Latest news with #Crisil
Time of India
2 days ago
- Business
- Time of India
7.4% GDP growth in Jan-Mar pushes FY25 figure to 6.5%
Representative image NEW DELHI: India's economy grew faster than expected at 7.4% in the Jan-March quarter, led by robust growth in agriculture and construction. The strong quarterly showing - the fastest in the fiscal year - pushed overall growth in 2024-25 to 6.5%, according to data released by the National Statistics Office. The Jan-March figure outperformed the upwardly revised 6.4% in the Oct-Dec period, and pointed to robust momentum in the fourth quarter amid global uncertainty. India remained the fastest growing major economy in the March quarter, followed by China at 5.4% and Indonesia at 4.9%. The full-year growth estimate was in line with expectations and the second advance estimate, but the lowest in 4 years, on the back of 9.2% expansion in the previous year. Chief economic adviser V Anantha Nageswaran Friday said robust domestic demand has supported GDP growth and private consumption share has risen to the highest level since FY04. "Govt retains its outlook on FY26 growth at 6.3-6.8%, with private consumption, especially the rural rebound, and resilient services exports as the key drivers," Nageswaran said in a presentation after the data was released. Multiple agencies project India's growth to be in the range of 6.3-6.7% this year, he said. The Jan-Mar quarter data showed the farm sector remaining robust with growth of 5.4% while the construction sector grew 10.8% in the same period. The services sector remained steady at 7.3% in the March quarter compared with an expansion of 7.8% in the same year earlier quarter. The 6.5% growth for 2024-25 was attributed to a pickup in private consumption and investment while the acceleration in investment demand led to the sharp jump in the fourth quarter performance. "In line with expectations, real GDP registered 6.5% growth in fiscal 2025, elevating the Indian economy's size to $3.9 trillion from $3.6 trillion in fiscal 2024," said DK Joshi, chief economist at ratings agency Crisil. "Consumption growth outpaced GDP, primarily driven by robust rural demand supported by a strong agricultural sector. A sharp catchup in investment growth in the last quarter also brought investment growth above GDP growth. ... Net net we expect India's GDP to grow at 6.5% in fiscal 2026 with risks tilted downwards," said Joshi. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Hindustan Times
2 days ago
- Business
- Hindustan Times
India economy grew 6.5% in FY25, beating forecasts
The Indian economy grew 6.5% in fiscal year 2024-25 and 7.4% in the quarter ending March, according to data released by the National Statistical Office (NSO) on Friday that underlines the nation's position as the fastest growing economy in the world. In current dollar terms, India's gross domestic product (GDP) is now $3.9 trillion compared to $3.6 trillion in 2023-24, according to an estimate by research agency Crisil after the data was released. According to the International Monetary Fund, India is on pace to become the fourth largest economy in the world with GDP of $4.3 trillion in 2025-26. Pointing out that India is the fastest growing economy for the fourth year in a row, finance minister Nirmala Sitharaman said that all the engines of growth– manufacturing, services and agriculture-- have propelled the Indian economy in the January-March quarter and indicated that the prospects of a good monsoo would maintain the momentum in the current fiscal year. 'India is sustaining this growth as the fastest growing economy now for the fourth year continuously without a break, thanks to the work of our small, medium and large industries, which are coming in and making sure our manufacturing capacity, our service capacity, are all intact. And agriculture has also sustained us,' she said at an awards function in the Capital . The data shows that the Indian economy has lost momentum compared to fiscal year 2023-24 when the GDP growth was 9.2%. To be sure, that growth was largely a reflection of pent-up demand after the Covid pandemic, a fact also highlighted by Sitharaman in her speech. But private investment, required to sustain growth beyond 7%, continues to remain sluggish. Growth for the fiscal and the quarter was higher than most analysts' estimates. A Bloomberg poll of economists had expected annual GDP growth of 6.3% and 6.8% for the quarter. The primary reason for the divergence between analyst estimates and the actual numbers is the wide gap between GDP (7.4%) and Gross Value Added (6.8%) growth in the March quarter. GDP is the sum of GVA and indirect taxes minus subsidies. Sajjid Chinoy, Chief India Economist at J.P. Morgan, who had projected a 6.5% and 7.5% growth number for the fiscal year and the March quarter, that were closer to the actual numbers, had expected this variance due to a fall in subsidies. 