RBI 7.2% estimate 'overly optimistic', India has entered cyclical growth slowdown: Nomura

Japanese brokerage Nomura connected Monday said the Indian system has entered a signifier of "cyclical maturation slowdown" and the Reserve Bank's estimation of 7.2 per cent GDP enlargement is "overly optimistic".

The brokerage said it sees "rising downside risks" to its GDP maturation estimates of 6.7 per cent successful the ongoing FY25 and 6.8 per cent successful FY26.

"We judge India's system has entered a cyclical maturation slowdown. Coincident and starring maturation indicators constituent to a further moderation successful GDP maturation and the RBI's forecast of 7.2 per cent for FY25 is overly optimistic," the brokerage said successful a note.

The RBI maintained its FY25 maturation estimation astatine 7.2 per cent earlier this month, adjacent arsenic immoderate watchers person been coming retired with little numbers.

Nomura said municipality depletion indicators person been softening lately, and pointed to the slump successful rider conveyance sales, moderation successful hose rider postulation and FMCG companies flagging anemic municipality demand.

"We judge this weakness successful municipality request is apt to continue," the brokerage said.

Stating that companies are scaling down their wage outlays, the brokerage said existent wage and wage expenditure of listed companies has moderated 0.8 per cent successful the September 4th erstwhile adjusted for ostentation if 1 were to spell by the numbers disclosed till now.

The aforesaid was 1.2 per cent successful the June quarter, 2.5 per cent successful FY24 and 10.8 per cent successful FY23, the brokerage said, adding that this apt reflects a premix of weaker nominal wage maturation and a leaner workforce.

"The post-pandemic surge successful pent-up request has faded, monetary argumentation is choky and the RBI's macroprudential crackdown connected unsecured, frothy recognition is being reflected successful the slowdown successful idiosyncratic loans and lending maturation by non-banking concern companies," the brokerage said.