- 2 months ago
India recorded a gross domestic product growth rate of 7.8 percent in the first quarter of the financial year, demonstrating economic resilience against global challenges, geopolitical tensions, and global financial tightening. Leading financial analysts and economists, including Dr Soumya Kanti Ghosh of the State Bank of India, Madan Sabnavis of Bank of Baroda, Madhavi Arora of MK Global, and former Finance Secretary Subhash Garg, evaluated the statistical metrics. The panel examined manufacturing expansion, services sector performance, private and public capital expenditure, micro, small, and medium enterprises investment, household debt composition, employment trends, and statistical base revisions. Further discussion centered on potential Reserve Bank of India interest rate actions, export performance linked to currency depreciation, and future risks regarding monsoon deficits and inflation. Additionally, Axilone Chief Executive Officer Sanjay Komera presented direct air capture streetlight node technology deployed at Rajghat in Delhi, detailing its solar power infrastructure, real-time pollution monitoring, and street-level air filtration capabilities.
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00:02global icon reimagined for India
00:36It's been yet another blockbuster quarter for the Indian economy
00:41Despite the Iran war, despite the tariffs by the US
00:46Despite all global challenges, India's economy grew at 7.8%
00:51In the quarter of April, May, June, the first quarter of the current financial year
00:58This is data which only strengthens the government's claim
01:02that India is the fastest growing major economy in the world
01:07But today, we ask a bigger question
01:10What does this growth really reflect on the ground?
01:14What about jobs, income growth and household savings?
01:18Are they growing at the same pace?
01:21Is India's growth story reaching every corner of the country?
01:26To decode what these numbers really mean
01:29And how the benefits are trickling down all the way
01:33We have leading economists with us
01:36And I am now joined by Dr. Soumya Kanti Ghosh
01:40The Group Chief Economic Advisor of the State Bank of India
01:43Dr. Ghosh, welcome to the show
01:45I want to begin by getting you to explain to our viewers
01:48What really do these numbers mean?
01:53Because most of these numbers are really beyond expectations
01:59Thank you, Siddharth, for having me on the show
02:02I think 7.8% is really a very creditable number
02:06In fact, we have put out a forecast of 8% of first quarter
02:11And if we take out, if we just ignore the minor revision in the Q1 GDP of last year
02:18The growth rate for the current quarter comes in exactly at 8%
02:218% in a time when the economy has been
02:25The world has been besized by turmoil
02:28And it's not one year
02:30It's happening from 2020
02:32If you remember, from 20 the pandemic started
02:3421 there was a second wave
02:3522, 23
02:37Every year has been
02:38And seen an increase in progression
02:40And the last quarter, January to March
02:43Data was revised upwards to 8.6%
02:45But I think this data is particularly welcome
02:49Because it is actually firing on all cylinders
02:51We have a service sector growth rate which is at 10%
02:55Which is basically the manufacturing sector growth rate is at
03:00And the agricultural sector growth rate is a little lower, 4%
03:04But I think that the number could actually pick up
03:07And historically for the agricultural sector
03:08We have been growing in this range of 3.5 to 4%
03:12For a considerably longer period of time
03:13So if you ask me
03:15It's a growth
03:16And the most important part of this growth story
03:19Is that it has been now being driven increasingly by manufacturing
03:22So that means that the lot of initiatives
03:24The government has been trying to push in now for the several years
03:28Is now bearing fruit
03:29We are seeing it in the electronic sectors
03:32And hopefully the manufacturing sector
03:35The average growth rate in the last three years
03:37Is more than 9%
03:38And the average GDP growth rate is actually around 7.4%
03:42So while service sector in India
03:44Has been resilient enough for a longer period of time
03:47The most heartening thing to note
03:49Is that the significant pickup
03:51In the manufacturing sector in the last three years
03:54Which actually bodes well
03:56For the overall growth story for India
04:00Dr. Kosh
04:02Is this momentum sustainable?
04:05Because while these are quarter on quarter
04:07Year on year numbers
04:08If we were to look at it in sequential terms
04:12The question that people would have is
04:14Is it sustainable?
04:16Or is there something temporary about it?
04:19Particularly any lingering effects
04:21Of the issues that the West Asia conflict have caused?
