New Delhi:

India’s economic growth is poised to rebound as domestic demand regains strength, though the stickiness in food inflation warrants careful monitoring, the latest RBI Bulletin released on Friday said.

An article on the ‘State of the Economy’ published in the January Bulletin also noted that the economic outlook for 2025 is divergent across countries with some loss of speed in the US; weak-to-modest recoveries in Europe and Japan; more moderate growth profiles in emerging and developing countries alongside a more gradual disinflation relative to advanced economies.

“In India, there is a conducive quickening of high-frequency indicators of economic activity in the second half of 2024-25, bearing out the implicit pick-up in real GDP growth for this period in the annual first advance estimates of the NSO,” it said.

It further said, the headline inflation eased for the second successive month in December, although the stickiness in food inflation warrants careful monitoring of second order effects.

The article has been authored by a team lead by Michael Patra, who demitted the office of RBI Deputy Governor earlier this month.

“India’s economic growth is poised to rebound as domestic demand regains strength. Rural demand continues to gain momentum, reflecting a resilience in consumption, supported by brighter agricultural prospects,” the article said.

A revival in public capex on infrastructure is likely to stimulate growth in key sectors.

It also noted that rising input cost pressures in the manufacturing sector, coupled with weather-related exigencies and global headwinds could, however, pose risks to this outlook.

The central bank, however, said the views expressed in the Bulletin are of the authors and do not represent the views of the Reserve Bank of India. 

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

India’s July-September growth slides: what options does RBI have? | Business Matters

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The Hindu

Economic growth fell sharply to 5.4% for the quarter ended September. The important question is, what next?

Are we looking at a prolonged slowdown? And as importantly, will the Reserve Bank cut rates, something that observers have been expecting it to do for a while so that lower borrowing costs may spur growth? Or will the latest inflation print of a high 6.2% force its hand to maintain status? 

Presentation and direction: K. Bharat Kumar

Video: Thamodharan B.

Editing: Shibu Narayan

Image used for representative purpose only
| Photo Credit: Getty Images/iStockphoto

S&P Global Ratings on Monday (November 25, 2024) revised down its estimate for India’s economic growth in the next two financial years as high interest rate and lower fiscal impulse temper urban demand.

In an update to its economic forecast for Asia-Pacific economies after U.S. election results, the rating agency projected a 6.7% GDP growth rate in 2025-26 financial year (April 2025 to March 2026) and 6.8% in the following fiscal year, down from 6.9% and 7%, respectively in previous projections.

For FY25, S&P Global pegged GDP growth rate at 6.8%.

“In India we see GDP growth easing to 6.8% this fiscal year as high interest rates and a lower fiscal impulse temper urban demand. While purchasing manager indices (PMIs) remain convincingly in the expansion zone, other high-frequency indicators indicate some transitory softening of growth momentum due to the hit to the construction sector in the September quarter,” it said.

The agency expects India’s GDP to grow at 7% in FY28.

S&P retained its growth projection for China at 4.8% in 2024 but cut next year’s forecast to 4.1% from 4.3% earlier and to 3.8% in 2026 from the previous estimate of 4.5%.

“The impending change in the U.S. administration will be challenging for China and the rest of Asia-Pacific. US tariff increases have become more likely, especially on China, and possible changes in the US macro picture are leading to different interest rate expectations,” said the report titled ‘Economic Outlook Asia-Pacific Q1 2025: US Trade Shift Blurs The Horizon’.

Louis Kuijs, S&P Global Ratings Asia-Pacific Chief Economist, said rising risks are blurring the economic outlook for Asia-Pacific in the first quarter of 2025.”While much of the region should be able to continue to grow solidly, central banks will probably remain cautious by not reducing their policy rates too fast.”

China’s stimulus measures should support growth, but S&P expected its economy to be hit by U.S. trade tariffs on its exports.

The Asia-Pacific growth will be impeded by slower global demand and U.S. trade policy. But lower interest rates and inflation should ease their drag on spending power.

Union Minister Dharmendra Pradhan. File
| Photo Credit: PTI

“Though several developed economies suffered badly owing to the COVID crisis, India continued to grow at 7-8% during the last 10 years,” Union Minister Dharmendra Pradhan said on Friday (November 15, 2024.)

In his keynote address at the Indian School of Business (ISB) in Hyderabad, Mr. Pradhan said India is set to become the third largest economy in the world in the next three to four years.

