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Monday, August 11, 2025
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MacroSutra

India’s Q2 growth likely to be weaker. Soft urban demand & credit growth, patchy manufacturing to blame

Sales revenue of manufacturing firms saw weak growth in September quarter. Rural demand indicators performed better than urban. Capex must rapidly pick up in 2nd half of the fiscal.

Maharashtra & Jharkhand’s long list of poll promises reliant on them getting their fiscal maths right

Maharashtra has headroom to spend, but committed expenditure is expected to rise. In Jharkhand, optimistic revenue projections may limit the state govt’s ability to fulfill the promises.

Recession has been averted, inflation is down. But latest IMF reports sound alarm on global debt

For India, IMF has maintained its growth estimate at 7% for 2024-25, followed by 6.5 per cent next year. Slowdown from 8.2% growth in 2023 is attributed to exhaustion of pent-up demand.

AI is revolutionising banking & finance, but over-reliance, misuse may pose financial stability risks

If many market participants tend to use similar models, correlated risk & herding behaviour can amplify stability risks. Regulatory guardrails are important.

The global sovereign ratings space needs revamp. Indian agency’s entry a welcome change

Rating analyses by global agencies, like Fitch, S&P & Moody’s, have faced flak for opacity of methods, over-reliance on perception. The space often witnesses ‘convergence’ of methodologies.

New Haryana govt has to choose between raising taxes & cutting committed spends to fund poll promises

Haryana has seen good growth, keeping its deficit within limit in recent years. Inclusive development, fixing unemployment, bridging rural-urban inflation gap should be new govt’s priorities.

With RBI’s new Monetary Policy Committee in place, a look at challenges that await its members now

Israel-Iran conflict, along with outlook on inflation & growth in an uncertain global environment will be key areas of concerns for new members of the reconstituted committee.

Low demand, costly logistics, China’s deflation hurting India’s goods exports. Services may give cushion

India’s goods exports contracted by 9.3 percent to USD 34.71 billion in August, while the import bill rose by 3.3 percent to USD 64.36...

US Fed’s rate cut is likely good news for India. It may also help temper RBI’s stance

US & Indian policy rates have seen similar trajectory. With Fed’s rate cuts, difference between interest rates in India & US may widen, leading to foreign capital inflow & stronger Rupee.

Bad economics of freebies is triggering financial crises for some states. Fiscal discipline is key

Freebies promised during polls, subsidies, swelling wage & pension bills are adding to the debt pile of states like Himachal Pradesh & Punjab. Revenue expenditure rationalisation can help.

On Camera

Rahul’s ‘vote chori’ attack on EC is a political dead-end. He still has a point

The ECI needs to respond to Rahul Gandhi’s accusations professionally and transparently. Else, it will end up giving him the ammunition he is desperately seeking.

How mining, manufacturing & power sectors weighed on India’s industrial output since January 2024

India’s industrial output growth saw a 10-month low in June, with Index of Industrial Production (IIP) growing by mere 1.5% as against 1.9% in May 2025.

‘Next war may come sooner than expected, will require whole-of-nation approach’—Army chief

Gen Dwivedi framed Op Sindoor not just as retaliation to Pahalgam, but as demonstration of India’s capability to fight multi-domain conflicts with integration between services & agencies.

Modi’s ready to risk it all for farmers. Farm reform can answer Trump with new Green Revolution

Standing up to America is usually not a personal risk for a leader in India. Any suggestions of foreign pressure unites India behind who they see as leading them in that fight.