04:26No, of course there is a lingering impact of the West Asia
04:30I think the most important part of that
04:32Is that the surprising
04:33The only surprise of the data
04:35Was the nominal GDP growth rate
04:36Which just came in at 10.3%
04:38I think the market was expecting to be significantly higher
04:40But there actually
04:42The real manufacturing sector growth rate
04:46Is actually higher than the nominal manufacturing growth rate
04:49Indicating that the deficit was negative
04:52That actually is an impact of the war
04:54Because the input prices in many of the sectors
04:57Were running higher than the output prices
05:00So that is actually one indication
05:02Of how the global turmoil
05:04Has actually impacted the Indian markets
05:09Coming at 8th May
05:10I think the next three quarters
05:12Will also see good growth rates
05:14But there could be some progression in the data
05:17I think the second quarter
05:18Could also see a very good number
05:20I think that could be in excess of 7.5% again
05:23The third and fourth quarter numbers
05:26Could be a little on the downside
05:27Because you need to remember
05:28That the fourth quarter number
05:30GDP growth rate was 8.6%
05:32So coming on the top of 8.6%
05:35I think
05:35So progressively there could be a little bit decline
05:38But overall
05:39And we have now revised our GDP forecast
05:41To 7.3% for the full year
05:44So it's actually
05:45If we look into the last three years
05:47Average 7.4%
05:49So consistent growth
05:50Of around close to 7.5%
05:52And I think it's good for the economy as a whole
05:56Because if this growth
05:57The consistency in the growth rate
05:59Is maintained over a period of time
06:02Fair point
06:03And at 7.3%
06:05Dr. Ghosh
06:06It would clearly still put India
06:09Amongst the fastest growing major economies
06:12And you gave us that number
06:13For the full year
06:14What I want to ask you is
06:15Is 8% possible in the near term
06:19Full year GDP growth of 8%
06:23No I think we have hit 8%
06:25In the last quarter
06:26We hit 7.8%
06:28And my belief is that
06:30This number is likely to be upgraded
06:32Because we have looked into the trends
06:34And let me tell you
06:35That the last quarter data
06:36Went juxtaposed
06:37With the leading indicators of Q4
06:40I mean January to March of this year
06:41The leading indicators of Q4
06:43Is actually lower than the leading indicators
06:46Of April to June of this year
06:48So if I just do a deep check analysis
06:51I think the first quarter
06:52Number of 7.8%
06:54Is likely to see upward division
06:55At a later point of time
06:57So coming what may
06:58I think
06:59What is important to grow consistently
07:01At 8% or so
07:03Over a period of time
07:04Right now we are hitting 8%
07:06But we are also going at 7 to 7.5%
07:09For some quarters
07:09So hopefully
07:11If the full year growth rate
07:12Is closer to 8%
07:15For a significant period of time
07:17I am not saying 8%
07:19It should be 8%
07:20For all the time
07:21That in itself
07:22Would be a creditable achievement
07:23For a country like India
07:25Because you need to understand
07:26That India is actually
07:28Moving up the ladder
07:29And it needs to move up the ladder
07:32At a steadfast pace
07:34Because it has set forward
07:35This ambition
07:36Of being a big shit Bharat
07:38In 2047
07:39Which basically is a distance
07:41Which you need to travel
07:43You say
07:44And mention
07:46Moving up the ladder
07:47There would be some
07:48Who would say that
07:48While the economy
07:50Is moving up the ladder
07:51There are several
07:52Who are being left behind
07:53There are concerns
07:55Around asset price inflation
07:57There are concerns
07:58Around income disparities
08:01And the nature of
08:03Distribution of income
08:04That we see
08:05Also there are concerns
08:06Around household debt
08:08In the recent past
08:09We have seen some
08:11Commentary around that
08:13How would you respond
08:14To those concerns?
08:16So I think
08:17Let me first come
08:18To the household debt
08:19But I think
08:19There has been
08:21Some commentaries
08:22On the household debt
08:23That it has been
08:23Significantly high
08:24If you actually
08:26Look into the data
08:27Which is
08:28Yes it's higher
08:29It's more than 46%
08:30I think is around
08:3147.5% of GDP
08:32But I think
08:34The larger question
08:35Is that the
08:36Household debt
08:37Under the hood
08:38Which you need
08:38To look into
08:39Because a large part
08:40Of that household debt
08:41Which is around
08:4224%
08:43Is for asset creation
08:44Which is nothing
08:45But housing loans
08:46And loans taken
08:47For productive purposes
08:48That means
08:49Loans against
08:50A collateral
08:50If you
08:52Take out that loan
08:54From the overall
08:55Household debt
08:56The debt to GDP ratio
08:57Household debt
08:59To GDP ratio
08:59Comes for it
09:00For India
09:00Comes to only
09:01Around 23.8%
09:03Which is almost
09:04At the lower end
09:05Of the ladder
09:06I think only Turkey
09:07Russia
09:08And another country
09:09Is below us
09:10And we are at
09:10The fourth one
09:11Even China's
09:12Household rate
09:13Is 50% of GDP
09:14So we have to
09:15Look into the number
09:15In totality
09:16And the distribution
09:18And not at the
09:18Overall numbers
09:19Regarding the
09:20Income distribution
09:21Part
09:21Yes
09:22But it is also
09:23A fact that
09:24At the
09:25This growth
09:26Which is becoming
09:27More broad based
09:28Would not have been
09:29Possible
09:30If there was
09:31No growth
09:31At the bottom
09:32Of the pyramid
09:33In fact
09:34If I look into
09:35The data
09:35For the last
09:38Large part
09:39Of this discussion
09:39On this
09:40Why this growth
09:41Has happened
09:42Is because
09:42If you remember
09:43That last year
09:44There was an
09:45Income tax cut
09:46Now one family
09:47Of two
09:48Need not pay
09:49Taxes on an
09:50Income of
09:5026.75 lakhs
09:52Because 12 lakh
09:53Is still
09:5312 lakh
09:54The amount
09:54Is tax free
09:55That's a big
09:56Amount
09:57And the second
09:57Thing is that
09:58There was also
09:58A GST
10:00Tax cut
10:01In September
10:02Of last year
10:02I think both
10:03These tax cuts
10:04Have significantly
10:05Stimulated the
10:07Consumption
10:07At the lower
10:08End of the
10:08Pyramid
10:09And one
10:10Proof of that
10:10Is proof
10:11Of the pudding
