The Core
Posts
India’s GDP Woes

India’s GDP Woes

January 09, 2025 • Estimated Reading Time: 9 minutes

In partnership with

Good morning. In today’s edition — DK Joshi, chief economist at Crisil Ratings on India’s growth slowdown estimates; are small and mid-cap stocks or sectors being perceived as risky?; and Ola Electric under the scanner again

CORE CONVERSATIONS

Govt Must Keep Pedal Pressed On Public Expenditure: Economist DK Joshi On Economic Slowdown

Recently several organisations have lowered their estimates of India’s gross domestic product (GDP) for the financial year of 2024-25. While the Ministry of Statistics put it at 6.4%, the State Bank of India on Wednesday put it at 6.3%.

“A gradual slowdown was expected, but it turned out to be sharper than expected earlier because of the second-quarter surprise,” DK Joshi, Chief Economist at Crisil Ratings told The Core Report podcast.

A formal government release said despite a dull first half of the financial year 2025, an uptick in agricultural and industrial activity was expected, along with resilient rural demand in the second half to keep India on a growth path towards achieving a 6.4-6.8% expansion by the end of the financial year.

"The slowdown is in investments. We all know that investments are being led by government investments and also by household investments... we know that government investment did slow down in the first half of the year," said Joshi.

It is unlikely the last quarter could significantly compensate to improve this number. However, could there be a factor that might positively influence the GDP estimates?

PODCAST

On Episode 476 of The Core Report, financial journalist Govindraj Ethiraj talks to Bjarne Schieldrop, Chief Commodity Analyst at Oslo headquartered SEB as well as Pratik Shah, Managing Director for India and SAARC at F5.

The stock markets fight back a fresh bout of selling.
Indians love gold but did not import as much as we thought last month as the Government revises figures.
ONGC ties up with BP to boost oil drilling output, the IEW segment.
Will new tax laws be simpler?
How security threats for APIs, which link almost all our financial transactions are rising?

Click to listen to the full episode.

MESSAGE FROM INDIA ENERGY WEEK 2025

India Energy Week 2025 will bring together global energy leaders to explore pressing challenges, showcase India's energy transition, and highlight innovative solutions.

The conference is scheduled from February 11-14, 2025, in New Delhi.

CO:RELATION

Reality Strikes

The stock market's 'risk off' strategy kicked off at the start of the new year. Foreigners have continued their relentless selloff in India and other markets as US bond markets show rising yields. Investors who think they can make risk-free returns through sovereign bonds tend to book profits in other asset classes. Among things that get affected are small and mid-cap stocks or sectors perceived as 'risky'. Some mid-tier real estate companies like Sobha, Purvankara and others have had a dream run in 2024. However, the market momentum is against companies that have reported better numbers. Shares of Sobha slumped over 5% on Wednesday despite a better performance in terms of residential space sold in the quarter to December 2024 than the preceding quarter. Sobha's average price realisation per square foot is the strongest in three quarters. The quarterly business update credited the development of global capability centres in major cities like Bengaluru as a key driver for residential property uptick. The company has warned about an increase in the supply of residential apartments in key markets.

CORE NUMBER

1,824.13 billion kilowatt-hours (kWh)

⚡This was India's annual power output in 2024, a 5.8% increase. Despite the rise, this has been the slowest annual growth since the pandemic, reflecting weaker demand. Growth in electricity generation averaged just 2.3% in the second half, down sharply from 9.6% in the first. The slowdown persists, with manufacturing activity in December recording its weakest expansion of the year amid softer demand. According to Business Standard, analysts predict 6-7% growth in electricity use in 2025, driven by increased residential demand and industrial recovery. Coal’s share in power generation fell to 74.4%, while renewables hit a record 12.1%. However, solar and wind power growth slowed, and hydropower’s share declined despite a 4% recovery.

FROM THE PERIPHERY

—📉 Ola Electric’s shares fell by 5% to Rs 75.20 on January 8, 2025, following an administrative warning from the Securities and Exchange Board of India (SEBI), the country’s market regulator. SEBI flagged a violation of disclosure norms after Ola Chairman Bhavish Aggarwal announced company-specific plans on social media before filing with stock exchanges. The regulator highlighted breaches of regulations 4(1)(d), 4(1)(f), 4(1)(h), and 30(6) under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which require equal, timely, and cost-efficient access to information for all investors. SEBI warned the company to improve compliance and disclosure practices to avoid further regulatory action.

—💰 Two suppliers of Apple Inc — Foxconn Technology Group and Dixon Technologies India Ltd — have asked the Indian government to pay them subsidies that are still unallocated under the production linked incentive (PLI) scheme, people familiar with the matter told Bloomberg. Under it’s PLI scheme the government has allocated Rs 41,000 crore for manufacturers and some of it is yet to be doled out. The report said that both companies believe that they would be eligible to receive the subsidies under the PLI scheme rules. The requests from the two companies are reportedly under government review.

—⛈️ The central government is planning to mandate domestic airlines to share in-flight weather data with the India Meteorological Department. Such data may help enhance weather forecasting accuracy by utilising data collected during aircraft takeoffs and landings, according to a PTI report. While international airlines are legally obligated to share such data, not all domestic carriers in India currently do so. The proposed mandate now seeks to bridge this gap, to help leverage domestic airlines’ weather data to enhance the accuracy of weather forecasts across India.

— 📝 Will filing income taxes become easier soon? Bloomberg reports that the government plans to simplify India’s tax rules to make things easier for taxpayers. This could come in the form of formulas that may replace income computation structures and reduce the number of forms that need to be submitted, among others. The report said that the proposed changes to the income tax rules may also be released in January for public review.

Looking for unbiased, fact-based news? Join 1440 today.

Upgrade your news intake with 1440! Dive into a daily newsletter trusted by millions for its comprehensive, 5-minute snapshot of the world's happenings. We navigate through over 100 sources to bring you fact-based news on politics, business, and culture—minus the bias and absolutely free.