody else.
01:40So, you know, there is an overall broad based GDP growth that we are seeing today.
01:45And I think the most pleasant surprise of all was a turnaround in investor sentiment,
01:51because if you notice what is called the gross fixed capital formation and a complicated word for,
01:57you know, private investment, that's shown an increase of 11.8 percent, you know, in this quarter,
02:04which has taken everybody by surprise because, you know, we had thought that investors will wait
02:09to see the uncertainties come down, to see the turbulence come down, both in the global and somewhat in the
02:15domestic market.
02:16But no, here you are, you know, that the investor sentiment has been turned.
02:22So I think overall it is not fair to deny what is, you know, what is sort of, you know,
02:31staring you in your face.
02:32I mean, there are areas where we can discuss and talk about, et cetera, but you should give the credit
02:40to where it is due.
02:417.8 percent GDP, 8.2 percent gross value addition is something to reckon with,
02:48especially in these times when the world is going through what it is going through.
02:53Yes, you know, because of the global headwinds, certainly this will be seen as a huge achievement.
03:00But the Congress says that the GDP actually stands for greatly distorted picture,
03:05that this is not the real picture because of the number of questions that are being raised here,
03:12which is largely to do with, you know, weaknesses which are inherent,
03:15and also the private investment largely being depressed, you know, the consumer confidence also being sluggish.
03:26Yeah, but, you know, this is exactly what I'm trying to say, that private investment, yes, was tepid last year,
03:33this quarter.
03:34It was, you know, NMEK 5.8 percent.
03:36But now this year, private investment has grown by 11.8 percent.
03:41But to reinforce that, Mayra, I think, you know, the commercial bank credit growth to the, you know,
03:48to the industrial sector, which was about 7 percent between 2014 to 2025, very weak,
03:56has suddenly surged 15 percent in April 26 and 19 percent in June 26.
04:04Now, this cannot happen unless there was a demand from the industry, you know,
04:08for capacity expansion and investment.
04:10And more, this is further reinforced by the fact that the manufacturing sector growth,
04:16you know, the highest growth rate there is that of the capital goods sector,
04:20which are required for investment.
04:22So investment has been triggered.
04:24My own hunch is that, you know, the GST simplification, you know,
04:29has actually, you know, in some sense awakened the animal spirits in the hope that demand will go up.
04:36And demand weak is, you know, what, I mean, you know, the private consumption demand has grown at,
04:41I think, 7.8 percent.
04:43You know, it's not jumping up at 10 percent and so on, but 7.8 percent, no account is, you
04:49know, is weak.
04:50And public capex and public consumption, you know, there was an argument being made
04:54that is growing all on the basis of the public expenditure.
04:57It's not true any longer, you know, because so therefore I think, you know, again,
05:02I repeat myself that, you know, when you see a good thing, let's recognize a good thing.
05:08Okay.
05:08I have just enough time for my last question here, Professor Rajiv Kumar.
05:11And are you seeing this as a genuine broad-based growth story or perhaps just an exceptional quarter?
05:21Not an exceptional quarter because the previous quarter has been revised to 8.6 percent
05:26and this you've got now 7.8.
05:28What I'm scared of is that inflationary, you know, pressures are beginning to pick up,
05:35especially in the food and the commodities sector, you know, sugar and milk, et cetera.
05:40Now that inflationary pressure will perhaps demand from the RBI that your interest rates go up
05:47and that might make it difficult to sustain this growth rate,
05:51especially in the investment in the coming quarters.
05:54So not a flash in the pan, but, you know, nothing to be complacent about
05:59and your eyes have to be focused on how to maintain this growth moving forward.
06:04Professor Rajiv Kumar, pleasure having you on my show, sir.
06:07Thank you so much for joining us.
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