10:12Is that the
10:12Rural actually
10:13Has been doing
10:13Better than
10:14Urban in
10:15The last
10:16Year or so
10:17So that
10:18Actually shows
10:18That yes
10:19There could be
10:19Some issues
10:20But it actually
10:21Has significant
10:24Momentum
10:25At the rural
10:25Way
10:25And on the
10:26Employment
10:27Scenario
10:28Yes
10:28Employment
10:29For a country
10:30Like 140
10:31People is always
10:32Going to be
10:33A challenge
10:33But let me
10:34Tell you also
10:35One fact
10:35For the last
10:3650 years
10:37The overall
10:38If you look
10:39Into the
10:39India's
10:39Employment
10:40Creation
10:40In 1970s
10:42Also
10:4280s
10:42Also
10:43Today
10:43Also
10:43More than
10:4450%
10:45Of India's
10:46Employment
10:46Continues
10:47To be
10:47Self-employed
10:48That was
10:4950 years
10:49Back
10:50That was
10:50Even today
10:51But today
10:51The distribution
10:52Has changed
10:53In terms of
10:54The self-employment
10:55Because a
10:55Large part
10:56Of these
10:56Start-ups
10:57Is now
10:57Being created
10:58So I
10:59Think
10:59Again
11:00This
11:00My point
11:01Is that
11:01When you
11:02Discuss
11:02We need
11:03To discuss
11:03These numbers
11:04In totality
11:05Yes
11:06Employment
11:07Will always
11:07Be a challenge
11:08For a country
11:09Like India
11:09And my sense
11:10Employment
11:10The problem
11:11With India
11:12Is that
11:12India
11:12Cannot
11:13Produce
11:14High
11:14Income
11:15Jobs
11:15India
11:16Is producing
11:16Jobs
11:17But that
11:17May not
11:18Be of
11:18High
11:18Income
11:18But
11:19The other
11:20Part of
11:21The story
11:21Is that
11:22Overall
11:22Self-employment
11:23The Indian
11:24Labour market
11:25Is still
11:2550%
11:26Of GDP
11:26Which was
11:27Even
11:2750 years
11:28Back
11:28And that
11:29Number
11:30Has changed
11:31A little bit
11:32Because of
11:32The startups
11:33Which has
11:34Been
11:34Come into
11:34The picture
11:36Dr. Ghosh
11:37Many people
11:38Find it
11:38Difficult
11:39To comprehend
11:40And statistically
11:42Understand
11:42The extent
11:43Of employment
11:45Or unemployment
11:45In the country
11:46You are a
11:47Numbers man
11:49What would you
11:50Say is the
11:51Best way
11:52To look
11:53At the
11:53Employment
11:54Data
11:55In the country
11:55What is the
11:56Rate of
11:56Unemployment
11:57As of now
11:58What metric
11:59Can you
12:00Discuss
12:00With our
12:01Viewers
12:01I think
12:04Siddharth
12:04The PLFS
12:05Survey
12:05Is a
12:06Very good
12:06Survey
12:07The PLFS
12:07Survey
12:08Undergone
12:08Many
12:08Structural
12:09Changes
12:10And overall
12:10The PLFS
12:11Survey
12:11Data
12:12Showed
12:12That the
12:12Overall
12:13Unemployment
12:14Data
12:14Is actually
12:15At 3.2%
12:16Or so
12:16So there
12:17May be
12:18Some
12:18Regional
12:18Variation
12:19Now
12:19That number
12:19Is actually
12:20Published
12:20On a
12:20Monthly
12:21Basis
12:21But if
12:21You look
12:22Into
12:22The
12:22Overall
12:22Data
12:22This
12:23Number
12:23Fluctuates
12:24But
12:24Generally
12:25This
12:25Number
12:25Is
12:25Around
12:26Less
12:26Than
12:264%
12:27So
12:27That's
12:28Give
12:28You
12:28A fair
12:28Bit
12:33Discussed
12:34Topic
12:34Is
12:35Basically
12:35You will
12:35Find
12:35A lot
12:36Of
12:36Commentaries
12:36On the
12:37Youth
12:37Unemployment
12:38In India
12:39Interestingly
12:39If you
12:40Look
12:40Into
12:40The
12:40PLFS
12:41Survey
12:41The
12:41Youth
12:42Unemployment
12:42Number
12:43Is actually
12:43A little
12:44More
12:44Than
12:4510%
12:45Here
12:46Again
12:47We have
12:47Actually
12:48A statistical
12:48Issue
12:49The
12:49PLFS
12:49Survey
12:51Classifies
12:52Youth
12:52As
12:53Unemployment
12:53If
12:54He is
12:54Within
12:54The
12:55Age
12:55Group
12:55Of
12:5515
12:56To
12:5629
12:56Years
12:57Now
12:57You
12:58Tell me
12:58At
12:59The
12:59Age
12:59Of
12:5915
13:00Whoever
13:00In
13:00India
13:01Everybody
13:01In
13:01India
13:02Will
13:02Unemployment
13:02Every
13:03Youth
13:03But
13:03No
13:04One
13:04Has
13:04Actually
13:04Completed
13:05The
13:05Study
13:05So
13:07There
13:07Are
13:08Some
13:08Methodical
13:09Issues
13:09Also
13:10In
13:10This
13:10Context
13:11But
13:11Keeping
13:11Aside
13:12That
13:12I
13:13Think
13:13The
13:13Larger
13:14Point
13:14Is
13:14That
13:15What
13:15Is
13:15Important
13:16For
13:16Us
13:17Today
13:17Is
13:17That
13:17To
13:18Link
13:18The
13:18Skilling
13:18Program
13:19To
13:19The
13:19Education
13:20Program
13:20Because
13:21Only
13:22A
13:22Simple
13:22Degree
13:23May
13:23Not
13:23Able
13:24To
13:24Get
13:24You
13:24A
13:25Handsome
13:25Paying
13:26Job
13:27Well
13:28That's
13:28A
13:28Good
13:29Way
13:29To
13:29Put
13:29It
13:29Because
13:30Headline
13:30GDP
13:31Numbers
13:32Are
13:33Important
13:33For
13:33The
13:33Economy
13:34And
13:34For
13:34The
13:35Country
13:35And
13:36Rightly
13:36To
13:37Be
13:37Celebrated
13:37But
13:38On
13:38The
13:38Ground
13:39GDP
13:40Must
13:40Mean
13:41Upliftment
13:41Of
13:42All
13:42And
13:42Some
13:42Of
13:42The
13:42Points
13:43That
13:43You
13:43Mentioned
13:43Are
13:45Significant
13:46I
13:46Thank
13:47You
13:47For
13:47Being
13:48Here
13:48With
13:48Us
13:48Today
13:49Let's
13:50Move
13:50On
13:50And
13:50Take
13:50A
13:51Listen
13:51Into
13:51How
13:52Prime
13:53Minister
13:53Modi
13:53Welcomed
13:54The
13:55Latest
13:55GDP
13:56Numbers
13:57In
13:57Fact
13:57He
13:58Called
13:58Them
13:58A
13:58Reflection
13:59Of
13:59India's
14:00Economic
14:00Strength
14:01Despite
14:02The
14:02Uncertainties
14:03The
14:03Geopolitical
14:04Tensions
14:04And
14:05The
14:06Supply
14:07Chain
14:07Disruptions
14:08As
14:09He
14:09Put
14:09It
14:09Doomsayers
14:11Were
14:11Doomed
14:12And
14:12India
14:13Gloomed
14:13Yet
14:14Again
14:14Take
14:15A
14:15Listen
14:16A
14:16Go
14:18Go
14:18Go
14:18Go
14:19That
14:21Seven
14:21Point
14:22Eight
14:22Pers greatness
14:23Growth
14:24A
14:24Dex
14:25Khusiao
14:26S
14:26Bha
14:26Gaya
14:26In
14:28Lekin
14:28Dex
14:29S
14:29Vlasio
14:29Ko
14:29My
14:29Bad
14:30I
14:30Was
14:30To
14:32Sankt
14:32Sankt
14:32Prashakti
14:33To
14:34Uncut
14:34Purshant
14:35Ke
14:36Lidya
14:36Sa
14:36To
14:37Sankt
14:37Sa
14:37You
14:38Why
14:41You
14:41What
14:42D
14:42D
14:42B
14:42B
14:42Is
14:43L
14:44L
15:08The Prime Minister also repeated his appeal
15:12of the recent past that Indians should forego
15:15on unnecessary foreign travel and temporarily stop buying gold.
