Union Finance Minister Nirmala Sitharaman, RBI Governor Sanjay Malhotra and Directors at a meeting in New Delhi on February 8, 2025.
| Photo Credit: PTI

With the Reserve Bank of India (RBI) following up the Union Budget’s demand stimulus for the slowing economy with a long-awaited interest rate cut, Finance Minister Nirmala Sitharaman said on Saturday (February 8, 2025) that fiscal and monetary policy working in harmony to spur growth impulses, should yield a bigger boost to the economy.

Ms. Sitharaman was speaking to mediapersons after addressing the RBI’s central board in the capital.

The government expected India’s tepid private investment trends to reverse, Ms. Sitharaman indicated, citing anecdotal inputs from industry leaders received after the Budget that unveiled income tax breaks worth ₹1 lakh crore to jumpstart sputtering urban demand. Industry, she said, was clearly showing signs of a consumption recovery and were reviewing their capacities.

“Whether it is inflation or growth, monetary policy and fiscal policy moving in tandem, like the two wheels of a car, will definitely provide more benefit to our economy and our people. With RBI’s decision on Friday, I am sure that together, things can move in the required direction that we need,” Ms. Sitharaman said.

Washington:

The Indian economy is expected to be “a little weaker” in 2025 despite steady global growth, IMF Managing Director Kristalina Georgieva has said. Georgieva also said she expects quite a lot of uncertainty in the world this year mainly around the trade policy of the US.

In her annual media roundtable with a group of reporters on Friday, she said global growth is expected to be steady in 2025, but with regional divergence.

Georgieva said she expects the Indian economy to be a little weaker in 2025. However, she did not explain it any further. The World Economy Outlook update week will have more details about it.

“The US is doing quite a bit better than we expected before, the EU is somewhat stalling, (and) India a little weaker,” she said.

Brazil was facing somewhat higher inflation, she said.

In China, the world’s second-largest economy, the International Monetary Fund (IMF) was seeing deflationary pressure and ongoing challenges with domestic demand, she said.

“Low-income countries, despite all the efforts they are making, are in a position when any new shock can affect them quite negatively,” Georgieva said.

“What we expect in 2025 is to have quite a lot of uncertainty, especially in terms of economic policies. Not surprisingly, given the size and role of the US economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” Georgieva said.

“This uncertainty is particularly high around the path for trade policy going forward, adding to the headwinds facing the global economy, especially for countries and regions that are more integrated in global supply chains, medium-sized economies, (and) Asia as a region,” she said.

That uncertainty is actually expressed globally through higher long-term interest rates, even though short-term interest rates have gone down, the IMF Managing Director said.

Donald Trump will be sworn in as the 47th President of the United States on January 20, replacing Joe Biden at the White House.

Trump, 78, has announced plans to impose additional tariffs on countries like China, Canada and Mexico. He has publicly announced the use of tariffs as a key policy tool.

On inflation, the IMF expects global disinflation to continue, Georgieva said.

“As we all recognise, the higher interest rates that were necessary to fight inflation did not push the world economy into recession. They have delivered the desired results. Headline inflation is converging back to target sooner in advanced economies than in emerging markets,” she said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Washington:

The Indian economy is expected to be “a little weaker” in 2025 despite steady global growth, IMF Managing Director Kristalina Georgieva has said. Georgieva also said she expects quite a lot of uncertainty in the world this year mainly around the trade policy of the US.

In her annual media roundtable with a group of reporters on Friday, she said global growth is expected to be steady in 2025, but with regional divergence.

Georgieva said she expects the Indian economy to be a little weaker in 2025. However, she did not explain it any further. The World Economy Outlook update week will have more details about it.

“The US is doing quite a bit better than we expected before, the EU is somewhat stalling, (and) India a little weaker,” she said.

Brazil was facing somewhat higher inflation, she said.

In China, the world’s second-largest economy, the International Monetary Fund (IMF) was seeing deflationary pressure and ongoing challenges with domestic demand, she said.

“Low-income countries, despite all the efforts they are making, are in a position when any new shock can affect them quite negatively,” Georgieva said.

“What we expect in 2025 is to have quite a lot of uncertainty, especially in terms of economic policies. Not surprisingly, given the size and role of the US economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” Georgieva said.

“This uncertainty is particularly high around the path for trade policy going forward, adding to the headwinds facing the global economy, especially for countries and regions that are more integrated in global supply chains, medium-sized economies, (and) Asia as a region,” she said.

