CRISIL's Dharmakirti Joshi gives India a 7 out of 10 on growth durability; says private capex has the money but not the will

Dharmakirti Joshi sees India's long-term trajectory intact but warns that corporate India is sitting on strong balance sheets without deploying them, and energy prices are the one number he is watching most closely.

India's growth story is real, durable, and consistently underappreciated, but it is also running on one engine when it should be running on two. That was the core message from Dharmakirti Joshi, Chief Economist at CRISIL, an S&P Global Company, speaking at the ET Alpha Wealth Summit's panel on India's economic durability.

Joshi was part of the panel discussion on the topic 'India's Growth Story: How Durable it is? at the ET Alpha Wealth Summit in Mumbai last week. Other panelists included Garima Kapoor, Deputy Head, Research & Economist, Elara Securities India Pvt Ltd, Dr Aurodeep Nandi, India Economist & Executive Director, Nomura, Sakshi Gupta, Principal Economist & Vice President, HDFC Bank


His growth durability score for India today is 7 out of 10. His view on where it goes over the next five years: holding steady, and in today's global environment, that is no small feat.

Why 6.5% growth is not a failure

Joshi opened with a pushback on the pessimism surrounding India's growth rate. Over 30 years, India has averaged 6.2% annual GDP growth, a compounding engine that quietly builds national wealth even when it fails to generate headlines.

His more interesting observation was structural. India's short-term growth cycles have become synchronised with those of advanced OECD economies since 2000, a consequence of deeper trade integration and financial market linkages. When the global economy sneezes, India now catches a cold faster than it used to.

But, and this is his key point, cycles are synchronised while trends are divergent. India's long-term growth trajectory has been trending upward even as advanced economies trend downward. That structural divergence, driven by low per capita income, infrastructure investment, and digitalisation-driven efficiency, is what keeps the India story credible despite the near-term noise.

The private capex puzzle: Ability without willingness

The most candid part of Joshi's remarks concerned private investment, a debate that Indian economists have been having for a decade. His diagnosis is precise: corporate India has the financial strength to invest but not the conviction to act.

CRISIL's rated corporate universe carries a debt-to-equity ratio of just 0.45, historically low. Credit rating upgrades are outpacing downgrades. Balance sheets are in the best shape they have been in years. The capacity to invest is clearly there.

What is missing is willingness, and Joshi identifies three reasons. First, the post-pandemic environment has been one of unrelenting uncertainty, and uncertainty delays capital decisions. Second, the Insolvency and Bankruptcy Code has made promoters more cautious about overextending, having watched peers lose control of firms after aggressive expansion cycles. Third, and most structurally, ease of doing business remains a genuine constraint. India's logistics costs and electricity costs are both higher than competing manufacturing destinations, a gap that dilutes the investment case in traditional sectors.

The China overhang makes this worse. Chinese overcapacity is flooding Asian markets with cheap goods, forcing Indian corporates in sectors like steel and cement to choose between investing in domestic production or simply importing and trading at a margin. Safeguard duties on solar panels, currently at 40%, are a symptom of exactly this problem.

Where private capital is actually moving

Joshi is more optimistic about new-economy sectors. Private capex in EVs, renewable energy, data centres, 5G, and cloud infrastructure accounted for roughly 12% of total industrial capital expenditure over the last five years. His projection: that share doubles to 25% in the next five years — driven not by policy incentives but by visible, certain demand.

The $67 billion committed to Indian data centres is one signal. The broader point is that wherever demand is clear and durable, private capital is moving. The problem lies in the traditional sectors where demand is weak and Chinese competition is structural.

The one number that matters most

Asked what data point he will watch most closely over the next year, Joshi's answer was immediate: energy prices. Without affordable energy, he said, the entire economic machinery slows, or stops.

In a world where oil, geopolitics, and the energy transition are all moving simultaneously, that is the variable that could reshape every other forecast on the panel.