A quiet Friday night in Mumbai has sparked fresh reflections on India’s economic health. Ace investor Shankar Sharma took to social media after visiting a popular rooftop lounge in the city, noting its unusually sparse crowd. “Last night, went to a very happening nightclub/rooftop lounge in Bombay. Friday night. Should have been packed. Was just around 30% full. Mandi?” Sharma wrote on Saturday, raising a pointed question about a potential economic slowdown.
His observation comes against the backdrop of India’s GDP growth slowing to a near two-year low of 5.4% in the July-September quarter. The decline has been attributed to sluggish performance in the manufacturing and mining sectors, coupled with weak consumer spending—a trend Sharma seemed to subtly allude to through his anecdotal experience.
The debate over whether India’s slowdown is temporary or structural remains divided. The International Monetary Fund’s Deputy Managing Director Gita Gopinath remains optimistic, stating the country will achieve 6.5% growth this fiscal, suggesting the current dip is transient.
However, former Chief Economic Advisor Arvind Subramanian offers a contrasting view. “Whether the economy is slowing down, the answer to this is absolutely yes,” Subramanian said in an interview with Karan Thapar for The Wire. According to him, the slowdown is not just a cyclical blip but a deeper, structural issue. “We’ve had growth at whatever 7-8% and yet consumption has been at 3%, investment has been weak, exports have been weak. So how come if all the constituents of GDP are so weak, how come GDP itself is so high?”
Subramanian argues that post-pandemic recovery figures have masked underlying weaknesses. “More importantly, we should talk about the long-term slowdown in the weakness of the Indian economy,” he added.
Meanwhile, Finance Minister Nirmala Sitharaman is set to present her record-setting eighth consecutive Budget today. A cut or tweak in income tax rates/slabs to ease the burden of middle class struggling with high prices and stagnant wage growth is widely expected in the Budget.
The Budget for the fiscal year starting April 1 is expected to contain measures to shore up weakening economic growth while being fiscally prudent. It is likely to focus on steps to boost consumption while sticking to the roadmap of narrowing the fiscal deficit.
