Indranil Pan, the Chief Economist at Yes Bank, shared his thoughts on India’s economy. He believes the growth might not be as strong as expected. Most experts think the country’s growth will be around 6.4% to 6.8%, but Pan thinks it will be lower at about 6.2%.
His main worry is about the manufacturing sector, which had a slowdown in the second quarter of the year. Global prices and currency changes are affecting how much it costs to make products in India. If there isn’t a solid growth in what people buy, and if the world economy slows down, production in the manufacturing sector could stay weak.
Pan also mentioned that government spending isn’t strong enough. He thinks focusing on building infrastructure (like roads and bridges) is more important than just boosting personal consumption. While agriculture is doing okay, many farmers are still buying food from the market, usually at higher prices, which affects how much they can spend on other things.
As for the future, Pan feels the recovery will take a while. The services sector is doing better than the goods sector, but he’s unsure about how quickly urban demand will pick up. He believes it will take time for inflation to lower to around 4%, which could help wages increase and boost spending.
Looking ahead to the union budget next month, Pan thinks it should focus on increasing infrastructure spending instead of just trying to push consumption. He wants the government to pay attention to employment and skills, as this will help more people work and improve income growth.
For this financial year, Pan predicts a GDP growth of 6.2% and nominal growth (including prices) of about 10%. Next year, he expects the real growth to be 6.6% and nominal growth to be around 9.5%. He believes these figures will improve if the government invests in infrastructure and if the Reserve Bank of India helps ease monetary policies.
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