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Business Standard
10 hours ago
- Business
- Business Standard
India's GDP expands 7.4% in Q4 to meet annual growth estimates of 6.5%
India's economic growth rebounded to a four-quarter high of 7.4 per cent in the January-March period of 2024-25 (FY25), aligning with the annual growth estimate of 6.5 per cent, according to provisional estimates of gross domestic product (GDP) released by the National Statistics Office (NSO). The final-quarter performance outpaced expectations, beating both the Reserve Bank of India's (RBI's) forecast of 7.2 per cent and a Reuters poll of economists that had projected 6.7 per cent growth. Nominal GDP for the full financial year rose 9.8 per cent to ₹330.7 trillion, slightly above the ₹324.1 trillion estimated in the Union Budget. This boost helped the government perform marginally better on fiscal deficit, which stood at 4.77 per cent of GDP in FY25, against the revised estimate of 4.84 per cent. Gross value added (GVA) grew at a slower rate than GDP — at 6.8 per cent — in the March quarter, widening the gap between GDP and GVA due to a surge in net taxes (taxes minus subsidies), as government subsidy payouts contracted during the period. Now, economists believe uncertainty because of the tariff war triggered by US President Donald Trump's policies and weak urban demand will shape India's FY26 growth outlook, even as further policy rate cuts by the RBI will support economic recovery. 'The momentum of the economy, which picked up in the fourth quarter, is continuing into the first quarter (of FY26), and that's a good sign,' said V Anantha Nageswaran, chief economic advisor in the finance ministry, while briefing reporters after the release of GDP data. He said high-frequency indicators for April showed strong industrial and commercial activity, and noted that interest rate moderation and recent tax relief measures would likely support consumption. Sakshi Gupta, principal economist at HDFC Bank, noted that while FY25 GDP growth moderated from the previous year's 9.2 per cent, the economy recovered from the sluggish performance in the first half of FY25. 'Average growth for H2 stood at 6.9 per cent versus 6.1 per cent in H1FY25. Growth in the second half was supported by a rise in government capex and construction activity, healthy agriculture performance, and continued momentum in the service sector,' she said. Agriculture grew 5.4 per cent in the March quarter, buoyed by strong reservoir levels and robust rabi sowing. Manufacturing expanded 4.8 per cent — a three-quarter high rate — helped by subdued input cost inflation. The labour-intensive construction sector surged 10.8 per cent, marking a six-quarter high. The services sector expanded 7.3 per cent, with public administration, defence, and other government services leading the way with 8.7 per cent growth. However, segments like trade, transport, communication, and broadcasting recorded slightly slower growth at 6 per cent, down from 6.2 per cent a year earlier, despite the festival boost from events like the Mahakumbh. Financial, real estate, and professional services also slowed to 7.8 per cent from 9 per cent in the same quarter a year ago, possibly reflecting weaker credit and deposit growth. Public sector-driven services remained strong, as both central and state governments pushed to accelerate projects in the final three months of FY25. Net exports turned positive in the March quarter after three consecutive quarters of drag. 'The 8.3 per cent growth in exports in FY25 was mainly due to better performance of services, given that exports of goods were virtually flat,' said Madan Sabnavis, chief economist, Bank of Baroda. On the supply side, private final consumption expenditure growth moderated to 6 per cent, while government consumption spending declined 1.8 per cent, partly due to the high base of a year ago. Investment demand, measured through gross fixed capital formation, rose by 9.4 per cent in the March 2025 quarter. 'The seasonal rush by both Union and state governments to meet their capex targets, along with the private sector (there has been an increase in capex intentions based on the latest NSO survey data), appears to have provided succour to the investment demand in Q4FY25,' said Paras Jasrai, associate director, India Ratings. 'The pickup in investment demand is significant but needs to be watched for a sustainable trend in view of economic uncertainty and weak foreign investment demand as indicated by the net FDI inflow.' Rajani Sinha, chief economist, CareEdge Ratings, said the uneven pace of consumption recovery remained a key 'monitorable'. 'The strength in rural demand is expected to continue on the back of favourable monsoon prospects, healthy reservoir levels and upbeat agricultural output. However, the softness in urban demand continues to be an area of concern,' she said. Sinha also warned that despite the US placing reciprocal tariffs on hold for 90 days, global economic uncertainty was likely to persist. 'This is likely to weigh on the private investment impulses. Given this context, a broadbased and durable consumption recovery, along with a revival in the government's capex, becomes increasingly critical for a revival in the private capex cycle. Factoring all of these aspects, we expect GDP growth in FY26 to be 6.2 per cent,' she added.
