Auto sales indicate slowing down in urban economy: Chetan Ahya
Chetan Ahya, Chief Asia Economist, Morgan Stanley, says it looks like the urban economy or the urban consumption which had led the initial recovery, is the one which is slowing. We are looking at the auto sales data on a daily basis from the government sources and it is indicating that there has been an improvement in the last few days in terms of auto sales. But urban consumption is the one which has raised some concern because there has been a broad-based slowdown.
While there has been a slowdown over the past few months, all eyes are now on what the festive season could potentially bring. Could we see some sort of a shift or a pickup?
Chetan Ahya: Yes, that is right. We are expecting things to improve over the next few weeks. The main reason why growth was slowing was the government expenditure slowdown and then parallelly we had the excess rainfall in August and at the same time there were some shifts in the calendar effects, particularly the festival and inauspicious time period.
Going ahead, we think the government expenditure will be the biggest driver for overall economic recovery. If we take the budget forecast that the finance minister has shared, the implied growth in capital expenditure in September to March 25 should be around 40% year on year so that should be a big improvement versus contraction that we have seen in April to August. Similarly, revenue expenditures from the government side should see an improvement. But in all, one can expect 14% year-on-year total expenditure increase and 40%
