Analysts are revising upwards the rate at which they expect the Indian economy to expand this year, even as the stock markets— more a measure of sentiment than of any fundamental metric—have rallied smartly over the past three weeks. And brokerages and investment banks have already begun revising upwards their earnings estimates of companies.

Yet, a recent study by staffing services firm Manpower shows that fewer Indian companies will hire people in the quarter beginning July, compared with the current quarter.

If both sets of numbers are accurate, what explains this seeming contradiction? One possible answer could be efficiency and productivity gains. A Mint analysis shows that Indian companies improved their profitability in the quarter ended March, with no appreciable improvement in revenue.

This could only have been achieved by lowering costs or increasing productivity.

If true, the fact that no new jobs are being created could eventually crimp the recovery.