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Business Standard
10 hours ago
- Business
- Business Standard
Govt outperforms on fiscal deficit, brings it down to 4.77% of GDP in FY25
The government has marginally improved its fiscal deficit for 2024-25 (FY25), bringing it down to 4.77 per cent over the revised estimate (RE) of 4.84 per cent, according to the data released by the Controller General of Accounts (CGA) on Friday. With the provisional estimate of gross domestic product (GDP) FY25 of ₹330.68 trillion, showing an improvement over the RE of ₹324.11 trillion, the fiscal deficit calculated as percentage of GDP has come down. 'The government's fiscal deficit marginally exceeded the RE for FY25 by ₹77 billion, albeit led by a welcome overshooting in capital expenditure amid a less palatable miss on receipts being largely offset by considerable savings of ₹90,000 crore in revenue expenditure,' said Aditi Nayar, chief economist, Icra. Capital expenditure for FY25, at ₹10.5 trillion, stood at 103.3 per cent of the RE for the year, the CGA data showed. In line with its commitment to narrow the fiscal deficit to 4.5 per cent by FY26, the government had set the fiscal deficit target for this financial year at 4.4 per cent. Experts say the upward revision in the FY25 nominal GDP number augurs well for meeting the deficit and debt for FY26. The bumper dividend of ₹2.69 trillion announced by the Reserve Bank of India (RBI) is expected to ease the fiscal situation and help bring down the fiscal deficit in FY26 even further. The Union Budget for 2025-26 has projected a dividend income of ₹2.56 trillion from the RBI and public-sector financial institutions. 'India's medium-term growth prospects appear to be robust with sound fiscal management. Emphasis on government capital expenditure appears to be leading the growth story from the policy side, with healthy supporting growth in private final consumption expenditure,' said D K Srivastava, chief policy advisor, EY India. Net tax revenue, according to the CGA data, fell short of the RE at ₹24.99 trillion -- at 97.7 per cent. Non-tax receipts, however, overshot the RE at 101.2 per cent at ₹5.8 trillion. Union Finance Minister Nirmala Sitharaman in her FY26 Budget announced a new glide path with the debt-to-GDP ratio as the fiscal anchor, moving away from the current practice of targeting fiscal deficit. The government now targets bringing down the debt-to-GDP ratio to 50 per cent by FY31 with a one percentage point deviation on either side.
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Business Standard
12 hours ago
- Business
- Business Standard
India's GDP expands 7.4% in Q4 to meet FY25 growth estimates of 6.5%
Nominal GDP for FY25 grew at single digit at 9.8 per cent to Rs 330.7 trillion, slightly higher than Rs 324.1 trillion factored in the Budget Premium New Delhi Listen to This Article India's economic growth rebounded to a four-quarter high of 7.4 per cent in the January-March period of 2024-25 (FY25), aligning with the annual growth estimate of 6.5 per cent, according to provisional estimates of gross domestic product (GDP) released by the National Statistics Office (NSO). The final-quarter performance outpaced expectations, beating both the Reserve Bank of India's (RBI's) forecast of 7.2 per cent and a Reuters poll of economists that had projected 6.7 per cent growth. Nominal GDP for the full financial year rose 9.8 per cent to ₹330.7 trillion, slightly above the ₹324.1 trillion estimated in the Union Budget.