15:22His message had an appeal for Swadeshi.
15:46His message had an appeal for Swadeshi.
15:55The Prime Minister has an appeal for Swadeshi.
16:14Meanwhile, Finance Minister Nirmala Sitaraman, who is currently heading the Indian delegation at the G20 Finance Minister's meeting in the
16:22United States,
16:23has also spoken about the latest growth data, highlighting the fact that this data is evidence of the resilience of
16:33the Indian economy.
16:36Prime Minister Modi has given us the destination for 2047, which is Vikasid Bharat.
16:42If every quarter Indians are able to lift the Indian economy like this, I am sure clearly by 2047 the
16:50goal will be achieved.
16:51And in this, the reforms which have been undertaken by the Prime Minister across various departments and ministries and also
17:00in the financial sector,
17:01the way in which digitalization has helped small, micro, medium businesses to be able to access the global markets.
17:09Because of the deep penetration of the UPI, the NPCI, the QR codes and everything else, the Indian economy's robustness
17:19has come out.
17:22And as always, there is an element of the opposition also questioning India's economic performance.
17:31Both the Prime Minister and the Finance Minister have responded to that and said that these remarks and comments ignore
17:38the hard work of Indian citizens
17:41and undermine the country's achievements.
17:47The globalists, the world, has been diminished in society.
17:51The globalists are starting out on the previous side of the world,
17:54the nationalists have been dowed on the world.
17:58The imperialists have been fallen from the beginning of the 19th century.
18:04The nationalists have been dragged over the last few years.
18:35I thought there are quite a few economists within the Congress party who form an economic
18:41advisory group like. I am sure they can't be denying the facts but for political purposes if you want to
18:53talk ill of the Indian economy at a time when people are really doing well, there can be performance which
19:00can be improved in some other areas but that doesn't undermine the overall good story which is today revealed in
19:08number.
19:09Every quarter after quarter we are coming up with good numbers. To deny that fact and to speak the opposite
19:16of it just makes me feel that, you know, in Hindi you all say, Rajneetik roti sink ne bale business.
19:25It can't go on for too long.
19:29Well clearly while the opposition also has whatever it has to say, there is merit in discussing the way in
19:39which India seems to have broken and gone beyond expectations when it comes to maintaining the economic momentum and we
19:48are now joined by two expert economists on this subject.
19:51Madhan Sabnaviz, the chief economist at the Bank of Baroda and Madhavi Arora, chief economist at MK Global.
19:58Madhan, I want to come to you because some amount of time has passed between the headline numbers being released
20:05and you've spent time decoding what these numbers really are all about.
20:10There are of course always going to be some naysayers but like the Prime Minister said, those who had a
20:18negative view have been doomed.
20:20How do you read these numbers and more importantly what does it tell us about the rest of the year,
20:26Madhan?
20:27Yeah, actually I think this particular number of 7.8% was much beyond our own expectations but we are
20:34looking at something closer to 77.2%.
20:36So therefore this is a very good surprise to have. Now I think that one quarter has gone past and
20:41I think all the contemporary indicators which we had during the course of this particular quarter were also indicating that
20:48things were doing very well.
20:49And one indicator which actually I look at very closely are the corporate results. So I think the Q1 results
20:54of corporates, even if I exclude the BFSI and IT sector, turned out to be very good.
20:59I think it's the very first time we saw a very good top line as well as bottom line growth.
21:03So we knew that the performance was going to be very wide.
21:07But I think Siddharth the question is that what happens in the next three quarters because one quarter is one
21:12part of the year and we still have three quarters to go.
21:14I think there are two particular threats which I think are there very much for us. One is in terms
21:20of the monsoon. We know that it's an early no year. We also know very well that virtually everything that
21:26had to be sown is already being sown.
21:27And I think we have a deficit in terms of cereals, in terms of oilseeds, cotton and sugarcane. So agricultural
21:36production is one particular risk factor which I see.
21:39Of course, if we do get higher production in these numbers, then there's nothing like it. And the second part
21:43is, of course, in terms of consumption.
21:46Because I think if you look at the first quarter, what I have seen is that it is basically being
21:50driven by capital formation.
21:52If you look at the growth rates in nominal terms, I always look at nominal rather than real, because we're
21:57able to relate it to what happens to bank credit.
