Business

IIE DIGITAL DESK :Sanjay Chawla, Chief Investment Officer at Baroda BNP Paribas Mutual Fund, has expressed optimism about a strong recovery in earnings for FY26, citing the potential positive impact of recent RBI rate cuts and continued fiscal support. In a recent interview, Chawla discussed how these key factors are expected to provide the necessary boost to India’s corporate earnings and overall economic growth. According to him, the rate cuts and fiscal measures are critical for sustaining growth momentum, especially as the country navigates through a challenging global economic environment.

The Reserve Bank of India (RBI) has implemented rate cuts in recent months, aimed at encouraging consumption and investment. Lower interest rates make borrowing cheaper, which stimulates demand in both consumer and business sectors. This, in turn, is expected to lead to increased corporate profitability and a recovery in earnings growth. Additionally, the government’s fiscal stimulus measures, including structural reforms and targeted spending in key sectors, are likely to provide further support to the economy, boosting corporate performance.

Chawla highlighted that while FY25 may see some headwinds, the structural changes and policy interventions in place are expected to create a more favorable environment for businesses in FY26. The combination of lower borrowing costs and increased government spending is anticipated to drive growth in various sectors, including infrastructure, manufacturing, and consumer goods.

The optimism surrounding the recovery in corporate earnings is also supported by improved global economic conditions, as major economies recover from the pandemic’s aftermath. With the RBI rate cuts, fiscal support, and an improving global backdrop, Chawla believes that India is well-positioned to witness a solid earnings rebound in the next fiscal year.