'But, as with several GDP prints in recent years, the (GDP versus GVA) outturn will need careful interpretation, because it will be driven substantially by a sharp fall in subsidy payouts in the last quarter, compared to the previous year', Chinoy had written in a GDP preview research note released on May 28. To be sure, the March quarter GDP numbers are not surprising when seen in the context that even the second advance estimate of GDP released by the NSO in February had assumed a growth rate of 7.6% in the March quarter while projecting a 6.5% annual growth rate. While fiscal consolidation has played a role in the large gap between GDP and GVA growth in the March quarter, its impact was less than in 2023-24. India's fiscal deficit fell sharply from 5.6% in 2023-24 to 4.8% in 2024-25, according to the provisional data released on Friday. But it is expected fall only 40 basis points to 4.4% in 2025-26. With the larger economic situation largely unchanged between the second advance estimates released in February 2025 and provisional data released on Friday, what are the key takeaways from the disaggregated GDP data? Private consumption seems to have regained its primacy as the growth driver while capital formation and government spending seem to be losing steam. The latter is to be expected as government capex growth has already peaked and fiscal consolidation is weighing on government's revenue expenditure. Government Final Consumption Expenditure and Gross Fixed Capital Formation lost momentum growing at 2.3% and 7.1% in 2024-25 compared to 8.1% and 8.8% in 2023-24. Private Final Consumption Expenditure grew at 7.2% in 2024-25 compared to 5.6% in 2023-24. 'Consumption growth outpaced GDP, primarily driven by robust rural demand supported by a strong agricultural sector…We anticipate that consumption will remain robust in the current fiscal year, buoyed by favourable domestic factors such as normal monsoon patterns, the transmission of interest rate cuts by the Reserve Bank of India (RBI), and middle-class income tax benefits', Dharmakirti Joshi, Chief Economist, Crisil, said in a note. At the sectoral level, the growth slowdown was broad based in every sector except in agriculture which grew at 4.6% in 2024-25 compared to 2.7% in 2023-24. The slowdown was the sharpest in manufacturing, where the growth rate fell from 12.3% in 2023-24 to just 4.5%. It is important to underline that part of the slowdown in manufacturing is driven by indexation (accounting for inflation) issues. This is borne out from the fact that nominal growth in manufacturing in 2023-24 (10.9%) was lower than real growth (minus inflation) and it has gone back to being higher than real growth (6.3%) in 2024-25. Services, which account for more than half of GVA grew at 7.2% in 2024-25 compared to 9% in 2023-24. Its private components, namely, Trade, Hotels, Transport, Communication & Services related to Broadcasting, and Financial, Real Estate & Professional Services lost momentum. Public Administration, Defence & Other Services saw a small uptick in growth. RBI's Monetary Policy Committee (MPC) has projected a GDP growth of 6.5% for 2025-26 in April, which was a 20-basis point downgrade from the projection made in February 2025 on account of increased downside risks from the global economy. 'Government retains its outlook on FY26 growth at 6.3-6.8%, with private consumption, especially the rural rebound, and resilient services exports as the key drivers,' Chief Economic Advisor V Anantha Nageswaran said while reacting to the GDP numbers. 'Multiple agencies project India's growth to be in the range of 6.3 – 6.7 per cent in FY26. Amidst global uncertainty, global growth for 2025 and 2026 is likely to slow,' he added.