“Several developed economies in the world suffered badly owing to the COVID crisis. Still, we are thriving with a 7-8% growth rate since last decade and we will continue to do that,” he said.

India overtakes U.K. to become fifth largest economy in the world

The Minister of Education said India has a low corporate tax as Prime Minister Narendra Modi is very clear on not getting money to the exchequer by imposing more taxes, but more income in low slabs.

He further said 46% of the global digital payments are happening in India even as 25 crore people have been out of the poverty line.

New Delhi:

Prime Minister Narendra Modi today said this is the right time to join India’s growth story, as German Chancellor Olaf Scholz met the Prime Minister in the national capital with a business delegation.

Addressing the 18th Asia-Pacific Conference of German Business 2024, PM Modi said the time is ripe for foreign investors to participate in India’s growth story, and join the ‘Make in India’ initiative and ‘Make for the World’.

“This is the right time to join India’s growth story as the country is becoming a global trade and manufacturing hub,” PM Modi said, adding that the country stands on strong pillars of democracy, demography, demand, and data.

Germany has expressed that India’s skilled manpower is amazing as the European nation has decided to increase visas for the skilled Indian workforce from 20,000 to 90,000.

Chancellor Scholz arrived in Delhi late on Thursday as part of his three-day official visit to India.

The German Chancellor said he wanted to deepen defence ties with India and bring the two countries’ militaries closer.

“Our overall message is clear, we need more co-operation, not less. At our inter-governmental consultations with India, we also want to deepen cooperation in defence and agree to bring our militaries together,” he said.

The German Chancellor will travel to Goa on Saturday, where the German naval frigate ‘Baden-Wuerttemberg’ and combat support ship ‘Frankfurt am Main’ are making a scheduled port call as part of Germany’s Indo-Pacific deployment.

Earlier in the day, Union Commerce and Industry Minister Piyush Goyal emphasised understanding and respecting mutual sensitivities to fast-track India-EU free trade agreement (FTA) talks.

Addressing the Asia-Pacific Conference of German Business, the minister stated that “extraneous” issues like labour and climate change should be discussed at international forums.

“A trade deal could be concluded swiftly if sensitivities were respected on both sides,” Goyal told the Asia-Pacific conference of German business in the Indian capital, attended by German Economy Minister Robert Habeck.
 

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

New Delhi:

India’s goal of becoming a $35 trillion economy by 2047 hinges on regional stability, said Ajay Bisaria, Former High Commissioner of India to Pakistan.

Speaking about India’s stake in West Asian affairs at the NDTV World Summit, Mr Bisaria argued that India’s role in promoting peace is crucial to mitigating risks to its growth trajectory.

Mr Bisaria highlighted India’s efforts to improve relations with its neighbors, Pakistan and China. He noted that recent diplomatic overtures, including Prime Minister Modi’s upcoming meeting with his Chinese counterpart and External Affairs Minister S Jaishankar’s visit to Pakistan, signal India’s willingness to stabilise these relationships.

When asked about the potential for further progress in India-Pakistan relations following Mr S Jaishankar’s visit, Mr Bisaria stated that the aim is to stabilise, if not normalise, the relationship.

He emphasised India’s desire to be a force for peace and stability in the region and globally. “We want to be the rising tide that helps all the neighbours. And to be an advocate and force for peace in the conflicts in the world”, he said.

Tim Roemer, Executive Director of APCO and Former US Ambassador to India, echoed Mr Bisaria’s sentiments, asserting that India can play a pivotal role in building a new architecture for regional cooperation and security. He highlighted India’s significant diaspora in the Middle East and its growing economic interests as factors driving its engagement in the region.

Mr Bisaria also acknowledged the potential pressure on India-Iran relations due to the ongoing war between Israel and Iran.

He noted that the conflict has implications for India’s diaspora, oil prices, and geopolitical interests.

The BRICS Summit, where Prime Minister Modi and Iranian president met on Tuesday, was an opportunity for India to address these concerns and potentially play a role in peacemaking efforts, he said.

He also said that “If we can play a role in peacemaking, we will. India’s interest is this conflict ending as soon as possible.”
 

New Delhi:

India’s goal of becoming a $35 trillion economy by 2047 hinges on regional stability, said Ajay Bisaria, Former High Commissioner of India to Pakistan.

