New Delhi: The economy may be growing fast, but the profits of many large companies in the country are just not keeping pace with that growth. For the ninth quarter in succession, revenue growth for Indian firms has remained below the growth rate of the country’s GDP. In other words, the economy is moving ahead, but big companies are struggling to keep pace with it.
Experts point to a set of reasons for this mismatch in estimates. Some companies are facing rising production costs, particularly after global prices of raw materials started going up. Others are battling slow demand in international markets. While sectors such as IT and finance might be performing well, manufacturing and exports are finding growth more difficult.
This may prove to be an unwelcome divergence between GDP and company growth if it lasts. With lower earnings, companies will cut jobs, delay investments, or avoid expanding. That can slow down the overall economy in the long run.
Still, some analysts say things should start looking up as inflation cools down and exports pick up. The government is working on policies that support industries and increase manufacturing.