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Business Standard
3 days ago
- Business
- Business Standard
Shrimp export volume growth to stay flat in FY26 due to US tariffs: Crisil
Indian shrimp exporters are expected to register a marginal 2–3 per cent rise in revenues in FY26, driven by higher prices and currency gains, according to a Crisil Ratings report. However, export volumes are likely to remain flat due to anticipated US tariff hikes and weak demand in key markets amid sluggish economic growth. Margins under pressure despite value addition efforts The Crisil report notes that operating margins will remain under strain, as the increased tariff burden will be passed on only gradually and partially. While exporters are exploring new markets and enhancing value-added products, these initiatives may take time to improve profitability. The report highlights that extended working capital cycles will increase exporters' dependence on external borrowings, impacting credit profiles. Nevertheless, capital structures are expected to remain stable. Market share and demand outlook Crisil's analysis of 63 shrimp exporters, representing around 55 per cent of the industry's revenue, supports this outlook. Global shrimp demand has stayed steady at roughly 4 million tonnes over recent years and is expected to remain subdued this fiscal year due to weak economic growth in major importing regions such as the US, EU and China. India holds about a fifth of the global shrimp market, with domestic production forecast to stay flat at 1.2 million tonnes. Low global prices have discouraged farming expansion this year. US tariffs and competition from South America India exports nearly 48 per cent of its shrimp to the US. Although the US has temporarily paused reciprocal tariffs, these reliefs primarily benefit South American exporters such as Ecuador, the world's largest shrimp supplier. Indian exporters are expected to face stronger competition in low-value-added segments such as raw, frozen and peeled frozen shrimp, which offer lower profitability. Himank Sharma, director at Crisil Ratings, said, 'Last fiscal was challenging for Indian shrimp exporters due to price pressures and US countervailing duties. With the US imposing reciprocal tariffs this year and sluggish demand from other key markets, revenue growth will likely remain in low single digits despite improved realisations.' Competitive edge in value-added products Low-value-added shrimp exports are expected to face rising challenges. However, Indian exporters maintain a competitive advantage in value-added products compared to Asian peers such as China, Vietnam, Thailand and Indonesia, who control over a third of the US market despite higher tariffs. Value-added products currently account for about 10 per cent of India's shrimp exports, but this share could rise to 15–17 per cent over the next 2–3 years, benefiting from tariff advantages, according to the report. Despite growth in value-added segments, limited volume expansion and tariff pressures are expected to reduce profitability by 50–60 basis points this fiscal year, bringing margins down to around 6.5–6.7 per cent, after a 70 basis point decline last year. Profitability and credit profile outlook Working capital cycles may lengthen as exporters face higher inventories and slower collections amid weak demand. This will lead to increased working capital borrowing alongside long-term debt for capital expenditure on value-added products, while capacity utilisation remains moderate. Nagarjun Alaparthi, associate director at Crisil Ratings, said, 'Debt levels will rise but capital structures will stay healthy. However, lower profits and higher interest costs will reduce interest coverage ratios. Gearing is expected to remain comfortable at 0.5 times by March 2026, slightly up from 0.46 times in March 2025, while interest coverage may ease to around 4.3 times in fiscal 2026 from 4.8 times last year, reflecting margin pressure.' The final impact of reciprocal tariffs, revisions to US anti-dumping and countervailing duties, their effects on demand, and forex fluctuations remain critical factors to monitor for the sector's outlook.
