There are signs that the economic recovery is entering the slow lane, despite the fact that India's recovery from the Covid-19 pandemic has boosted equity markets.
In two and a half years, India has seen total employment contracted, negative real rural wage growth, persistently declining unit labour costs, and sharply higher earnings per share.
The informal sector is losing out to big businesses due to the exaggerated K-shaped recovery.
India will be one of the fastest-growing economies this year despite global challenges.
The finance ministry's chief economic adviser said that the private sector capital expenditure is improving. The potential growth will be boosted by continued economic reforms over the medium term.
The budget for the next fiscal year is expected to be presented by the central government on February 1st.
The outlook is positive.
The divergence between the strong equity market and weak economy will likely continue due to sharply lower unit labour costs and the fact that most bigger corporates have adequately deleveraged.
There are signs that something isn't right.
The analysts said that about 20% of the economy contributes to India's growth.
Read about India's employment challenge.
According to forecasts by the International Monetary Fund, India will be the fastest-growing G20 economy this year.
Capacity utilization has surged in recent months, bolstering hopes of a revival of private investments, but this key metric has yet to surpass pre- Covid average, they said.
Outbound shipments shrank for the first time in nearly two years in October, and are still a cause for concern.
The analysts said that inflation is expected to ease into next year and that the central bank will be able to end its rate-hike cycle.
The terminal policy rate is going to be adjusted to 6.5 percent before the central bank focuses on growth.
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