The government’s GDP data faces a credibility challenge and the economy will struggle to accelerate growth above 8 per cent, panelists at the VCCircle India Limited Partners Summit said.
On the first day of the summit, which was held at Mumbai’s Taj Land Ends hotel on March 9 and 10, the panelists discussed the state of the Indian economy and what the government’s reform agenda means for business in general and the private equity sector in particular.
The panelists included Saugata Bhattacharya, senior vice president, business, and chief economist, Axis Bank; Saurabh Mukherjea, CEO of institutional equities business at Ambit Capital Pvt Ltd; Bharti Gupta Ramola, markets and industries leader at PwC India; and Roopa Purushothaman, managing director and head of research at Everstone Capital Advisors.
The discussion started with Mukherjea pointing out the credibility challenge with the government’s GDP data, as reflected by tepid stock market earnings.
“In the last seven quarters we have barely seen any earnings growth in the market. Stock market earnings are clearly not growing at the pace what 7.6 per cent GDP growth would suggest,” he said.
“Even if you take a battery of real metrics, you struggle to see where the 7.6 per cent growth comes from… We see quarter after quarter of almost zero earnings growth from the large listed companies,” he added.
Bhattacharya stressed that 2016-17 will see lower or same growth as in 2015-16. “Growth this year is going to be even lower or at the same pace as FY16. We should not expect for this year at least or for the next couple of years high degree of growth. That 8 per cent or 8.5 per cent is not feasible,” he said.
Bhattacharya said that the farm sector could support the growth momentum if monsoon rainfall is good. He also said that there could be some activity in road, rail and power transmission projects in the next three to six months.