Time of India
a day ago
- Business
- Time of India
Bullish on private banks; 3 stocks to bet on: Rajat Sharma
Rajat Sharma , Founder & CEO, Sana Securities , says he favours private banking, highlighting HDFC Bank , Axis Bank , and Federal Bank . These banks benefit from non-interest income. Sharma is also optimistic about the IT sector, noting attractive valuations for companies like Infosys and TCS . Increased spending in the US will benefit Indian IT firms. He believes these tech giants will remain core portfolio components. Which themes are looking good to you right now? What are you bullish on? Rajat Sharma: Yes, in terms of themes, clearly with it is almost a given that next week there will be a rate cut in the MPC's meeting, so banking of course is one sector that I have been bullish on for a very long time because private banking in particular has already anyways been trading fairly cheap compared to a lot of the other pockets of the market. And with RBI's meeting next week with where inflation is, it is a given that there would be a 25 bps rate cut, so that would be an additional benefit which the banking sector will get. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like War Thunder - Register now for free and play against over 75 Million real Players War Thunder Play Now Undo Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. But the major reason why I am bullish on banking, in particular private banking, is because the Union Budget that we had this year which increased the tax slabs and made income up to Rs 12 lakh tax-free, the benefit of that you will start seeing from the FY26 which is the financial year which has just started. So, while a lot of people are talking about consumption spending going up and discretionary spending going up, a clear beneficiary, the first beneficiary and the biggest beneficiary of this new tax policy would be banking because that is where money will come in the first place. If you talk about things that are working for the bank, the tax policies, the new tax structure is really favourable, repo rate will be revised to 5.75% so more money in the hands of the banks and over the last two-three years also tax policies have been changed in such a way that a lot of the advantage is given to mutual funds where people were taking their money from banks, particularly debt mutual funds which got indexation benefit and 20% tax post that – has been taken away. Gradually, a lot of policies have started favouring banking and I like private banking. The top picks I have in that sector would be clearly HDFC Bank and Axis Bank which also by the way get a lot of their revenue from non-interest income, another area of banking which I am really positive on, HDFC and Axis both get about 18% to 19% of their total income from fee-based income distribution of third-party products, mutual funds, the AMC business, and the other bank I am bullish on is Federal Bank. Live Events You Might Also Like: CA Rudramurthy BV on crucial Nifty levels to watch; 2 stocks to buy So, these three banks and clearly a week before the MPC meeting banking is definitely one sector which I am really bullish on and bullish on for the next three, four, five years kind of perspective. India still remains an underbanked country. What is your view on the IT sector? Do you continue to be optimistic on that one? And also, how do you see Indian IT companies navigating the whole AI transition play? Rajat Sharma: If you look at the history of the Indian IT sector , it always trails the US IT. Whatever happens there both in terms of development and adoption to new technology whether it was digital around a decade back or it is AI now and also in terms of earnings and valuations, so while US tech companies have run up a lot in the last one year or so, Indian tech has been struggling mainly because there was a negative sentiment around Indian IT companies, still relying on cloud and digital and basically the legacy business of programming and not really adopting to the AI revolution. In fact, because of AI, there were a lot of job cuts which we saw at Infosys and stuff. So, my view is that they got affected because there was a curtailed spending in the US on fears of a recession in US markets on account of Trump's tariffs policies or whatever. Now US and European companies have started spending more, a trend which we have started seeing and given where Indian IT companies are, the large IT companies, Infosys and TCS and Coforge and Mphasis a lot of these companies will benefit from increased spending in the US. I was looking at Infosys, the dividend yield is almost close to 2.75%. For tech companies to be trading at 22-24 kind of price to earnings multiple is a very attractive level to buy. These companies are not going anywhere. They are, were, and will always be part of the core portfolio in India. They will be part of Nifty for all times to come, as would a lot of these large tech companies. So, this is one sector which from a valuation perspective is really attractive and things should turn around for them given that the whole tariff business is behind us and there is no fear of a recession in the US as much as there was some time back. 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Economic Times
a day ago
- Business
- Economic Times
Bullish on private banks; 3 stocks to bet on: Rajat Sharma