That uncertainty is actually expressed globally through higher long-term interest rates, even though short-term interest rates have gone down, the IMF Managing Director said.

Donald Trump will be sworn in as the 47th President of the United States on January 20, replacing Joe Biden at the White House.

Trump, 78, has announced plans to impose additional tariffs on countries like China, Canada and Mexico. He has publicly announced the use of tariffs as a key policy tool.

On inflation, the IMF expects global disinflation to continue, Georgieva said.

“As we all recognise, the higher interest rates that were necessary to fight inflation did not push the world economy into recession. They have delivered the desired results. Headline inflation is converging back to target sooner in advanced economies than in emerging markets,” she said.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Washington:

The World Bank has approved a USD 188.28-million loan to stimulate economic growth in Maharashtra, especially in the lagging districts, a media release said.

The USD188.28 million Maharashtra Strengthening Institutional Capabilities in districts for enabling growth operation will support district planning and growth strategies, the bank said in a statement.

Investments under the operation will equip districts with the necessary data, funds, and expertise to maximize the value of public money employed for driving growth and job creation.

It will also enhance private sector participation by improving e-government services for businesses in districts, especially in the tourism sector, it said.

“By providing well-articulated investments in institutional capability and coordination at the district level, the program will enhance evidence-based planning and policymaking, efficient public sector interface with the private sector, and improved service delivery to the public – all of which are the fulcrum of broad-based growth, especially in lagging districts,” said Auguste Tano Kouamé, the World Bank’s Country Director for India.

The operation will unlock the value of public data by building a data governance architecture including the Maha Databank for better coordination, integration, analysis, and dissemination of insights into state development. This data can be used to address key development gaps including gender disparities.

“The operation sets up an incentive framework that will trigger annual fiscal rewards to districts that achieve performance targets. The operation will also strengthen the online service delivery portals MAITRI 2.0 (for services to private sector) and the RTS portal (used for all government services) for improving access of the private sector to timely government services,” said Neha Gupta and Thomas Danielewitz, the Task Team Leaders for the project.

The USD 188.28-million loan from the International Bank for Reconstruction and Development (IBRD) has a final maturity of 15 years, including a grace period of 5 years, the media release said. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Union Finance Minister Nirmala Sitharaman addresses the 11th SBI Banking & Economics Conclave 2024 in Mumbai on November 18, 2024.
| Photo Credit: ANI

Seeking to quell anxieties about a slowdown in the economy, Union Finance Minister Nirmala Sitharaman on Monday asserted that the government was fully aware of domestic and global challenges and there was “no cause for undue concern”.

Ms. Sitharaman batted for lower interest rates to spur private investments while acknowledging that perishable vegetables continue to pose an inflation risk.

Acknowledging that there has been moderation in some economic indicators, Ms. Sitharaman, however, brushed them aside and said India’s economy remained resilient, underpinned by strong macroeconomic fundamentals, moderating inflation, robust external position, and continued fiscal consolidation that have reinforced confidence among both consumers and businesses.

“I need to address the concerns arising from recent signs of moderation in certain economic indicators. The concerns are there… Whilst I acknowledge the remarkable growth trajectory and promising prospects of the Indian economy, it is also important to address the concern… let me assure you that the government is fully aware of the challenges posed by domestic and global factors,” the Minister said at the SBI Banking and Economics Conclave.

The remarks assume significance in the light of slackening momentum in the economy, marked by faltering urban demand and weak corporate results for the second quarter that some economists have even posited as a “cyclical slowdown”.

“There is no cause for undue concern. Recent high frequency indicators also reflect sustained growth momentum. Record e-way bill generation, buoyant trends in rural demand, and strong PMI data for manufacturing and services underscore the steady pace of economic activity,” she said.

She also pointed to healthy growth in foreign direct investment inflows this year and foreign exchange reserves that “comfortably cover 11.8 months of imports and exceed 100% of external debt, underlining the strong net buffer in the Indian economy”.

“So let me assure you all that the government is closely monitoring an evolving situation. We remain committed to taking all necessary measures to ensure that India remains fully and firmly on course to become the third largest economy in the world,” she said.

While noting that stress on the inflation front is coming from three perishables — tomato, onion, and potato — Ms. Sitharaman said she did not want to wade into the debate on whether these should be excluded from the retail inflation measure, but that India periodically suffered from supply inadequacy of these commodities.

