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Can India Address Growth Pangs In FY26? – Forbes India

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Can India Address Growth Pangs In FY26? – Forbes India


Capital expenditure has been the weakest link in the FY25 fiscal accounts of the government (Centre and states)

Even as India is caught in the midst of a growth downgrade by global agencies—triggered by uncertainties due to trade protectionism, currency headwinds and geopolitical risks—economists believe there are a few silver linings.

For instance, India’s easing retail inflation may possibly lead to further monetary easing, leading to consumer demand growth. The softening of key commodity prices like Brent crude could translate into higher margins in corporate earnings, especially in the consumer segment. India could also be one of the most promising beneficiaries within Asia of the realignment of global supply chains due to higher tariffs imposed by the US on China.

“There is growing anecdotal evidence of trade diversion and supply chains shifting to India, due to (US President Donald) Trump’s higher tariffs on China and on competitor nations, the US’s goal of a strategic decoupling from China, India’s brisk progress on a trade deal with the US and its large domestic market,” say Sonal Varma and Aurodeep Nandi, economists, Nomura.

Over time, if these incentives sustain, both in the form of push factors (lower tariffs, de-risking, diversification) and pull factors (ease of doing business, domestic market size), then firms would relocate their factories, they feel. Most of these shifts are concentrated in the low- and mid-tech manufacturing sectors like electronics, textiles and toys, where low margins and higher tariffs on China make it imperative for firms to diversify their supply chains.

However, they add that overall while India’s economy remains vulnerable to a global growth slowdown, there are encouraging signs of relative gains. Varma and Nandi remain positive on the potential for India to emerge as a beneficiary of the next round of supply-chain shifts.

There are three caveats, though, according to them. India needs to complement any tariff arbitrage with earnest ease-of-doing-business reforms; second, India still depends heavily on imported components from China for its assembly of electronics products and solar equipment; third, the trade diversion to India could include some rerouting of Chinese exports to the US and thus requires stricter “rules of origin” enforcement.

Pramod Amthe, head of institutional equity research, InCred Capital, believes that the government’s initiative to cut income-tax rates and the Reserve Bank of India’s (RBI) move to improve liquidity and two successive repo rate cuts in the last three months are targeted to revive the growth momentum.

“Despite a seasonally strong March quarter, a mixed trend in macro variables sustained, as improvement in rural demand, electricity demand and easing inflation was overshadowed by slow automobile & housing sales, easing Index of Industrial Production (IIP) growth, and weakness in credit disbursal as well as government capex,” Amthe explains.

At the same time, he is also concerned that rising trade protectionism, currency war threat, geopolitical tensions, and volatile oil prices may exert downward pressure on the economy.

According to economists at QuantEco Research, India’s GDP growth is seen to have a strong correlation with global economic growth, especially in the recent two decades. They estimate that India’s GDP growth moderates by 40 basis points for every 1 percent decline in global GDP growth. “As such, 60 bps moderation in annualised global growth in 2025 could imply a 20-30 bps of downside for India’s FY26 GDP growth outlook,” they say.

Also Read: How climate change can impact GDP and jobs

Weather impact on food price

One of the most encouraging factors, currently, is the easing of the stubborn food-price led inflation. After experiencing multiple supply shocks, the consumer price index (CPI) inflation came off to a six-year low in FY25, at 4.6 percent. The gap between core CPI inflation and food inflation had stayed wide for a long time in FY25 and has converged with food prices coming off towards core inflation.

“The tepid growth backdrop means demand-led price pressures are likely to be soft, and food inflation pressures are coming off, as input costs, food production and supply chains align towards a lower inflation regime,” says Rahul Bajoria, managing director, head of India and ASEAN economic research, Bank of America.

Vegetable prices, which were elevated for a few months in the second half of 2024, have corrected sharply. Even within non-perishables like cereals, pulses, and spices, Bajoria sees downward inflation momentum, and it is only cooking oil and fruits that currently show high inflation. “With summer months so far not showing any material signs of a price increase in perishables, food inflation may stay low for some time given adequate supply and high base effects, keeping headline inflation below 4 percent for most of 2025,” Bajoria adds.

According to his estimates, India will continue to meet its inflation target for an extended period, expecting headline inflation to fall to a seven-year low of 3.8 percent year-on-year in FY26 from 4.6 percent in FY25. “We continue to see the RBI continuing its path of interest rate cuts, expecting another 50 basis points of rate cuts in the next two meetings, with risks of more cuts emanating from a potentially larger growth slowdown,” he says.

