Mumbai: Japanese brokerage Nomura on Monday said the Indian economy has entered a phase of “cyclical slowdown” and the Reserve Bank’s estimate of 7.2 per cent GDP growth is “overly optimistic”. The broker said it sees “increasing downside risks” to its GDP growth estimates of 6.7 percent in current FY25 and 6.8 percent in FY2026.
“We believe that the Indian economy has entered a cyclical slowdown. Coincident and leading growth indicators point to further moderation in GDP growth and the RBI’s forecast of 7.2 per cent for FY25 is overly optimistic,” the broker said in a note.
The RBI earlier this month maintained its FY25 growth estimate at 7.2 percent, even as some observers came out with lower figures.
Nomura said urban consumption indicators have weakened recently, pointing to the decline in passenger car sales, the moderation of passenger traffic by airlines and FMCG companies signaling weak urban demand.
“We believe this weakness in urban demand is likely to persist,” the brokerage said.
Stating that companies are cutting back on salary expenditure, the brokerage said real salary and wage expenditure of listed companies fell by 0.8 percent in the September quarter, adjusted for inflation, based on the figures released so far.
The same was 1.2 per cent in the June quarter, 2.5 per cent in FY24 and 10.8 per cent in FY23, the broker said, adding that this likely reflects a mix of weaker nominal salary growth and a leaner workforce.
“The post-pandemic surge in pent-up demand has ebbed, monetary policy is tight and the RBI’s macro-prudential crackdown on unsecured, frothy credit is reflected in the slowdown in personal lending and lending growth by non-banking finance companies ,” said the broker. said.