21:59We have seen there has been a phenomenal growth in capital formation, which is very heartening because all this time
22:05there's this thing of saying that is the private sector investing or not.
22:08Now, it looks like that both the government as well as the private sector have been investing. So therefore, we're
22:12seeing a 20 percent growth.
22:14But if I look at consumption, it's close to 10 percent, 9.9 percent, I think, in nominal terms.
22:19So I think that is something which needs to be maintained in the coming quarters.
22:23Now, will it be maintained or not? I'm not quite sure, because if we do believe, at least I do
22:29believe that inflation is something which is going to go up.
22:31We're going to go towards the 6 percent mark. We've already seen prices of essentials going up.
22:36Milk prices have been increased. Onion prices have gone up. Sugar prices have gone up.
22:40Now, this is something that should come in the way of consumption plans.
22:44So I think these are the two threats we have. One is what happens to a curry crop.
22:48The second thing is on account of consumption. Both of them linked on account of inflation, which will be driving
22:53it.
22:53So while we have also upgraded our GDP forecast, we're not being too optimistic or too bombastic about it.
23:01We are sticking to something closer to 7 percent. We're not yet going beyond that number as of now.
23:06Okay. You're not going beyond 7 percent as of now. Madhavi, apart from your comments on the data, what is
23:14your forecast?
23:16Any revised forecast? Are you agreeing with what Madhan has to say or are you the one who would tend
23:22towards a higher range, perhaps closer to 8 percent?
23:27I concur with Madhan. We are also looking close to 7 percent at this point in time, exactly 7 percent
23:32actually on the GDP.
23:34But value added, we're looking at around 7.2, 7.3 percent for the year.
23:39But one has to note the fact that for the year as a whole, the best is already passed in
23:46terms of the sequential gain.
23:48So going forward, while the rest of the year would probably have close to 6.8 to 7 percent, the
23:56best is already played out in the first quarter.
23:58And interestingly, this also has happened despite the fact that we have seen massive past revisions.
24:05Had there been no revision in the last year's data, probably this quarter would have been as high as 8
24:09percent if I take the numbers as a whole.
24:12But that said, I think one has to reckon with the fact that, you know, the data has obviously exceeded
24:18most expectations.
24:19We were looking at 7.7 percent growth for this quarter, expectation-wise.
24:25Okay.
24:27Yeah.
24:27So it was not a big surprise for us as such.
24:30But we also reckon the fact that when we were in the peak of the Middle East crisis, we were
24:36expecting growth to be somewhere close 6.5 percent-ish.
24:39The first quarter earnings data did surprise us on the positive side because, you know, all the company commentaries that
24:46we heard were very positive on consumption story or on the resilience of consumption story.
24:52Plus, we're also seeing, you know, a cyclical upturn in the capex cycle, both led by public and private sector.
24:58So first six months, if you look at the capex data for the private sector, which is a proxy that
25:04we track, there's been a consistent uptake.
25:06In fact, for this June quarter, the four-quarter moving average capex for the private sector is now tracking close
25:12to 14-15 percent.
25:14But the German sector…
25:15Madhavi, just to interrupt you there, for the benefit of our audience, simplify it.
25:19What are you telling us? Are you saying that the private sector, which for years was seen as lagging in
25:27investing money for growth in India and instead was sweating its current plants and assets more, is now finally putting
25:36in money for future growth?
25:38Is that what you are saying?
25:40Yes. The fixed capital formation has been steady. And, you know, in the last five years or so, post-Covid,
25:47the general government led by Centre was a large player in this so-called capex story.
25:51And you were saying that the private sector capital formation is absent. We are seeing a cyclical upturn in that.
25:58And interestingly, it's possibly been written by the MSME segment, not the large-cap guys.
26:04You know, we're not hearing big stories or big names like LNTs, you know, putting up new plants and stuff
26:08like that. But if you look at the credit optic to MSME, that has gone up.
26:12If you look at the private sector, proxies of capex, they're also looking pretty healthy for the last six, nine
26:18months.
26:18They're finally tracking the private consumption, which also has gotten a kick from the GST cut.
26:24And thus, to a large extent, this first quarter, which was bearing the brunt of the West Asia crisis, the
26:30pain has not been borne by the private economic reasons.
26:33The government has taken the large brunt of its own books.
26:36Absolutely. The government handled the pain points of the West Asia crisis, and we know how that firefighting happened.
26:44But Madan, coming back to you very quickly, we also saw data that FPI inflows have also gone up.
26:54And we've seen a kind of reversal of a trend significantly with the latest data that has come out.
27:01Can I, therefore, ask you, are we now seeing a proper trend reversal when it comes to private capital expenditure
27:10and inflows of foreign portfolio money into our markets?
27:14Look, I have a slightly different take in when you're talking of private investment.
27:19I didn't mention that private investment is taken off, but I don't think it's broad based.
27:23So that is something which is always missing.
27:25Because if you look at the overall investment intentions and which are the sectors which have been actually getting into
27:30investment,
27:31you'll realize a lot of that is going into IT or data centers.
27:34I think data centers, AI is something where there's lots of investment being made.
27:37If we're looking at power, both conventional as well as renewable, there's a lot of investment going on there.
27:43Metals, we have investment taking place.
27:45We have something taking place in oil.
27:47But beyond that, if I go into the consumer goods segment, we still have not seen that kind of fraction,
27:51which really means that investment is taking place.
27:53It's not just that the government is investing, the private sector is investing, but there is surplus capacity.
27:59So when I spoke of the threat of consumption, the thing is that consumption needs to keep increasing.
28:03Only then does the capacity utilization improve.
28:07And it's at that particular point of time that companies in the consumer goods space will start investing.
28:11So I think we'll have to wait to see.
28:12Madhan, Soumya Kanti Ghosh just a little while ago on this show said that rural consumption is, you know, doing
28:21better than urban.
