Delhi- The HSBC Global Research report says that despite the ups and downs, 55 per cent of the Indian economy is growing positively. The report says that after a period of bullish stock market and impressive GDP growth, the Indian economy appears to be entering a more moderate phase. The report, which analyzed 100 growth indicators, said most represented a drop from 65 percent a quarter ago, indicating a cooling in sentiment.
Some sectors are performing better and the long-term outlook is promising, according to the report. However, hinting at a slowdown, he said: “Although a smaller proportion of the economy is growing positively compared to a quarter ago (55 per cent versus 65 per cent), most indicators remain positive. “And while investment activity (especially construction and public sector-driven) is stable, consumption-related activity is slowing.” Acknowledging growth in some sectors, the report said agriculture, which accounts for 15 percent of GDP, has shown signs of improvement, with 60 percent of its indicators showing positive trends. Patchy monsoon rains and heat waves hampered production earlier in the year, but the return to normal temperatures and well-stocked reservoirs have improved prospects, the report said.
It highlights that credit to industries, especially small and medium-sized businesses, is growing rapidly and that a robust digital public infrastructure has increased access to credit. Construction activity has been boosted by ongoing real estate and infrastructure projects, although the pace has slowed slightly. He said India’s export basket has begun to diversify. “The diversification of the export basket towards business services is helping to sustain export growth,” he stated.
The report highlights that consumption has been slow in both rural and urban centers. Manufacturing production related to consumer goods decreased, while production of construction-related goods remained stable. The report says the slowdown in consumer lending, especially unsecured lending, reflects the Reserve Bank of India’s (RBI) efforts to curb excessive credit growth. Mining and utilities also fell sharply, with none of their indicators showing positive growth in the quarter. The normalization of weather conditions has led to a decline in energy demand, which had increased during the summer season earlier this year. Growth in the communications sector has stagnated, possibly due to the impact of rate increases earlier this year. Trade and transportation are lagging in their recovery, but tourism-related activities are growing, driven by pent-up travel demand.