Speaking about India’s stake in West Asian affairs at the NDTV World Summit, Mr Bisaria argued that India’s role in promoting peace is crucial to mitigating risks to its growth trajectory.

Mr Bisaria highlighted India’s efforts to improve relations with its neighbors, Pakistan and China. He noted that recent diplomatic overtures, including Prime Minister Modi’s upcoming meeting with his Chinese counterpart and External Affairs Minister S Jaishankar’s visit to Pakistan, signal India’s willingness to stabilise these relationships.

When asked about the potential for further progress in India-Pakistan relations following Mr S Jaishankar’s visit, Mr Bisaria stated that the aim is to stabilise, if not normalise, the relationship.

He emphasised India’s desire to be a force for peace and stability in the region and globally. “We want to be the rising tide that helps all the neighbours. And to be an advocate and force for peace in the conflicts in the world”, he said.

Tim Roemer, Executive Director of APCO and Former US Ambassador to India, echoed Mr Bisaria’s sentiments, asserting that India can play a pivotal role in building a new architecture for regional cooperation and security. He highlighted India’s significant diaspora in the Middle East and its growing economic interests as factors driving its engagement in the region.

Mr Bisaria also acknowledged the potential pressure on India-Iran relations due to the ongoing war between Israel and Iran.

He noted that the conflict has implications for India’s diaspora, oil prices, and geopolitical interests.

The BRICS Summit, where Prime Minister Modi and Iranian president met on Tuesday, was an opportunity for India to address these concerns and potentially play a role in peacemaking efforts, he said.

He also said that “If we can play a role in peacemaking, we will. India’s interest is this conflict ending as soon as possible.”
 

Union Finance Minister Nirmala Sitharaman addresses the third edition of Kautilya Economic Conclave. October 4, 2024
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on Friday (October 4, 2024) said India would achieve near doubling of per capita income in the next five years and witness the steepest rise in living standard of the common man in coming decades aided by structural reforms undertaken by the government in the last 10 years.

Addressing the 3rd edition of Kautiliya Economic Conclave in New Delhi, the Minister said, India’s critical economic performance in the recent decade was underscored by its leapfrog from the 10th to the fifth largest economy in a matter of five years.

“While it took us 75 years to reach a per capita income of $2,730, as per IMF projections, it will take only five years to add another $2,000. The upcoming decades will see the steepest rise in living standards for the common man, truly making it a period-defining era for an Indian to live in,” she said.

She added India seeks to double its per capita income in a matter of a few years for its 1.4 billion strong population (which makes up 18 % of the global total) in a fragmented and fractured world where several persistent conflicts may worsen, posing a threat to global peace that is the bedrock of prosperity.

This is being achieved with declining inequality, as the Gini coefficient (income inequality benchmark) for rural India declined from 0.283 to 0.266, and for urban areas it declined from 0.363 to 0.314, she said.

“I expect these improvements to continue as the effects of the last ten years of economic and structural reforms manifest more thoroughly in the data in the coming years as the Covid shock fades from the economy,” she said.

By 2047, as India crosses the 100-year mark of independence, she said, the new Indian era will have core characteristics similar to developed countries.

Viksit Bharat will usher prosperity not just to Indians but to the rest of the world by becoming central to a vibrant exchange of ideas, technology, and culture, she added.

Speaking on the country’s financial system she said the soundness and resilience of India’s banking sector have been underpinned by a sustained policy focus on asset quality improvements, enhanced provisioning for bad loans, sustained capital adequacy, and a rise in profitability.

NPA (non-performing asset) ratios are at a multi-year low, and banks now have efficient debt recovery mechanisms.

Ensuring that the financial system stays healthy and the cycle lasts longer is another of our core policy priorities, the minister said.

A report by the SBI called for more reforms in the banking sector in India. File
| Photo Credit: Reuterss

As the Central government prepares for the Union Budget presentation on July 23, a research report by the State Bank of India (SBI) has highlighted crucial areas that need attention to drive sustainable economic growth and development in the country.

The report emphasises adherence to fiscal prudence while continuing on the path of fiscal consolidation, suggesting a fiscal deficit target of around 4.9%. “Government should focus on adherence to fiscal prudence and continue on the fiscal consolidation path, but at the same time refrain from obsessing too much over the fiscal stance,” the report stated.

