“We will continue to see relentless growth,” Commerce and Industry Minister Piyush Goyal said, adding India’s merchandise and services exports too have recorded high growth during April-October this fiscal. File
| Photo Credit: The Hindu

Growth in the manufacturing sector quickened to 7.7% in the April-June 2025 quarter, coming on top of a high base of 7.6% in the same quarter of the previous year. File
| Photo Credit: Getty Images

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On the economy, the report said during the first half of 2024-25, real GDP growth (y-o-y) moderated to 6 per cent from 8.2 per cent and 8.1 per cent growth recorded during H1 and H2 of 2023-24, respectively. File. Representational image
| Photo Credit: Reuters

The Indian economy is exhibiting resilience and stability, and the gross domestic product (GDP) is projected to grow at 6.6 per cent in 2024-25, aided by a revival in rural consumption, a pickup in government consumption and investment, and strong services exports, a RBI report said on Monday (December 30, 2024).

The Reserve Bank has released the December 2024 issue of the Financial Stability Report (FSR), which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on the resilience of the Indian financial system and risks to financial stability.

“The soundness of scheduled commercial banks (SCBs) has been bolstered by strong profitability, declining non-performing assets and adequate capital and liquidity buffers. Return on assets (RoA) and return on equity (RoE) are at decadal highs, while the gross non-performing asset (GNPA) ratio has fallen to a multi-year low,” the report said.

It also said that macro stress tests demonstrate that most SCBs have adequate capital buffers relative to the regulatory minimum threshold even under adverse stress scenarios. Stress tests also validate the resilience of mutual funds and clearing corporations.

On the economy, FSR said during the first half of 2024-25, real GDP growth (y-o-y) moderated to 6 per cent from 8.2 per cent and 8.1 per cent growth recorded during H1 and H2 of 2023-24, respectively.

“Despite this recent deceleration, structural growth drivers remain intact. Real GDP growth is expected to recover in Q3 and Q4 of 2024-25 supported by pick up in domestic drivers, mainly public consumption and investment, strong service exports and easy financial conditions,” the RBI said.

On inflation, the report said that going forward, the disinflationary effect of a bumper kharif harvest and the rabi crop prospects are expected to soften prices of foodgrains.

On the flipside, the rising frequency of extreme weather events continues to pose risks for food inflation dynamics.

Persisting geopolitical conflicts and geo-economic fragmentation can also impose upside pressures on global supply chain and commodity prices.

New Delhi:

This week India crossed a major milestone as a top global investment destination. Latest data reveals that Foreign Direct Investment into India crossed the thousand-billion-dollar mark since the turn of the century, showing how India has been the favoured destination for foreign investors.

The data released by the Department for Promotion of Industry and Internal Trade or DPIIT showed that the cumulative amount of FDI, including equity, reinvested earnings and other capital, stood at USD 1,033.40 billion (or $1 trillion) between April 2000 and September 2024.

To get a perspective of just how gigantic a trillion dollars really is, let’s take this simple example – If a person was to earn one dollar (Rs. 84) per second (i.e. a trillion dollars in trillion seconds) – then it would take the person 11.5 days to earn a million dollars. But here’s where is gets interesting. Continuing to earn a dollar a second, it would take the person 31.7 years to reach the billion-dollar mark, and a staggering 31,709 years to reach the trillion-dollar figure.

Another thought-provoking way to look at this is that India, which is the fifth largest global economy, has an overall GDP of around $3.89 trillion in 2024. It used to be around $2 trillion in 2014. Now compare that to the FDI inflow of $1 trillion in the last two decades.

SOURCE OF THE FDI

So, where did all this investment come from? Which are the countries from which these investments flowed in? One might assume that the top spot would be either the US, which is the largest economy in the world, or perhaps China, which is the second-largest economy globally. But it’s neither.

The country which has contributed the most in terms of FDI in India during this period is Mauritius – a massive 25 per cent of all FDI inflows came via this route. Mauritius was closely followed by Singapore at 24 per cent. The United States of America came a distant third with 10 per cent.

Other countries which have invested significantly in India include The Netherlands at 7 per cent, Japan at 6 per cent, The UK at 5 per cent, UAE at 3 per cent, and the Cayman Islands, Germany, and Cyprus all accounting for 2 per cent each.

SECTORS WHICH SAW BIG INVESTMENT

The sector which saw the highest investment was the services and allied sector. There was significant investment in computer software and hardware, telecommunications, trading, construction, infrastructure development, automobile, chemicals, and pharmaceuticals.

FDI INFLOWS ON THE RISE

Of the 1,033 billion dollars, USD 667.4 billion came in the last ten years between 2014 and 2024 showing a 119 per cent uptick in investment when compared to the previous decade. The data also revealed that FDI inflows have come for nearly 60 sectors across 31 states and union territories in India.

