Pvt Sector Needs To Pitch In For Growth

The signals have been there. The economy has been slowing.

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But now the challenges of trade disruption, tepid consumer demand, and insufficient private corporate investment have begun to impact industry performance and corporate results. Things are likely to get worse before they get better if the 50% tariffs on exports to the US kick in by the month end. Earlier denials have been replaced by some panic. Perhaps the alarm has galvanized the government to announce a 15-August package of Goods and Services Tax (GST) reforms, hoping lower tax will generate higher consumer demand.

A review of company results by business writers show listed companies for the April-June quarter witnessed only single-digit growth in revenue; and that is the story for nine consecutive quarters. Their core profits (excluding other income and one-time gains) have followed the same trajectory, contracting for the second time in four quarters. Some companies have gained from the lower energy costs; but the growth leaders -- IT, banking, FMCG, automobiles and pharmaceuticals -- have all shown slowing growth in both turnover and profits.

Combined net sales for these 3,000 or so companies for the April-June period this year rose just 6% from a year ago, the slowest since the June-September 2023 period. This means for the last nine consecutive quarters, or over two years, the revenue growth has been averaging just 6.9%, slower than the average GDP growth.