“We, as a government, are making a lot of efforts towards scientific and more rigorous storage facility for perishable commodities. So till you really get on the top of that issue, you will periodically have this problem causing immense stress in a cyclical fashion,” Ms. Sitharaman noted.

“Equally, I think what is important is when you look at India’s growth requirements and you have so many different voices coming out and saying the cost of borrowing is really very stressful. At a time when we want industries to ramp up and move, building capacities, our bank interest rates will have to be far more affordable. These are our requirements if we have to make Viksit Bharat not just an aspiration, but a reality. So we need to have a lot more conversation on this,” she said.

Photo used for representation purpose only.

Growth in India’s Gross Goods and Services Tax (GST) collections slumped to a 40-month low of 6.5% in September, yielding revenues of ₹1,73,240 crore, about 1% lower than the tally in August.

Net GST receipts, after adjusting for refunds made to taxpayers, were 3.9% higher than a year ago, marking the slowest growth in this financial year. However, net collections were 1.5% higher than August’s receipts of ₹1,52,782 crore.

In the preceding month, net GST receipts had grown 6.5% while gross collections were up 10%.

Domestic revenues were up 5.9% prior to refunds, and were 4.5% higher after adjusting for refunds, provisional numbers from the Central Board of Indirect Taxes and Customs (CBIC) showed. Growth in gross revenues from imports outpaced domestic revenues for the third straight month, rising 8% in September.

GST refunds continued to grow at a healthy pace for the second successive month, with domestic refunds to taxpayers rising 24.3% in September, while export related refunds of Integrated GST (IGST) revenues were up 39.2%. Overall refunds were 31% higher, compared with a 38% uptick in August and an over 19% contraction in Jul

Union Finance Minister Nirmala Sitharaman in the interim Budget had proposed to borrow ₹14.13 lakh crore by issuing dated securities to meet revenue shortfall in the next financial year.
| Photo Credit: The Hindu

The Centre has retained its borrowing target for the current financial year and plans to raise ₹6.61 lakh crore through auction of dated securities during October-March period of 2024-25 to fund the revenue gap to boost economic growth.

“Out of Gross Market borrowing of ₹14.01 lakh crore budgeted for 2024-25, ₹6.61 lakh crore (47.2%) is planned to be borrowed in H2 through issuance of dated securities, including ₹20,000 crore of Sovereign Green Bonds (SGrBs),” the finance ministry said in a statement on Thursday (September 26, 2024).

The gross market borrowing of ₹6.61 lakh crore shall be completed through 21 weekly auctions.

The market borrowing will be spread over 3, 5, 7, 10, 15, 30, 40 and 50 year securities. The share of borrowing (including SGrBs) under different maturities will be 3-year (5.3 per cent), 5-year (10.6%), 7-year (7.6 per cent), 10-year (24.8%), 15-year (13.2%), 30-year (12.1%), 40-year (15.9%) and 50-year (10.6%).

The government will carry out switching/buyback of securities to smoothen the redemption profile, it said.

It will continue to reserve the right to exercise greenshoe option to retain an additional subscription of up to ₹2,000 crore against each of the securities indicated in the auction notifications, it said.

Weekly borrowing through issuance of Treasury Bills in the third quarter of 2024-25 is expected to be ₹19,000 crore for 13 weeks with issuance of ₹7,000 crore under 91 dated treasury bills (DTBs), ₹6,000 crore under 182 DTBs and ₹6,000 crore under 364 DTBs.

To take care of temporary mismatches in government accounts, the Reserve Bank of India has fixed the Ways and Means Advances (WMA) limit for H2 of FY 2024-25 at ₹50,000 crore.

Out of the gross market borrowing of ₹14.01 lakh crore estimated for 2024-25, ₹7.4 lakh crore, or 52.8%, is already raised in first half (H1).

Finance Minister Nirmala Sitharaman in the interim Budget had proposed to borrow ₹14.13 lakh crore by issuing dated securities to meet revenue shortfall in the next financial year.

However, she reduced the gross borrowing estimate by ₹12,000 crore in the final Budget tabled in July on account of robust revenue collection.

The gross borrowing for FY25 is lower than last year’s gross borrowing estimate of ₹15.43 lakh crore, which was the highest ever.

“The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.01 lakh crore and ₹11.63 lakh crore respectively. Both will be less than that in 2023-24,” she had said.

There are signs of private investment picking up in the steel and cement sector due to massive capital expenditure by the government.

