At the onset of GDP data, Equirus says India's economic landscape remains promising

New Delhi [India], August 30 : As the government prepares to release its GDP data for the first quarter (April-June) of FY 2024-25 on Friday, expectations are mixed amid various economic factors.
The upcoming figures are expected to reflect the impact of the recent heatwaves and the ongoing election cycle, which may have contributed to a moderation in growth.
However, according to a report by Equirus Securities, analysts remain optimistic, noting that there are no clear signs of a slowdown, suggesting that any temporary holdup could reverse with favourable weather and the approaching festive season.
"While there are no signs of a slowdown, it could be a temporary holdup. However, prospects continue to look upbeat with macros holding up well," said the report.
The report also noted that the Indian economy has shown resilience, supported by stable macroeconomic indicators, including controlled twin deficits and adequate reserves.
Despite the challenges posed by climate conditions and external demand, the report added that the overall outlook of the Indian economy remains positive.
"The temporary slowdown could well reverse with favourable weather and the festive season around the corner," the report added.
The potential for a rebound in growth is bolstered by improving consumer sentiment and a recovering rural economy, as food prices ease and inflation moderates. The report added that improvements in unemployment in July and reduced demand for MNREGS activity suggest the rural economy is coming back into balance.
Moreover, the report highlighted that the upcoming release of GDP data comes at a crucial time, with the Reserve Bank of India's (RBI) policy meeting scheduled shortly after.
The report also noted that the term of two external RBI members, known for their dovish stance, is set to end, raising questions about the future direction of monetary policy. If replaced by more neutral or hawkish members, the RBI's approach to rate cuts could be affected, potentially extending the pause on monetary easing.
"The term of the three external RBI members is coming to an end. Their term ends on October 4th, while the next policy meeting is on October 9th. Note that Dr Das's term also ends in December 2024. Therefore, any policy action may be in the hands of the incoming governor in 2025," said the report.
While expectations for India's GDP data are tempered by recent challenges, the overall economic landscape remains promising. The interplay of seasonal factors, policy decisions, and external conditions will be critical in shaping the future trajectory of India's growth. As the data is released, all eyes will be on how these elements converge to influence the country's economic outlook.
India's gross domestic product (GDP) surpassed all expectations and stood at 7.8 per cent in the January-March quarter. The full-year 2023-24 GDP was revised upwards to 8.2 per cent from the second advance estimate of 7.6 per cent, according to data from the Ministry of Statistics and Programme Implementation.
The data also revealed that real GDP soared to Rs 173.82 lakh crore in 2023-24, compared to Rs 160.71 lakh crore in the previous fiscal year.