India in 2025: While challenges resurface, so do opportunities

India needs job generation for balanced growth. With world trade in flux, mid-tech sectors hold promise if deals are struck

- PRANJUL BHANDARI

Much has been said about India's growth slowdown to 5.4% in the quarter ending September. It was a rather sharp turnaround for those who had gotten used to the 7.5%-plus growth clip. Part of the slowdown can be blamed on what looks like a one-off, offbeat quarter. Specific things went wrong. First, a string of climate change events hurt agricultural production and, second, in the midst of a series of high-stake elections, the government's expenditure slowed. Both are already showing signs of easing, and some of the slowdown could reverse over the next quarter.

Temperatures have normalized, with reservoirs full again after a long hiatus and, as a result, agricultural production has picked up. So far, farmers are using their earnings to build back savings or repay debt, as evidenced by rising cash balances in rural accounts. If the winter crop does well, it is likely that a larger share of that income will be used for rural spending, igniting a part of the economy that has been rather subdued.

Elevated inflation, pulled up by high food prices, has hurt mass purchasing power. The seasonal winter food disinflation, expected on the back of stronger agricultural production, could revive some of that purchasing power, boosting mass-level consumption.