Against the estimate of ₹10 lakh crore for 2023-24, the government has earmarked ₹11.11 lakh crore for this year.

Government final consumption expenditure tanked 0.2% in Q1, while public capital expenditure spends that include projects financed by the Centre, States and central public sector firms, were 33.3% lower than a year ago. 
| Photo Credit: Getty Images/iStockphoto

Signalling a moderation in the economy’s growth momentum, India’s real GDP rose 6.7% in the April to June 2024 quarter, the slowest in five quarters, and well below the Reserve Bank of India’s expectation of a 7.1% uptick as well as the 7.8% uptick registered in the preceding quarter.

For the first time in a year, growth in the real Gross Value Added (GVA) in the economy outperformed GDP growth, with a 6.8% uptick in the first quarter (Q1) of 2024-25. This is a significant shift from the preceding two quarters, Q3 and Q4 of 2023-24, when real GVA growth lagged GDP growth by 1.8 and 1.5 percentage points, respectively.

The central bank has penned in a GDP growth of 7.2% for this year, and the softer than expected Q1 growth amid easing headline inflation may shift the dynamics for its hawkish monetary policy stance, especially with the U.S. Federal Reserve indicating an interest rate cut next month.

Chief Economic Advisor V. Anantha Nageswaran sought to play down the Q1 blip as “a slight slowdown that was anticipated by most commentators” as the conduct of the general elections had brought down government expenditure, including capital spends.

“So in that sense, the 6.7% [growth] was well within the consensus anticipation. At the same time, there is a better alignment between the demand and supply side of the economy, and many components of the demand side, such as final private final consumption expenditure, gross fixed capital formation and net exports have held up quite well,” he said. The 2% rise in farm sector GVA in Q1 indicates a turnaround from recent quarters’ lows, such as the 0.6% rise in January-March 2024, he noted.

Government final consumption expenditure tanked 0.2% in Q1, while public capital expenditure spends that include projects financed by the Centre, States and central public sector firms, were 33.3% lower than a year ago. Still, gross fixed capital formation grew 7.5%, recovering from a four-quarter low of 6.5% in the previous quarter, and private consumption outgoes seemed to rebound from last year’s weak trends to hit a six-quarter high of 7.4%.

“The major components apart from public sector for capex are households and the private sector. A stagnation in the public sector capex along with a steady capex by the household sector indicates a modest pickup in the private sector capex,” said Paras Jasrai, senior economic analyst at India Ratings and Research.

“This GVA growth in Q1 has been driven by significant growth in the Secondary Sector (8.4%), comprising Construction (10.5%), Electricity, Gas, Water Supply & Other Utility Services (10.4%) and Manufacturing (7%) sectors,” the National Statistical Office said.

On the services side, however, growth in the job-intensive ‘Trade, Hotels, Transport, Communication & Services related to Broadcasting’ segment dropped to 5.7% from 9.7% in the same quarter last year, while ‘Financial, Real Estate and Professional Services’ eased to 7.1% from 12.6% a year ago. Economists attributed some of this to statistical base effects.

Congress president Mallikarjun Kharge. File
| Photo Credit: ANI

Congress president Mallikarjun Kharge on July 12 said that Prime Minister Narendra Modi “used PR” to keep the government away from basic issues but people were now demanding accountability after the June Lok Sabha poll results.

Mr. Kharge took a swipe at the Prime Minister, saying that while he is holding meetings under the shadow of cameras for the upcoming budget, he must pay attention to the basic economic issues of the country.

In a post in Hindi on X, the Congress president said, “Narendra Modi ji, Your government has ruined the lives of crores of people by pushing them into the pit of unemployment, inflation and inequality.” Listing the “failures” of the government, Kharge said that due to the unemployment rate of 9.2 per cent, the future of the youth is staring at naught.

“For people aged 20-24 years, the unemployment rate has risen to 40%, highlighting the serious crisis in the job market among the youth,” Mr. Kharge said.

The promise of doubling the income of farmers and MSP of cost plus 50 per cent has turned out to be false, he said.

Recently, on the MSP of 14 Kharif crops, the Modi government has again proved that it wants to use the MSP recommendation of the Swaminathan report only as an “election gimmick”, he claimed.

The Congress leader said, “3.84 lakh government jobs have been lost in the 7 PSUs in which the majority of government stake has been sold! This has also led to the loss of jobs for SC, ST, OBC, EWS reserved posts”.