The RBI has also continued to ease liquidity conditions through a combination of bond purchases and foreign exchange operations, signalling its comfort in maintaining adequate liquidity in the banking system.

Economists at QuantEco Research also expect sizeable and broad-based correction in food prices in FY26, led by vegetables, reinforced by the expectations of an above-normal monsoon. Further, the upside in core-core inflation (that excludes petrol, diesel, gold, silver etc.) is likely to remain capped, amidst trade driven downside risks to global growth and, in turn, global commodity prices.

“The easing CPI inflation, coupled with lower interest rates and regulatory easing, could possibly support quicker expansion of consumer credit and, in turn, leveraged consumption. However, trade uncertainties could impinge on the pace of urban jobs growth, especially in the private sector,” say economists at QuantEco Research.

Amidst food prices corrections, a healthy rabi output, the outlook of an above-normal monsoon and unconditional cash transfers seeing a complete rollout in FY26, they expect the rural consumption recovery to continue well into FY26.

The Indian Meteorological Department (IMD) forecasts Southwest monsoon to be ‘above normal’ in 2025. However, the total number of heatwave days has seen a continued increase in the last three years. The IMD had already issued a warning of higher-than-normal temperatures for months of March to May.

Capex: Laggards?

Capital expenditure has been the weakest link in the FY25 fiscal accounts of the general government (Centre and states). For 11 months in FY25, estimates by Kotak Institutional Equities show general government capex growth declined at -1 percent. The Centre’s capex growth was 0.8 percent in 11MFY25 with support from states’ loans, roads and railways. Most of the weakness stemmed from defence, telecommunication, economic affairs and steel. The states’ capex growth was at 0.2 percent in 11MFY25 and 60 percent of FY2025 budget estimates.

“Based on the year-end spending trend, the Centre and states had a tall task to meet expenditure targets in March. States have historically fallen short of budgeted spending. Given budgeted targets, the governments’ capital expenditure growth is likely to remain relatively muted in FY2026,” analysts at Kotak Institutional Equities say.

Among the larger spending areas, revenue expenditure was relatively muted for drinking water and sanitation and transfers to states, while a healthy pace was seen in health, agriculture, subsidies, defence and rural development.

Mapping new project announcements in the 11 months of FY25, economists at the Bank of Baroda say that companies and governments have shown the intent to invest ₹38.3 lakh crore, which is second highest on record since FY96. Domestic private companies accounted for the majority (62 percent) of the new projects announced in the last fiscal (April 2024-March 2025), amounting to ₹22.6 lakh crore.

The next big set of investments was announced by the public sector (central, state governments, local bodies) at ₹11.1 lakh crore (31 percent of total), followed by foreign private firms (₹2.6 lakh crore; 7 percent).

Also Read: Doubling India’s GDP by 2030: Triumph through tech, talent and tenacity

Growth forecast: A series of downgrades

In April, the IMF slashed India’s growth forecast to 6.2 percent in FY26 due to tariff uncertainties, with a further reduction to 6.3 percent projected for FY27.

However, the IMF says that, for India, the growth outlook is relatively more stable, supported by private consumption, particularly in rural areas, but this rate is 0.3 percentage points lower than that in the January 2025 WEO Update on account of higher levels of trade tensions and global uncertainty.

For similar reasons of a severe escalation in the global trade war, Fitch Ratings also cut India’s GDP growth estimate by 10 basis points to 6.4 per cent for FY26 but retained the projections for next fiscal.

“It is hard to predict the US trade policy with any confidence. The massive policy uncertainty is hurting business investment prospects, equity price falls are reducing household wealth, and US exporters will be hit by retaliation,” Fitch says.

Due to the US tariffs uncertainties, Moody’s Analytics also cut India’s growth forecast to 6.1 percent in 2025, lowering it by 30 basis points from its March projection.

Amidst the growth target downgrade scenarios, RBI has the most optimistic outlook on India’s GDP for FY26. Even as the central bank has lowered its GDP target for this fiscal, it is still the highest among all. In its latest monetary policy review, RBI lowered GDP forecast to 6.5 percent, from 6.7 percent in FY26, due to the global trade volatility and policy uncertainties.






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Webinar on stress and heart health on May 11

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Webinar on stress and heart health on May 11


Naruvi Hospitals, Vellore, in collaboration with The Hindu, will present a webinar on “Stress: The Silent Killer of One’s Heart”, from 11.30 a.m. on Sunday.