28:24Why is this?
28:25Is this on account of all the welfare schemes and their impact coupled with maybe other reasons related to the
28:33agriculture economy?
28:35See, from what I've figured out, my information is based more on what the corporates say during their quarterly result
28:43handouts.
28:44So out there, there's generally been a tendency that in the first quarter, we have seen that there's a revival
28:49of demand both in urban as well as rural areas.
28:51So I should assume that if there's a view saying that rural has done better, it could be maybe marginally
28:57better because there was a good Robbie crop last year.
29:00So therefore, there is a certain amount of spending taking place.
29:03Now, the whole question is that will this really lead to companies investing more?
29:08So that is something because just remember, I think this year we're going to have a rate hike.
29:12Like interest rates are going to start increasing and companies are going to be a bit careful when it comes
29:16to investing.
29:17I'll invest only in case there is demand.
29:19So that's the reason why I think consumption-
29:20How much of a rate hike, Madhan?
29:22We're looking at one rate hike at least, probably in the month of December.
29:26Based on the fact that if you look at the inflation forecast of the RBI, they're talking of 5.9
29:31% in Q3.
29:32So I think at that point of time, you have a better information about how the curry crop has behaved,
29:36how prices are behaving.
29:37So that's when we'll have the first rate hike.
29:39Of course, if I look at the OIS markets, it looks like there could be even two hikes as we
29:43speak today.
29:44Now, the second part-
29:45Okay, two hikes.
29:46Madhan, hang in there because I also want to welcome to the show another noted economist, one of the most
29:53popular voices on our macro economy,
29:56Sajid Zed Chinoy, Managing Director and Chief India Economist at JPMorgan.
30:02Sajid, welcome to the show, Madhan and Madhavi.
30:05And before that, Swami Kanti Ghosh have been having a go at trying to decipher this massive set of numbers
30:13where the Prime Minister said what he said.
30:16I want to quickly bring you in and get you to give us your first thoughts.
30:21Were you surprised?
30:22And as you have read through the data, is there anything that sticks out that you would want to relate
30:30to us?
30:31Thank you, Siddharth.
30:32Always great to be here.
30:34So we were not surprised at all, right?
30:36Our sense of normal, our forecast for real GDP growth, and we wrote about this before the print came out,
30:42was 8%.
30:43And we thought normal growth would be somewhere between 10% and 11%.
30:47And both those numbers were very close.
30:49Real GDP was 7.8%.
30:51GVA was 8.2%.
30:53And nominal was 10.3%.
30:55Why were we not surprised?
30:56Because I think there are three different drivers to what we saw yesterday.
31:00First is we've been seeing a cyclical pickup in the economy since the last quarter, calendar year of 2025.
31:07We've spoken, Siddharth, in the past about the huge cyclical stimulus that was injected to the economy, direct tax cuts
31:15last February, GST cuts in September, 150 basis points of monetary easing, regulatory easing, a weaker exchange rate.
31:23So that had already begun to show up in the October to December quarter and the Jan to March quarter.
31:29The question really was, could India insulate that recovery from events in the Middle East?
31:35And I think this is where the government deserves enormous credit because what you saw was the initial concern that
31:43the economy would have shortages of energy in the month of March and April that would derail the economic recovery
31:49were not brought to bear because the government scrambled and scurried to diversify energy imports as much as we could.
31:56So we got more crude from Russia, we got more energy from Oman, and ironically, we ended the quarter importing
32:0320% more energy in volumes than we do in a normal April to June quarter.
32:08So that for me was the key point here that the cyclical recovery was protected by the way we managed
32:14the crisis.
32:14And the third final point I'll make, which is the one which I think is least appreciated, is the role
32:20that exports have played in the last three or four months.
32:23We saw this in the high frequency data, and what you saw is yesterday, the biggest delta was exports growing
32:31from 4% the previous quarter to 12% last quarter.
32:36The contribution of net exports to GDP growth was three percentage points.
32:40Now, this last very final point I'll make is this is a consequence of the fact, in my mind, that
32:46the exchange rate has been allowed to depreciate almost 15% over the last year.
32:52That boosts export competitiveness.
32:54It makes imports more expensive.
32:56Tariffs came down earlier this year, and the global economy is resilient.
33:00So in a way, this was a perfect storm.
33:02You've got a weaker exchange rate, a strong global economy, a cyclical recovery fully in motion, and a government that
33:08worked to protect that recovery from being damaged by events in the Middle East.
33:14Good points there, Sajid.
33:17Madhuri, I want to come back to you on the point of interest rate hikes.
33:21Madhan made a mention of that.
33:22What's your own sense?
33:24Is an interest rate hike around the corner, and what will that do perhaps to dampen consumer expectations, and especially
33:35on account of the fact that we are very soon going to head into the festival season?
33:40There's been a change in the global winds in general.
33:44You are seeing the global financial conditions tightening across the world.
33:48There is a sense that possibly the cyclical recovery in the global order is going to sustain, which also will
33:56have a spillover effect on inflation to that extent.
33:59More importantly, I think what you see in post-COVID is that there's been a much higher pickup in the
34:07growth story than one would have expected post-COVID.
34:10There's been a fiscal activity which has been continuously feeding into the growth story,
34:15and we are looking at the real risk across the world going up.
34:18India is no different in that front.
34:20To that extent, I believe that in the near term, what you're looking at is how the financial conditions play
34:25out around the world.
34:26India is also seeing a brunt of that.
34:28We are seeing the 10-year yield now crossing 6.95.
34:31Of course, there's also been a lot of discussion around the mismatch of RBI's communications from the policy versus what
34:38the minutes showed out.
34:39So, with that said, Madan was also mentioning, there's a possible risk that we would see the Reserve Bank move
34:47the needle probably in December.
34:49I'm not looking at it to happen in the month of October.
