Majority of Sectors Indicate Signs of Recession Despite Policy Support

Despite the Reserve Bank of India’s (RBI) efforts to stimulate growth through repo rate cuts and banking system liquidity measures, several key sectors are showing signs of slowdown, according to a report by financial services firm Yuvama. The report indicates that sectoral growth rates, which were in double digits a year ago, have now fallen to single digits—similar to pre-pandemic levels.

 

Bank credit growth, which stood at 16% last year, is projected to slow to 11% by 2025. GDP growth, which was 7% a year earlier, is expected to drop to around 4% in the same period. The slowdown in GDP and business activity signals potential recessionary conditions.

 

Exports, both goods and services, have also shown weak performance, rising only 5% during the April–June quarter compared to much higher growth in previous years. Sectors such as automobile manufacturing, which saw 28% growth last year, are now growing at just 4%.

 

The report further highlights that the profitability growth rate of BSE 500 companies has dropped sharply—from 21% last year to just 10% now. In several industries, including steel, cement, and consumer goods, margins have narrowed due to weak demand and rising costs.

 

Economists warn that unless domestic demand strengthens and export markets improve, India’s economic momentum could continue to decline over the coming quarters. The report emphasizes the need for targeted policy interventions to revive investment, boost consumption, and address sector-specific challenges.