Finance Ministry on Thursday asserted that underlying growth story of Indian economy remains intact, noting that one should not “overinterpret” the growth slowdown in recent September 2024 quarter.
Noting that the seven quarter low of 5.4 percent GDP growth in Q2 was the first estimate and was impacted by monsoons and religious observance,Anantha Nageswaran, Chief Economic Advisor to Finance Ministry, said that a growth outcome of 6.5-7 percent as projected earlier by Finance Ministry for entire fiscal is still feasible.
He also indicated that the Q2 growth estimate may get revised upwards in the coming days.
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“We shouldn’t over interpret the second quarter (GDP growth slowdown). Don’t throw the baby with the bath water. When we review our performance against checklist of health on the Indian economy, it is pretty robust ”, Nageswaran said at ASSOCHAM organised Bharat@100 Summit in the capital.
Nageswaran said that the global backdrop is far from conducive and stressed the need to pull domestic levers to bolster overall GDP growth.
He also highlighted that Private sector profitability has been very impressive in recent years and gone up 4x in the last four years. However compensation level to employees has become weaker and weaker. Not paying employees well will be self destructive to Corporates themselves and enough incomes won’t be there among the employees to fuel demand, he added.
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Nageswaran also highlighted that private sector investments in Research and Development needs to go up. “Corporates must also make India as byword for quality. They should abandon the use of word ‘jugaad’. We need to think big”, he added.
Nageswaran also flagged the “negative working capital issue”, noting that the small and medium enterprises in many cases are now funding the working capital of large corporates. “India Inc needs to reflect on the negative working capital”, he said.
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On consumption, Nageswaran said that Consumption growth in economy has been steady and Rural consumption in particular has done well.