Synopsis Rajat Sharma is bullish on private banking, anticipating benefits from new tax policies and potential rate cuts, favoring HDFC Bank, Axis Bank, and Federal Bank. He's also optimistic about the IT sector, citing attractive valuations for companies like Infosys and TCS, expecting increased US spending to boost their performance. He believes these tech giants will remain core portfolio components. Rajat Sharma, Founder & CEO, Sana Securities, says he favours private banking, highlighting HDFC Bank, Axis Bank, and Federal Bank. These banks benefit from non-interest income. Sharma is also optimistic about the IT sector, noting attractive valuations for companies like Infosys and TCS. Increased spending in the US will benefit Indian IT firms. He believes these tech giants will remain core portfolio components. ADVERTISEMENT Which themes are looking good to you right now? What are you bullish on? Rajat Sharma: Yes, in terms of themes, clearly with it is almost a given that next week there will be a rate cut in the MPC's meeting, so banking of course is one sector that I have been bullish on for a very long time because private banking in particular has already anyways been trading fairly cheap compared to a lot of the other pockets of the market. And with RBI's meeting next week with where inflation is, it is a given that there would be a 25 bps rate cut, so that would be an additional benefit which the banking sector will get. There is optimism over earnings; only banks have disappointed: Nitin Bhasin But the major reason why I am bullish on banking, in particular private banking, is because the Union Budget that we had this year which increased the tax slabs and made income up to Rs 12 lakh tax-free, the benefit of that you will start seeing from the FY26 which is the financial year which has just started. So, while a lot of people are talking about consumption spending going up and discretionary spending going up, a clear beneficiary, the first beneficiary and the biggest beneficiary of this new tax policy would be banking because that is where money will come in the first place. CA Rudramurthy BV on crucial Nifty levels to watch; 2 stocks to buy If you talk about things that are working for the bank, the tax policies, the new tax structure is really favourable, repo rate will be revised to 5.75% so more money in the hands of the banks and over the last two-three years also tax policies have been changed in such a way that a lot of the advantage is given to mutual funds where people were taking their money from banks, particularly debt mutual funds which got indexation benefit and 20% tax post that – has been taken away. Gradually, a lot of policies have started favouring banking and I like private banking. The top picks I have in that sector would be clearly HDFC Bank and Axis Bank which also by the way get a lot of their revenue from non-interest income, another area of banking which I am really positive on, HDFC and Axis both get about 18% to 19% of their total income from fee-based income distribution of third-party products, mutual funds, the AMC business, and the other bank I am bullish on is Federal Bank. So, these three banks and clearly a week before the MPC meeting banking is definitely one sector which I am really bullish on and bullish on for the next three, four, five years kind of perspective. India still remains an underbanked country. ADVERTISEMENT What is your view on the IT sector? Do you continue to be optimistic on that one? And also, how do you see Indian IT companies navigating the whole AI transition play? Rajat Sharma: If you look at the history of the Indian IT sector, it always trails the US IT. Whatever happens there both in terms of development and adoption to new technology whether it was digital around a decade back or it is AI now and also in terms of earnings and valuations, so while US tech companies have run up a lot in the last one year or so, Indian tech has been struggling mainly because there was a negative sentiment around Indian IT companies, still relying on cloud and digital and basically the legacy business of programming and not really adopting to the AI revolution. In fact, because of AI, there were a lot of job cuts which we saw at Infosys and stuff. So, my view is that they got affected because there was a curtailed spending in the US on fears of a recession in US markets on account of Trump's tariffs policies or whatever. Now US and European companies have started spending more, a trend which we have started seeing and given where Indian IT companies are, the large IT companies, Infosys and TCS and Coforge and Mphasis a lot of these companies will benefit from increased spending in the US. ADVERTISEMENT I was looking at Infosys, the dividend yield is almost close to 2.75%. For tech companies to be trading at 22-24 kind of price to earnings multiple is a very attractive level to buy. These companies are not going anywhere. They are, were, and will always be part of the core portfolio in India. They will be part of Nifty for all times to come, as would a lot of these large tech companies. So, this is one sector which from a valuation perspective is really attractive and things should turn around for them given that the whole tariff business is behind us and there is no fear of a recession in the US as much as there was some time back. 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