This is the 10th webinar in the 15-part series organised as part of the “Healthy India, Happy India” initiative.

The session will focus on the often-overlooked link between chronic stress and heart health, offering insights and practical takeaways for individuals of all age groups.

Vinayak Shukla, senior consultant, cardiothoracic surgery, Naruvi Hospitals, Vellore, will speak on “Managing stress for a healthier heart”, while Ray George, consultant, cardio- thoracic and vascular surgery, Naruvi Hospitals, Vellore, will speak on “Signs, symptoms, and hidden dangers”. Mohammed Jaffer Sherif, consultant, cardiothoracic and vascular anaesthesia, Naruvi Hospitals, Vellore, will share his views on “Stress: The science behind it”. Hiba Mariam will moderate the session.

E-certificates will be issued to those who register. To register, visit https://newsth.live/HIHIUIE or scan the QR code.



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It is time to protect India’s workers from the heat

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It is time to protect India’s workers from the heat


In the first week of April 2025, Delhi crossed a dangerous threshold: the temperature soared above 41°C, and nights offered little relief. These extreme conditions are no longer outliers but part of a new, deadly normal. With climate change intensifying year after year, Indian cities have become the epicentre of a growing crisis.

And while heatwaves affect everyone, it is India’s millions of urban informal workers who are bearing the brunt of this slow-moving disaster. The Reserve Bank of India has pointed out, in 2024, that extreme heat threatens the health and livelihoods of occupationally exposed people, potentially causing a projected 4.5% loss to India’s GDP. Despite their considerable contribution, essential roles and sheer numbers, they are consistently excluded from the planning and implementation of urban heat response strategies. This exclusion has deadly consequences.

Key challenges in current Heat Action Plans

Many Indian cities now have Heat Action Plans (HAPs), inspired by pioneering efforts as in Ahmedabad. These plans, guided by the National Disaster Management Authority (NDMA), are meant to prepare cities for increasingly frequent and intense heatwaves. Yet, more than a decade later, most HAPs remain perfunctory, underfunded and poorly coordinated.

A review of HAPs across India reveals a consistent worrying pattern: informal workers are largely invisible. Worse, most treat heatwaves as temporary — short-term disasters instead of the symptoms of a deeper climate crisis that demands long-term, structural responses. The NDMA’s 2019 heat wave guidelines do not mention informal workers explicitly, but generally, under the category of outdoor workers and vulnerable groups. At the State level, most HAPs lack protocols for occupational safety, hydration, cooling spaces, shade provision or even a mention of compensation for lost work. City-level plans take a generalised public health and awareness approach, neglecting livelihood impacts. HAPs in India also suffer from fragmented governance and institutional silos. The Ministries of Labour, Environment, Urban Affairs and Health operate independently in the absence of guidelines at the central level, resulting in disjointed and inconsistent protections for workers. Moreover, city HAPs often remain short term, immediate for summer months, crisis-oriented documents. City heat actions rarely integrate long-term strategies such as urban cooling, heat-resilient infrastructure, working conditions, flexible work norms, or worker-focused social protection

Globally, cities are adopting worker protections against rising heat. In the U.S., California and Oregon mandate employers to provide water, shade, rest breaks, and heat safety training. France’s “Plan Canicule” requires work adjustments, hydration during heat alerts, and opened public buildings and spaces to the public for cooling off. In Qatar and Australia, outdoor work is restricted during peak heat, and employers are obligated to assess and mitigate heat risks. India, too, offers examples. Ahmedabad’s HAP introduced adjusted working hours and shaded rest areas. Odisha mandates a halt to outdoor work during peak hours. These good practices and innovations do offer replicable, worker-centric models for adapting urban livelihoods to extreme heat.

Towards a worker-centric response

We urgently need a new kind of urban heat response: one that is worker-centred, just, and grounded in lived realities.

First, the NDMA’s 2019 Heat Guidelines must be updated to explicitly include informal workers. A revised framework must map occupational vulnerabilities distinctly for varied workers —whether it is for construction workers, street vendors, waste pickers, gig workers or rickshaw pullers — and provide actionable protocols for city and State governments that may use them contextually. This includes defining safe working hours, mandatory rest breaks, access to water, and emergency response mechanisms.

