Madhavi Arora Explains India’s Economy, Inflation Trends, and Global Power Shifts on Simple Hai! Podcast

In the recent episode of The Simple Hai! podcast, hosted by veteran finance journalist Vivek Law, Madhavi Arora, Chief Economist at Emkay Global Financial Services, shared her expert insights on India’s economy. With rich experience from leading financial institutions such as Edelweiss, Kotak Mahindra Bank, Quant Capital, and JP Morgan, Arora explained key issues shaping India’s growth story, including market volatility, geopolitical tensions, inflation trends, and private sector investment challenges.

Volatility Is Here to Stay

Arora began by emphasising that market volatility is unlikely to subside anytime soon. While policy announcements, such as tariffs, initially move markets sharply, their impact tends to diminish over time. She explained that much of today’s uncertainty stems from geopolitical power shifts, especially US-China tensions, where the US wants to prevent China from becoming a superpower. She described this as more of a geopolitical play than a purely economic issue, and predicted that such trade dynamics would persist for at least the next two to three years.

Sector Rotation and Consumption Shifts

Arora explained how India’s growth after COVID came in two phases. The first phase saw a surge in global demand and an export boom, while the second phase focused on increased government capital expenditure and investment. Now, the spotlight is back on consumption, but growth is uneven across sectors.

Premium consumption surged post-COVID due to savings and a K-shaped recovery, followed by growth in middle-income spending, especially among IT and BFSI employees. However, urban consumption has stagnated recently, while rural India has been struggling even before the COVID-19 pandemic, making the investment story complex.

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Inflation at 4 Percent Is Healthy

Discussing inflation, Arora stated that 4-6 percent inflation is ideal for a growing economy like India. She praised the RBI and the Government of India for managing inflation well over the past decade, particularly food inflation, despite weather-related disruptions.

She explained that core inflation, which excludes food and energy, has been low due to tighter fiscal policies that reduced demand. Going forward, she believes that 4 per cent will become the “new normal” inflation rate, which is healthy and manageable as India becomes more efficient in its production.

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Looking Beyond GDP Numbers

Arora advised investors and citizens not to focus blindly on quarterly GDP figures, as they are lagging indicators. Instead, she suggested tracking 3 to 6-month averages of key indicators like:

• Rural wages and company commentary from firms like HUL with rural exposure
• Employment generation trends
• Government fiscal accounts such as expenditure, revenue, and capex
• RBI balance sheet updates for net spending impact

She emphasised that India’s economy is too complex to be understood through one-off data points, and building an investment thesis requires looking at the full picture over time.

A Powerful Voice for Women Economists

This Simple Hai! episode ended with Vivek Law appreciating the contributions of women economists like Madhavi Arora, who are shaping India’s financial understanding. Arora’s conversation on this Simple Hai! episode stands out for its clear breakdown of India’s economic trends, policy impacts, and global power shifts. For anyone looking to understand how markets, inflation, and consumption patterns will shape India’s future, this conversation is a must-watch.