Reality check: Corporate India's dilemma amidst economic surge

India has demonstrated impressive economic growth (GDP) across sectors including, manufacturing, infrastructure, agriculture etc. However industries allegedly lagging behind to reap dividends have expressed their doubt over these claims.While India's GDP growth reached 8.4% year-on- year in the third quarter of fiscal 2024, largely due to strong private investment and consumption, the sentiment within the corporate sector is mixed. Private consumption growth, although improved, is still modest, and government consumption has contracted, creating a less optimistic scenario for some businesses, believe economic analysts.The discrepancy between GDP and Gross Value Added (GVA) figures further fuels concerns, indicating that demand may be outpacing supply, potentially leading to inflationary pressures.
Amit Syngle, CEO of Asian Paints, has allegedly doubted the apparent disconnect between India's reported GDP growth and the actual demand in various sectors, including the decorative paints industry. Syngle noted that traditionally, there has been a strong correlation between GDP growth and demand for paints. However, he pointed out that this correlation appears to have broken down this year, suggesting that the reported GDP figures might not accurately reflect the economic realities on the ground.
Syngle's remarks have caused controversy, doing the rounds on social media in the middle of a bruising, six-week general election, especially as they come amid claims by the Indian government that the country's GDP is growing robustly, positioning India as the world's fifth-largest economy. He expressed skepticism about how the GDP numbers are calculated and their applicability to core sectors like steel and cement, which are not showing corresponding growth.
In response to the controversy, Asian Paints reportedly issued a clarification, stating that Syngle's comments were misinterpreted. The company emphasized that his remarks were in response to a specific query about the paint industry's growth relative to GDP and were not intended to question the official GDP figures. Asian Paints reiterated that Syngle was merely pointing out an observed discrepancy and not challenging the sanctity of the GDP numbers.
The matter indicate the sensitivity and high stakes involved in discussions about economic performance in India, particularly as the country approaches the 2024 general elections. The debate over the accuracy of GDP data and its reflection of ground realities is likely to remain a contentious issue,which is essential for ensuring sustainable growth.

(Ira Singh, Asstt Editor, Gandhinagar)