Second, is the mandate for worker participation in the creation of city and State HAPs. These cannot remain top-down exercises. Every municipal body must engage worker collectives, unions, and worker welfare boards in co-creating occupation-specific plans. Constituting civil society and community coordination groups at the city level is key. Local wisdom and the involvement of workers’ associations in co-producing solutions makes policies more realistic, responsive, and respected.

Third, informal workers deserve the right to shade, rest, and cooling. We need to establish shaded rest zones, hydration points and community cooling centres in key locations — markets, transport hubs, public spaces, labour chowks, construction sites. Open public buildings, malls and open spaces as cooling centres. These must be accessible, gender-sensitive, and co-maintained by workers and the local community. It is time to develop norms, guidelines, institutionalise protections and allocate dedicated budgets for this.

Fourth, innovative financing — through corporate social responsibility, or dedicated city development budgets —must support local solutions as adaptations. Health insurance must be expanded to cover heat-related illnesses, especially for those in informal occupations who are typically excluded from mainstream schemes. And yes, community-neighbourhood contribution and involvement are a must and should be woven in action plans. Cool roofs, shaded walkways and passive ventilation must become standard practices, not just pilots.

As a part of city design and governance

Fifth, this leads to a bigger shift: embedding heat resilience and worker safety into how we design and govern our cities. Heat adaptation and worker inclusion must be legally written into master plans, building bye-laws, and infrastructure codes. Cities must promote natural shade through urban forests and tree corridors, while also planning blue networks such as water bodies and public resting spaces. Informal workspaces such as vendor markets, waste depots and labour chowks must be retrofitted with materials and design strategies that ensure thermal comfort.

Sixth, at the national level, we need an inter-ministerial task force on climate and work, bringing together the Ministries of Labour and Employment, Housing and Urban Affairs, Environment, Forest and Climate Change and Health, with of course NDMA, and State Disaster Management Authorities. This task force must develop an integrated road map linking climate resilience with worker protection and labour codes. It must guide cities, coordinate efforts, and ensure accountability. Every city and district must appoint a dedicated heat officer — someone empowered to manage and monitor heat response measures and work across departments.

For informal workers, the climate crisis is not a distant threat. It is a present and daily struggle. The cost of inaction is no longer measured only in degrees — it is measured in lives, in lost livelihood and poor health, and, in burdened futures.

Aravind Unni is an urban practitioner and researcher working on building resilience for informal workers and urban communities. Shalini Sinha is Asia Strategic Lead, Urban Policies Program, Women in Informal Employment: Globalizing and Organizing (WIEGO)



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‘India’s healthy life expectancy lags a decade behind total lifespan’

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‘India’s healthy life expectancy lags a decade behind total lifespan’


Experts at the Indian Institute of Public Health during the convocation ceremony of Masters of Public Health batch on Friday.
| Photo Credit: Special Arrangement

India’s life expectancy stands at approximately 73.4 years, the healthy life expectancy is almost a decade shorter, said K. Srinath Reddy, honorary distinguished professor at the Public Health Foundation of India (PHFI).

Speaking at the convocation ceremony of the Master of Public Health (MPH) programme at the Indian Institute of Public Health (IIPH) in Hyderabad on Friday, Dr. Reddy highlighted the need for a sustained approach to public health. A total of 38 students from the 2022-24 MPH batch graduated on Friday.

“The loss of healthy years is not confined to the final decade of life, it is the cumulative result of health burdens across the entire life course. This calls for corrective measures through public health interventions, which must engage not only the health sector but also education, housing, environment, and transportation,” he said.

Echoing this sentiment, Zelalem Tafesse, Chief of UNICEF’s Field Office for Telangana, Andhra Pradesh, and Karnataka, reminded graduates that public health is deeply intertwined with economics, governance, gender equity, climate change, and infrastructure.

“Even the national budget and market trends influence health outcomes,” Tafesse said, warning that misinformation in the digital age has become a serious public health threat.

Highlighting the growing role of digital technologies and Artificial Intelligence in shaping the future, Tafesse encouraged graduates to harness their digital fluency to drive solutions. “You are better equipped than my generation to thrive in this digital era. Let your public health knowledge grow with the tools of tomorrow,” he said.

Addressing the graduates, IIPH-H Director Anil Kaul underscored the increasing significance of their chosen field. “You are stepping into a world grappling with global health crises and complex challenges. Your work has never been more important. This field demands innovation, resilience, and a commitment to equity and justice,” he said.



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