Indian economy is growing, but the sequential quarter growth is declining: P Chidambaram

Former finance minister and senior Congress leader, P Chidambaram, on Saturday said that Indian economy is growing but it is losing steam. Breaking down the GDP growth math, he said there is downward trend where the Q1 GDP growth was 13.5 per cent, Q2 it was 6.3 per cent, 4.4 per cent in Q3, and Q4 he predicted 4.1 per cent to 4.3 per cent.      

"We are growing, but the sequential quarter growth is declining. This means the Indian economy is losing steam," Chidambaram said at India Today Conclave 2023.

Neelkanth Mishra, equity strategist, Credit Suisse and advisor to Prime Minister Narendra Modi, on his part said that quarterly GDP numbers are inaccurate as they keep getting revised.  

He added that India’s growth is significant as there are several countries that have gone into bankruptcy and there is recession fears globally. “I feel India is aiming at macroeconomic stability because economics is not about scoring a run or a six on every ball. It's about being able to stitch together a long inning and create a larger income range for its citizens,” Mishra said.

He added that it is important to maintain stable growth in India in a bid to attract foreign companies and foreign investment in the economy.  

Recently, Crisil Ratings said the country’s gross domestic product (GDP) is likely to grow at 6 per cent in 2024 fiscal amid a challenging global macroeconomic environment. This growth rate is lower than the Reserve Bank of India’s forecast of 6.4 per cent growth and the Economic Survey’s projection of 6.5 per cent.

The agency has attributed three reasons for this 100-basis point deceleration in the FY24 GDP estimate.

First, the slowing world economy due to aggressive rate hikes by major central banks will create downside risks to the country’s growth. Domestic demand, therefore, will have to do the heavy lifting next fiscal.

Second, the full impact of rate hikes by the RBI will be visible in the next fiscal as monetary moves typically affect growth with a lag of 3-4 quarters.

And third, the tricky geopolitical situation implies that the country will continue to reckon with volatility in crude and commodity prices.

Chidambaram also alleged that the Modi-led government has not paid attention towards the poor, and that the poor are not at the centre of its policies and programmes.
“The Modi government is showcasing the top 500 companies and FDI, which are affecting only the top 70 crore people of the country. If we do so the economy will look shiny. But what about the bottom 70 crore,” he said.
He added the pandemic years (2020-22), the persisting inflation (CPI inflation 6.52 per cent) and unemployment (Urban 8.1 per cent, Rural 7.6 per cent) have only made the situation worse.  
"The government was wrong in not doing a fiscal stimulus. That is why 3 crore people had to migrate from other cities back to Uttar Pradesh and Bihar during the Covid-19 pandemic," P Chidambaram said on Saturday.
 Replying to him, Mishra said: “I feel Chidabaram was right that during the pandemic, the poor suffered a lot. But to get them back in a sustainable way is to let the growth and savings happen.”

Also read: P Chidambaram says Modi govt did a good job in maintaining fiscal deficit

Also read: S Jaishankar’s plain speak to China: ‘You can't violate agreements and then expect normalcy’

Also read: Adani-Hindenburg row: 'No one should be spared if found guilty,' says Amit Shah