India's K-shaped recovery debate has economists divided

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Bank of Baroda, growth in any economy always tends to be K-shaped where some sectors are moving up and down. Seldom do all sectors of the economy all move in the upward direction and when it happens, it is more when the growth is at a continuously elevated rate of over 8% per annum, he said. “If we look at the Indian economy there are several sectors moving in the upward direction especially those related to infrastructure like steel, cement, machinery.

However, consumer-oriented industries are still lagging as per H1 (first half) performance of companies and similarly the agricultural sector has witnessed a setback due to the monsoon being less than normal," said Sabnavis. He explained that excluding the BFSI (banking, financial services and insurance) segment, net sales in the first two quarters of FY24 have declined at the aggregate level and shows production is not going up universally across all segments. “If we dice up this data, then the proposition made earlier that infra-related industries are performing better is evident," said Sabnavis.

Meanwhile, the first advance estimates of the government showed last week that the Indian economy is expected to grow at 7.3% in FY24, 30 basis points (bps) higher than what the Reserve Bank of India (RBI) forecast in December. A basis point is one-hundredth of a percentage point. “One aspect that has been discussed a lot is the growth in consumption, which at 4.4% (based on the first advance estimates of FY24) is concerning," said Rajani Sinha, chief economist, CareEdge.