34:52Obviously, what's happening globally will also have to be reckoned with.
34:55There's a lot of geopolitical fluidity that is playing out.
34:57Plus, you know, how, again, the global financial conditions play out, how the Fed reaction function also evolves will feed
35:05into the Reserve Bank's reaction function.
35:08And to that extent, I think in the near term, they also probably are, you know, managing the market expectations
35:16by letting the yields be better.
35:18So, I think one has to recommend that.
35:20We'll have to wait.
35:20Absolutely.
35:21I agree with you.
35:22We'll have to wait for what the monetary policy response is.
35:26We are also joined by Subhash Garg, former Finance and Economic Affairs Secretary.
35:33We will be going to Mr. Garg in just a bit.
35:37Sajid, I want to come back to you.
35:38I have two quick questions for you.
35:41One, about private investment.
35:46Other speakers on this show have spoken about that.
35:49I want your views and do you think a stronger private investment cycle is now something that we can sort
35:58of write in as a given?
36:02I don't think we can write in as a given.
36:03I think the last few months have been very encouraging.
36:06But we have to appreciate that this is a cyclical recovery, which is what we were aiming to get last
36:12year.
36:12And the key for the recovery sustaining for more than a few quarters, because what's going to happen is eventually
36:20the impact of the tax cuts will wane.
36:23You know, interest rates, as you pointed out, the direction could reverse.
36:27So, some of these cyclical impulses will wane.
36:30For the recovery to be sustainable for several quarters, it's really important that we begin to crowd in private investment.
36:38Because, as we've seen, there are limits to what public investment can do.
36:42So, for me, the key enabling mechanism for this to continue for the next four to six quarters is for
36:48gross fixed capital formation to pick up.
36:50Now, as we've discussed in the past, the issue there has been demand visibility.
36:55And the hope is that if consumption growth can continue for a few more quarters, if stronger exports growth can
37:02continue for a few more quarters,
37:04that will begin to eventually crowd in private investment.
37:08But we'll have to wait and see about the data, because you've got a global environment that's still very uncertain.
37:13We still have an alinear shock ahead of us.
37:16You know, we've got higher U.S. interest rates.
37:19Crude prices are still above 90.
37:21And China's got lots of excess capacity.
37:23So, many emerging markets are facing all these headwinds.
37:26The good news for India is domestic demand has begun to fire now in the form of consumption for three
37:32quarters.
37:33And exports are picking up.
37:34But we'll need to see this continue for a few quarters, in my mind, to get a broad-based private
37:40capex cycle being crowded in,
37:42because utilization rates are still at 75%, 76%.
37:45I think we'll need to see those go up towards 80% to get a broad and convincing and sustainable
37:50cycle.
37:52Okay, that's a very important comment there.
37:55Let me bring in Subhash Garg, former Finance and Economic Affairs Secretary.
37:59Mr. Garg, welcome to the show.
38:01We have an esteemed panel of economists, and we were hearing Sajid speak about the private investment cycle.
38:07I just want a quick first response from you, especially on account of your ability to understand both sides of
38:17the coin.
38:18There are some people, including the political opposition, which is questioning whether this growth is real.
38:24What would you say?
38:26I think this is a serious question, which we should really examine.
38:32The growth, 7.8% in this quarter, on the face of it, looks very good.
38:39But I think you must have done these numbers now.
38:44We didn't have the real GDP data in the new series for the last year, first quarter.
38:52Last year, first quarter, the GDP numbers were given on the old series.
38:58So the number which has now been used as a base for 25, 26, Q1 is the number which the
39:06MOSP has come out for the first time.
39:10And therefore, comparing it with that base should be taken with a little bit of a pinch of salt.
39:17The better sort of analysis is done in terms of current, the GDP growth in current prices.
39:29And there, I don't know whether it has caught your attention or not.
39:34The government has drastically revised the GDP at current prices for 25, 26, Q1.
39:44It's such a massive, drastic reduction in the base year's Q1 GDP, current prices, that the growth is now 10
39:55.3%.
39:55If you had taken the numbers and the current prices don't change, if you had taken the numbers which were
40:03put out last year as the GDP in current prices,
40:07the growth is less than 2.5% in current prices, nominal GDP.
40:12So that, these two factors give me a kind of little bit of a doubt about whether 7.8%
40:22is genuine or not.
40:24Since you are questioning this number, Mr. Garg, I want to ask you, by your own calculations, if any, what
40:33do you think is therefore the real number?
40:36See, the difficulty is that the GDP real prices is a derivative number.
40:45You calculate the nominal first and then you take out the deflator or the inflation element out of it to
40:52work out the real GDP.
40:54Real GDP is not calculated as such in the system.
40:58And therefore, if you go by the current prices numbers, that is where it comes to.
41:07So if that number, now, why did the government decide to revise down the last year's current price so much?
41:17If you take that, as I said, it's 2.5%, I would say that there might be some justification in
41:26revising down the last year's current prices GDP,
41:29but it can't be that much.
41:31So depending upon what you take it, if you take 2.5% as the growth compared to the last
41:37year's GDP current prices and take 2% or 3% as the inflation,
41:44then the real GDP growth is non-existent.
41:47But if you take the number as 5% or 6%, then the GDP growth is much smaller.
41:55Okay, Madan, I wonder whether you want to kind of take this point forward and your own assessment in light
42:02of what Subhash Garg is saying?
42:05No, actually, I haven't quite looked at this particular factor.
42:08It's quite a revelation what Mr. Garg has said in terms of what was done in terms of the revised
42:14numbers of Q1 of last year.
42:16So I don't think I'll be able to make an intelligent comment out there.
42:19But yes, it is definitely a concern based on what Mr. Garg has said, that if we're really saying that
42:25the number was revised,
42:26and it's a fact that all GDP is calculated in nominal terms, and then we use the deflators,
42:31so there would be a case of saying that the number would not be 78%, but probably be something lower.
