Nominal GDP growth the biggest driver for slowdown worries in Indian economy: HSBC
CNBC-TV18 spoke to Pranjul Bhandari, Chief India Economist at HSBC, and Devendra Pant, Chief Economist of India Ratings, about the Indian economy, its macro data and what is the forecast for growth in the year ahead.
There is a gentle slowdown in the economy and tax growth looked weak in November. Going ahead, there could be some slowdown as well, and the biggest driver for the same would be the nominal GDP growth, which too is slowing, said Pranjul Bhandari, chief India economist at HSBC.
“It has already slowed from 27 percent in the first quarter to 16 percent in the second quarter and is likely to slow further towards a 10 percent handle. And that going to be the key driver of tax growth being a little softer than we saw a couple of months ago,” she said.
Some of the macro data for November last year was a bit worrying. Gross tax collections dipped in November 2022 compared to the previous year and were pulled down by a fall in corporate taxes — corporate paid less tax in November 2022 versus November 2021. The core sector data also showed that six out of eight sectors contracted compared to the October levels, while coal and cement did exceptionally well.
In an interview with CNBC-TV18, Pranjul Bhandari, Chief India Economist at HSBC, and Devendra Pant, Chief Economist of India Ratings discussed at length whether these are one-offs and what is the forecast for growth in the year ahead.
Pant said that the real growth in the second half of the year would be lower than the first half along with inflation. “We have to be very careful because in the second half, both the real growth is going to be lower than the first half and inflation is going to be lower than the first half as well. So, it’s unlikely that we will see 15 percent growth in gross tax revenue in the rest of the period,” he said.
Bhandari also added that the government had a Budget estimate of meeting the fiscal deficit target of 6.4 percent this year and was on track regarding the same.
For the entire discussion, watch the accompanying video
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