According to Nimesh Chandan, CIO at Bajaj Finserv AMC, the government’s renewed push to stimulate demand is both timely and supportive.
As consumption picks up, it could also serve as a trigger for a meaningful revival in private sector capex — an area that has lagged in India’s growth story over the past decade, he said in an interview with Moneycontrol.
On the tariff front, Chandan believes the 25% reciprocal tariff is likely to remain in place through FY26, reflecting the Trump administration’s long-term stance on trade.
At the same time, the expected rollback of the 25% penalty tariff on Russian imports in the coming months would signal a tactical adjustment aimed at easing commodity price pressures, particularly in the energy and metals space, he added.
Do you think the RBI will refrain from further rate cuts, even though some experts anticipate one more cut in either the October or December policy meetings?
Even if the US Federal Reserve begins easing following very weak non-farm payroll data, the RBI may need to remain cautious for some time. This is due to uncertainty around tariffs and volatile capital flows, which could put pressure on the Indian Rupee.
To safeguard external stability, the RBI will need to maintain a reasonable interest rate differential with the US Fed funds rate. Additionally, it must preserve some policy space to counter any potential drag on growth arising from tariff-related disruptions.
That said, there is a narrow window for a rate cut in the next few MPC meetings, but only if tariff issues are resolved and the Fed is resuming easing—a scenario that is now a serious possibility.
Despite concerns over global trade tariffs, the RBI has maintained a 6.5% growth forecast for FY26. Do you share this confidence, and what are the key factors supporting this outlook?
The RBI has already taken substantial steps to support the economy. Going ahead, strong fiscal–monetary coordination is expected to start yielding results. The fiscal side has already stepped up meaningfully. The Rs 1 trillion tax cuts announced in the FY26 Union Budget are aimed at boosting household disposable income and supporting consumption-led growth. The recent GST rate rationalisation is another step in the same direction, likely to enhance demand dynamics across key sectors.
Together, these measures should help sustain the growth cycle, especially at a time when global headwinds persist.
Do you expect the GST rationalisation to not only boost economic growth but also enhance tax collections for the government?
The GST rationalisation is a welcome step to support consumption and revive demand, which has remained subdued over the past two to three years. It has the potential to drive higher volumes across several consumption sectors. Should this volume growth materialise, it could contribute to an uptick in overall economic activity and over time, enhance tax collections for the government. While the impact may not be immediately visible in the first year, it is likely to become more evident in the second or third year.
Which sectors are likely to benefit the most if the government proceeds with GST rationalisation?
Consumption-related sectors are expected to benefit the most, particularly those segments where GST reductions are most significant. Within this, mass consumption or bottom of the pyramid items, where price elasticity is higher, as well as discretionary segments such as low-cost two-wheelers and affordable consumer durables, are likely to see a more pronounced impact.
Overall, as tax cuts increase the consumer’s disposable income, propensity to spend is expected to rise, generating a broader-based benefit across sectors.
However, certain segments within consumer durables and automobiles are likely to benefit disproportionately, especially products targeting the bottom-of-the-pyramid consumer base.
Do you strongly believe that the Trump administration will eventually be compelled to significantly reduce tariffs due to the risks of inflation and economic slowdown?
The economic logic supports a rollback to mitigate inflation and support growth. However, political and fiscal motivations such as deficit reduction and protectionist positioning make a significant tariff reduction unlikely unless economic conditions deteriorate sharply or legal and institutional pressures intensify. The Trump administration has consistently presented tariffs as a tool for strategic leverage rather than a purely economic instrument, and this framing continues to shape its policy stance.
Against this backdrop, it is reasonable to assume that the 25% reciprocal tariff will remain in place through FY26, reflecting the administration’s long-term positioning on trade. At the same time, the expected rollback of the 25% Russian penalty tariff in the coming months would signal a tactical adjustment aimed at easing commodity price pressures, particularly in energy and metals. This selective easing underscores a broader trend: tariff policy is being recalibrated not solely in response to macroeconomic fundamentals, but also through a lens of geopolitical and fiscal calculus.
Do you agree that stimulating demand should now be the government's top priority, allowing private capital to drive the rest of the economic recovery?
Over the last few years, the government has focused on driving economic growth through capital expenditure. This approach has clearly supported long-term capacity creation and strengthened. However, demand has been under pressure. In this context, the government’s renewed push to stimulate demand is timely and supportive.
As consumption picks up, it can also act as a trigger for private CapEx, an area that has lagged in India’s growth story over the last decade.
With rising consumption leading to higher capacity utilisation, we believe private sector CapEx could finally see a meaningful revival. This should complement public spending and set in motion a broader-based economic recovery.
Do you believe this hope-driven market rally is likely to continue from here?
We do not view the current market rally as being sentiment-driven. Rather, we believe it reflects the possibility of an upcycle in economic activity, driven by the earlier announced tax reductions, interest rate cuts, and the ongoing rationalisation of GST.
Additionally, expectations of a favourable monsoon and moderating inflation are likely to further support demand and growth. Given that markets are forward-looking, they are beginning to price in this potential upturn, both in terms of stronger GDP growth and in corporate earnings.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
