Corporate Grapevine     

Published: July 31, 2024
Updated: July 31, 2024

India Inc ‘unfriended’ by Modi.3 budget

Even as the general elections in India are now over, India Inc is worried about the second half of calendar 2024 which is rife with rising global uncertainties amid the approaching Presidential election in the US, the unclear direction of monetary policy worldwide, and heterogenous growth risks.

n the absence of political uncertainty, India remains a positive outlier, given its macro and financial stability, and analysts expect FY25E growth at 7.1% for India, factoring in one rate cut by the RBI Monetary Policy Committee (MPC) by December. Analysts expect two rate cuts by the US Federal Reserve starting September 2024, a probable rate hike by the Bank of Japan and continued accommodative stance by the PBOC (People’s Bank of China). The 10-year US bonds’ yields may oscillate within 4-4.4% for the rest of CY24 as fiscal concerns remain alive. Amid near-term risks, analysts are expecting the dollar vs the rupee at 82.8 (March 2025E) as against the earlier projection of 82-82.5.

Analysts say that given macro-economic stability, political continuity, deleveraging of corporate balance sheets and continued focus on government capex, they see India’s growth as a ‘standout’ in this and the next year. Even as consumption demand remains sluggish, efforts to boost employment and tax changes in the new tax regime should gradually give traction to private demand. But as the budget failed to give enough stimulus for corporate India to start investing, not many companies are expected to invest in the near future.