Hans India
3 days ago
- Business
- Hans India
Indian shrimp exporters to see 2-3 pc uptick in revenues this fiscal
New Delhi: Indian shrimp exporters will see a marginal 2-3 per cent uptick in revenues this fiscal (FY26) on improved realisations stemming from rising prices and currency gains, a Crisil report said on Friday. Though the low-value-added shrimp exports will likely see increased pressures, Indian exporters have a competitive advantage in the value-added segment over other Asian peers, such as China, Vietnam, Thailand and Indonesia, which face higher tariffs but enjoy over one-third market share in the US. However, export volumes will be flat because of higher tariffs expected to be imposed by the US and subdued demand in key importer nations as sluggish economic growth affects disposable incomes. India exports close to 48 per cent of its produce to the US. The reciprocal tariffs announced by the US, though paused for the time being, will benefit south American exporters such as Ecuador, the largest shrimp exporter in the world. Indian exporters will face higher competition from them in the raw frozen and peeled frozen categories, which have low value addition and are less remunerative. According to the report, operating margins will be under pressure because the tariff burden will be passed on only partially and gradually, as seen in the past, even as exporters scout for other markets and improve offerings through value addition. Credit profiles will continue to face challenges as elongated working capital cycles induce further recourse to credit lines that, in turn, would moderate debt protection metrics. Capital structures are expected to remain comfortable, however, the report mentioned. 'Last fiscal, the waters turned choppy for Indian shrimp exporters as prices and competition increased after a countervailing duty of 5.77 per cent was slapped by the US,' said Himank Sharma, Director, Crisil Ratings. This fiscal, with the US imposing reciprocal tariffs -- even as other major markets such as the European Union and China see sluggish economic activity -- exporters will likely see flattish demand. 'But as realisations tick up, overall growth in revenues should be in low single digit this fiscal,' Sharma added. Global shrimp demand has flatlined at 4 million tonne (MT) over the past few fiscals and will likely remain subdued this fiscal, too. Indian exporters have around a fifth of the global market share as of now, while domestic production is seen flat at 1.2 MT due to non-remunerative global prices impacting shrimp culture and growth, this fiscal. Nagarjun Alaparthi, Associate Director, Crisil Ratings, said that 'Despite rising debt, the capital structures of shrimp exporters will remain healthy'.
Time of India
4 days ago
- Business
- Time of India
Crisil pegs India's GDP growth at 6.5 pc in fiscal 2026
New Delhi: Crisil on Thursday forecast India's gross domestic product (GDP) growth at 6.5 per cent in fiscal 2026, adding that improving domestic consumption is likely to support industrial activity. "We expect domestic consumption demand to improve driven by healthy agricultural growth, easing inflation supporting discretionary spend, rate cuts by the Reserve Bank of India (RBI)'s Monetary Policy Committee (MPC) and income tax relief this fiscal," the global ratings agency said in a note. The India Meteorological Department expects an above-normal monsoon this fiscal (106 per cent of long-period average), which bodes well for agricultural production and inflation. Furthermore, according to Crisil Intelligence, crude oil prices are expected to remain subdued this fiscal, averaging USD 65-USD 70 per barrel compared with an average of USD 78.8 per barrel in the prevoius fiscal. "We expect the MPC to cut the repo rate by another 50 basis points (bps) this fiscal, after 50 bps cuts until April. Bank lending rates have begun easing, which should support domestic demand," according to the note. Overall, Crisil forecasts gross domestic product (GDP) growth at 6.5 per cent in fiscal 2026, with external headwinds posing downside risks. In the month of significant tariff announcements by the United States (US), IIP growth slowed in April. Production slowed in certain export-oriented sectors (including pharmaceuticals and chemicals), while front-loading exports benefitted others (machinery and readymade garments). Among consumer goods, durables performed better than non-durables. Industrial goods recorded a mixed performance, with output growth in capital goods picked up sharply along with a mild acceleration in intermediate goods. Performance of export-oriented sectors was mixed in April, despite the sharp improvement in merchandise exports (9.0 per cent in April in nominal terms vs 0.7 per cent in the previous month). There was also a 6.4 per cent increase in the production of consumer durables such as electronic goods, refrigerators, and TVs during November, reflecting the higher consumer demand for these items amid rising incomes, according to data released by the Ministry of Statistics. The infrastructure sector clocked a growth of 4 per cent on the back of big-ticket government projects being implemented in the highways, railways and ports sectors.