42:37So I wouldn't take that particular point.
42:39But definitely I would like to examine it further before I make any comment.
42:45Mr. Garg, I come back to you.
42:48Let's leave the number debate aside for a moment and ask you about the management of the economy during the
42:55first quarter,
42:56particularly in handling the West Asia crisis, the oil supply shock, and its second-round impact.
43:04How would you assess that?
43:06Because it is important.
43:08The West Asia crisis is not fully over as yet.
43:11How would you assess that handling, which seems to have demonstrated significant resilience as far as the broader economy is
43:19concerned?
43:20I think that was outstanding in the sense that the government decided that come what may, whatever price you buy,
43:28you buy,
43:29but don't allow the shortages to happen.
43:31And the government succeeded in that.
43:34They bought gas and the oil from wherever it was available, whatever price.
43:40And we did not see any kind of panic or any kind of, except for initial five, seven days.
43:46And from that point of view, if you are looking for, from the management of the economy or supply in
43:53that difficult period,
43:54to my mind, that was outstanding.
43:56But what is the impact of that on the economic growth of that is a different question.
44:06So if you buy so much of things at high prices, et cetera, and you don't allow prices to get
44:13to the consumers,
44:15ultimately it results into the government net taxes being sort of very artificially adversely affected.
44:24Mr. Garg, for the sake of time, I'm interrupting you to ask you a pointed question.
44:31As a former policymaker, would you say that given all the circumstances and this particular important point,
44:38that the monetary response should be a rate hike or should it be standstill for an extended period of time
44:45to fully nurture the growth impulse?
44:49See, I would rather believe that rate hike is justified because the differential between rupee interest rate
44:59and the dollar interest rate has become so small that the incentives for the foreign direct investment
45:06and the foreign debt flows to come in into India is really gone.
45:11And this situation is the result of resulting into how desperate the Reserve Bank has to buy the dollars through
45:21deposits.
45:22Very expensive way.
45:23So I think it would be for the rate hike.
45:28Okay.
45:29Viewers, we are completely out of time.
45:32But one quick summary of what our experts and economists are saying on this show.
45:37We have had a great set of numbers.
45:39There can be a debate about the statistical matters underneath those numbers.
45:44But it's clear that if you were to look ahead, not only is there expectation of our economic growth continuing,
45:51but also of money becoming costlier through a rate hike, perhaps in the next few months.
45:58We'll have to wait for that to pan out.
46:00I'm going to thank all my guests for their time here with us today and you, the viewer.
46:09My name is Sanjay Komera.
46:11I'm Axel One American company's CEO.
46:15And Axel One is primarily a climate engineering company focused on solving pollution problems like what we are seeing in
46:24Delhi.
46:30I come from IT, almost 22 years, digital transformation in the U.S.
46:36And then I started Axel One because I was always passionate about solving bigger problems.
46:47And right now around the world, the biggest problem is sustainability, primarily on pollution and the water.
46:54So, I founded this company four years back.
47:02I came to know about India Today's solution or our initiative on pollution solution.
47:09And I'm very happy to kind of talk to you, to talk to India Today today.
47:16And more importantly, you guys have the solution that we are deploying in Rajgat.
47:22We will go there and hopefully, whatever India today is pursuing on pollution solution, becomes a reality very soon.
47:32Delhi has got a lot of greenery, and in spite of that, you know, it is one of the highest
47:39polluted cities around the world.
47:42So, when I, you know, I've been spending almost three months in Delhi, and primarily what I have seen is,
47:50we need a lot at ground level analytics.
47:52Ground level information, we need to know about what pollution is, why pollution is there, and how many streets are
47:59there, and how much pollution is there.
48:06We are now in Rajgat.
48:09We are now in Rajgat.
48:09This new technology implementation is happening in Rajgat.
48:13I mean, it's the first time in Delhi, it's the first time in India, it's the first time in the
48:16world.
48:17And I'm glad to bring it to Delhi.
48:19So, I'm starting in Rajgat.
48:23It's almost the last four weeks, we have deployed about 23 poles.
48:29I would call it as the world's first climate environmental node.
48:34Basically, the idea behind that was, you know, we have all these street lights that don't do anything, right, except
48:41giving you the light.
48:42So, what we thought was, primarily cities like Delhi requires pollution control at street level.
48:48So, what we thought was, why don't we convert the traditional street lights into the urban street lights.
48:55So, you see, it has got almost four-in-one function built into it.
49:02The primary, biggest function is environmental cleaning.
49:06So, it actually tells you, how many pollution levels are.
49:10And also, it tells you how much of pollution reduction the individual street lights has done every day.
49:18So, you see the metrics every five minutes.
49:20It's real-time data.
49:22So, we call it direct air capture technology.
49:33Direct air, in layman terms, the air goes through the filtration process.
49:40And the multi-level filtration process, the air goes through the air.
49:49And mist operation, we just added.
49:51Looking at Delhi, the dust levels are increased.
49:54So, mist is definitely helpful to reduce your dust levels, which is PM10 and PM2.5.
50:03We have security surveillance built into the pole.
50:06And we have solar, this entire pole is solar-powered.
50:10And in future, all the poles will be renewable-powered.
50:14So, technically, a net-zero pole will be in future.
50:17And also, this has Wi-Fi.
50:20Every pole has got Wi-Fi built into it.
50:22In future, our goal is to kind of connect people with the infrastructure that we're laying on the ground.
50:32So, our initial calculations are looking at how much air flow is happening with the fan.
50:40So, every pole can support clean air to 2000 people per day.
50:46So, that's a mathematical calculation.
50:49And we would be happy to share that with you guys on how we have done the calculations.
50:54So, let's assume that every pole gives clean air to 2000 people per day.
51:06I will show you right now how beautiful it looks in the night.
51:09So, that's a Unterschied from Eucar Randall's.