To provide relief in tax structures, the report advocates aligning personal income tax rates with corporate taxes and gradually transitioning all payers to the New Tax Regime.

Additionally, it recommended considering tax parity for bank deposits to attract more savings and boost household financial savings.

For the agriculture sector, it highlighted the need to address issues like financing, livelihood support and the Agri Credit Guarantee Trust Fund.

The report also noted that the Minimum Support Price (MSP) has become politicised and suggested exploring alternatives as the current MSP policy reduces trade and export competitiveness. “The issues innate to MSP mechanism viz. needless politics, disincentivising private investment, neglect of non-MSP crops, reduction in export competitiveness and burden of trade disputes alternative mechanism needs to be looked into vigorously, viz. obligation to private parties for buying crops at MSP,” it said.

The report also suggested developing a comprehensive mineral strategy, especially for critical minerals, to ensure mass employment and secure the supply chain from exploration to recycling.

It called for more reforms in the banking sector in India, including the divestment of public sector banks (PSBs) and the stake sale in IDBI Bank. “After a decade of transformative changes, the Indian banking system stands much healthier ready to scale up to meet emerging challenges as the country embarks on the Viksit Bharat sojourn” it said. It also recommended changes to the Insolvency and Bankruptcy Code and the promotion of Production Linked Incentive (PLI) schemes for MSMEs to reduce import dependency.

The report also noted that by incorporating these suggestions into the upcoming Budget, the Government can lay a strong foundation for sustainable growth, promote financial inclusion, and drive economic resilience in the post-pandemic era.

New Delhi:

Global investment bank and financial company Morgan Stanley has stated that the PM Gati Shakti scheme has succeeded in giving a new fillip to India’s infrastructure development and multi-modal connectivity across highways, railways and ports that has spurred economic growth.

According to the report, India has scaled up its infrastructure strongly over the last decade, with higher investment that is also better targeted and potentially more productive.

“We expect India’s infrastructure investment to steadily increase from 5.3 per cent of GDP in FY24 to 6.5 per cent of GDP by FY29. Indeed, this implies that infrastructure investments are expected to register a strong 15.3 per cent CAGR, resulting in cumulative spending of USD 1.45 trillion over the next five years. In our view this will help to lift the investment rate, leading to a sustained period of high productive growth.”

Interestingly, the report also states that “contrary to popular perception, India’s physical infrastructure scale already compares favourably to China’s when viewed in the context of GDP differential.”

The report cites the World Bank’s Logistics Index Report, 2023, which records that the average Container Dwell Time in Indian ports was three days compared to four days for countries like the UAE and South Africa, seven days for the USA, and 10 days for Germany.

Indian Ports “turnaround time” has reached 0.9 days, which is better than the USA (1.5 days), Australia (1.7 days), Singapore (1.0 days), etc. 6. In F24, ports overall cargo growth was 7 per cent, with 53 per cent of cargo handled by major ports (government-owned).

Prime Minister Narendra Modi launched the PM Gati Shakti National master plan for infrastructure development in October 2021. It brings 16 ministries including Railways and Highways together on a digital platform for integrated planning and coordinated implementation of multi-modal connectivity projects. It is conceived as a transformative approach for economic growth and sustainable development with roads, railways, airports, ports, mass transport, waterways and logistics infrastructure constituting “7 engines ” to pull the economy forward in unison.

According to the Morgan Stanley Report, initiatives under PM Gati Shakti are yielding results. Under the PM Gati Shakti scheme so far, cumulatively 101 projects worth Rs 60,900 crore have been identified for implementation in the ports and shipping sectors.

As of April 2023, 26 projects, worth Rs 8,900 crore have been completed, 42 projects worth Rs 15,340 crore are under development, and 33 projects worth Rs 36,640 crore are under implementation.

The Ministry of Ports, Shipping, and Waterways (MoPSW) is also implementing a comprehensive port connectivity plan in coordination with the highways and railways ministries.

The Morgan Stanley report says under the Sagarmala programme, 220 projects worth Rs 1.12 lakh crore have been completed and 231 projects worth Rs 2.21 lakh crore are under implementation while 351 projects worth Rs 2.07 lakh crore are at the evaluation stage.

Similarly, National Waterways are also being developed as a more efficient and environment-friendly means of transport for both cargo and passengers.
 

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