He said 1.25 lakh people have lost government jobs in the 20 top PSUs in which the Modi government has sold a small stake since 2016.

Manufacturing as a percentage of GDP has fallen from 16.5 per cent during the UPA regime to 14.5 per cent during the Modi government, he pointed out.

“Private investment has also fallen drastically in the last 10 years. New private investment plans, which are an important part of GDP, fell to a 20-year low of only ₹44,300 crore between April and June. Last year, private investment of ₹7.9 lakh crore was made during this period,” he said.

Mr. Kharge also alleged that the havoc of inflation is at its peak.

The prices of flour, pulses, rice, milk, sugar, potatoes, tomatoes, onions, and all essential food items are skyrocketing, he noted.

The result is that the household savings of families are at the lowest level in 50 years, he added.

Mr. Kharge said that economic inequality is the highest in 100 years, while wage growth in rural India is negative.

“Unemployment has increased significantly in rural areas and it has now increased from 6.3% in May to 9.3%. The average number of days of workers employed in MNREGA has decreased,” he said.

“Modi ji, It has been 10 years, you used your PR to keep the government away from the basic issues of the people, but after June 2024, this will not work anymore, the public is now demanding accountability,” Mr. Kharge said.

The arbitrary tampering with the country’s economy must now stop, he added.

Solar panels in the Pavagada Solar Park, Karnataka.
| Photo Credit: Getty Images

Modern economic growth and rising demand for goods at relatively lower prices have led to inevitable exploitation of nature, and consequent climate change. There is no denying that unfettered capitalism has contributed to over extraction of natural resources and increasing emission of greenhouse gases. Should uncontrolled capitalism persist till 2050, the aim of restricting average global temperature within 1.5 °C above pre-industrial levels may remain a pipe dream. Emitting billions of tonnes of carbon dioxide will see continued climate extremes leading to the loss of lives and livelihoods. No wonder, climate emergencies have become frequent.

Many environmentalists believe that the long-term solution to tackling climate crises is to uproot capitalism because “we cannot solve the problem by what caused it”. But with time short for averting catastrophic climate change, the possibility of putting a new economic system in place may seem improbable.

Transform, progress

In Climate Capitalism, Akshat Rathi explores how to transform the world’s dominant economic system while ensuring that the wheels of progress don’t come to a halt. From renewable power to green cement, electric cars to carbon capture, emission-reducing technologies have tossed new opportunities for private capital and government regulations to work in tandem. The process to harness the forces of capitalism to achieve zero emissions has already begun. Although these are still early days for capitalism to wear a natural look for addressing impending climatic concerns, a faint ray of optimism seems to have been generated.

It has been over two decades that industrial capitalism has been critiqued for neither pricing nor accounting its negative externalities. It liquidates natural capital and calls it profit, undervaluing both natural resources and living systems. Rathi chronicles the political manoeuvrings that made possible China’s lead in building fleets of electric cars, India’s success in promoting solar power, America’s success with reversing climate damages in the oil industry, and the Danish quest for pushing wind turbines. All such initiatives combined, it has been estimated that 2% of global GDP is enough to make the carbon dioxide problem go away. Far from being linear, however, there are disruptive elements that play upon power politics to sully the path to zero emissions. Politics, technology and finance must align in the right direction to bring about change, says Rathi.

To work as a unit

With climate emergencies threatening life, public perception on the global climatic accords and green initiatives remains grossly sceptical. Holding an optimist position, Rathi argues that we cannot insulate ourselves from the transformation coming our way. From bureaucrats to billionaires, doers to enforcers, there are multiple actors on the capitalist platform who would need to bridge differences to reform the economic system and help shape a climate-conducive capitalism.

Passionate capitalists fear that policy reforms may kill the market. But policy shifts in favour of climate-oriented technologies and investments have created new business opportunities. Whether such efforts add up to make an impact at global scale is yet to be fully ascertained. Some trends are noticeable, the U.K. economy grew by 60% between 1990 and 2017 while its carbon emissions declined by 40%. The task lies in replicating and escalating such transformative processes and practices. Although climate financing may have been slow, the Paris Agreement has triggered a process of change.

Climate Capitalism conveys an optimistic narrative which contends that it’s cheaper to save the world than destroy it. What kindles a ray of hope is that capitalists themselves have woken up to both the cost of inaction and the opportunity of action.

Climate Capitalism

Akshat Rathi

John Murray/ Hachette

₹699

The reviewer is an independent writer, researcher and academic.