About 55% of Indian economy shows positive growth

Around 55% of sectors in the Indian economy continue to grow positively, albeit moderating from 65% a quarter ago, signaling a cooling of sentiment after rapid growth. Despite fluctuations, certain sectors show promise, particularly agriculture, which accounts for 15% of GDP. Improved rainfall and reservoir levels have boosted agricultural indicators, with 60% trending positively, suggesting further growth in the coming months. This was revealed in a report by HSBC Global Research.

“While a lower proportion of the economy seems to be growing positively compared to a quarter ago (55% vs. 65%), the majority of indicators are still positive. And while investment activity (especially construction and public sector led) is holding up, consumption-related ones are slowing,” the report said.

Government expenditure, both current and capital, has spurred investments, with credit expansion notably supporting small and medium enterprises. Strong construction activities, driven by real estate and infrastructure projects, persist despite slight moderation. Export diversification, particularly in professional services, has upheld export growth.

However, consumption remains sluggish in both rural and urban areas, with consumer goods manufacturing and uncollateralized loans declining due to regulatory tightening by the Reserve Bank of India. Mining and utilities have also experienced a sharp downturn, while the communication sector growth has stalled following tariff hikes. Tourism-related activities are thriving, buoyed by pent-up travel demand.

Electronics manufacturing, digital startups, and Global Capability Centres have normalized after years of high growth. Overall GDP growth, the report noted, is converging to a sustainable 6.5%, down from over 7% levels. The report suggests this new growth trajectory could be more equitably distributed if agriculture continues its positive momentum.