To attract more investment over time, India has also made its investment policies liberal and lucrative. Reforms have resulted in most sectors, barring ones of strategic importance, see 100 per cent FDI under the automatic route.

Giving impetus to the ‘Make in India’ initiative, the manufacturing sector has seen a 69 per cent rise in FDI in the last ten years as compared to the prior ten.

WHICH SECTORS ARE OPEN AND WHAT IS THE PROCEDURE

FDI is allowed through the automatic route in most of the sectors, while in areas like telecom, media, pharmaceuticals and insurance, government approval is required for foreign investors.

Under the government approval route, a foreign investor has to get a prior nod from the ministry or department concerned, whereas, under the automatic route, an overseas investor is only required to inform the Reserve Bank of India (RBI) after the investment is made.

At present, FDI is prohibited in some sectors. They are lottery, gambling and betting, chit funds, Nidhi company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.

(Inputs from PTI)
 

New Delhi:

This week India crossed a major milestone as a top global investment destination. Latest data reveals that Foreign Direct Investment into India crossed the thousand-billion-dollar mark since the turn of the century, showing how India has been the favoured destination for foreign investors.

The data released by the Department for Promotion of Industry and Internal Trade or DPIIT showed that the cumulative amount of FDI, including equity, reinvested earnings and other capital, stood at USD 1,033.40 billion (or $1 trillion) between April 2000 and September 2024.

To get a perspective of just how gigantic a trillion dollars really is, let’s take this simple example – If a person was to earn one dollar (Rs. 84) per second (i.e. a trillion dollars in trillion seconds) – then it would take the person 11.5 days to earn a million dollars. But here’s where is gets interesting. Continuing to earn a dollar a second, it would take the person 31.7 years to reach the billion-dollar mark, and a staggering 31,709 years to reach the trillion-dollar figure.

Another thought-provoking way to look at this is that India, which is the fifth largest global economy, has an overall GDP of around $3.89 trillion in 2024. It used to be around $2 trillion in 2014. Now compare that to the FDI inflow of $1 trillion in the last two decades.

SOURCE OF THE FDI

So, where did all this investment come from? Which are the countries from which these investments flowed in? One might assume that the top spot would be either the US, which is the largest economy in the world, or perhaps China, which is the second-largest economy globally. But it’s neither.

The country which has contributed the most in terms of FDI in India during this period is Mauritius – a massive 25 per cent of all FDI inflows came via this route. Mauritius was closely followed by Singapore at 24 per cent. The United States of America came a distant third with 10 per cent.

Other countries which have invested significantly in India include The Netherlands at 7 per cent, Japan at 6 per cent, The UK at 5 per cent, UAE at 3 per cent, and the Cayman Islands, Germany, and Cyprus all accounting for 2 per cent each.

SECTORS WHICH SAW BIG INVESTMENT

The sector which saw the highest investment was the services and allied sector. There was significant investment in computer software and hardware, telecommunications, trading, construction, infrastructure development, automobile, chemicals, and pharmaceuticals.

FDI INFLOWS ON THE RISE

Of the 1,033 billion dollars, USD 667.4 billion came in the last ten years between 2014 and 2024 showing a 119 per cent uptick in investment when compared to the previous decade. The data also revealed that FDI inflows have come for nearly 60 sectors across 31 states and union territories in India.

To attract more investment over time, India has also made its investment policies liberal and lucrative. Reforms have resulted in most sectors, barring ones of strategic importance, see 100 per cent FDI under the automatic route.

Giving impetus to the ‘Make in India’ initiative, the manufacturing sector has seen a 69 per cent rise in FDI in the last ten years as compared to the prior ten.

WHICH SECTORS ARE OPEN AND WHAT IS THE PROCEDURE

FDI is allowed through the automatic route in most of the sectors, while in areas like telecom, media, pharmaceuticals and insurance, government approval is required for foreign investors.

Under the government approval route, a foreign investor has to get a prior nod from the ministry or department concerned, whereas, under the automatic route, an overseas investor is only required to inform the Reserve Bank of India (RBI) after the investment is made.

At present, FDI is prohibited in some sectors. They are lottery, gambling and betting, chit funds, Nidhi company, real estate business, and manufacturing of cigars, cheroots, cigarillos and cigarettes using tobacco.

(Inputs from PTI)
 

The government is considering changing the base year for computation of the GDP to 2022-23 in February 2026 to reflect an accurate picture of the economy, a top Government official said.

This will be the first revision in over a decade. It was last done in 2011-12.

Also read: India’s real GDP growth slumps to multi-quarter low of 5.4%

Addressing an event here, Ministry of Statistics and Programme Implementation (MoSPI) Secretary Saurabh Garg further said the ministry will come up with monthly estimates of Periodic Labour Force Survey (PLFS) from January next year.

“…next base year (GDP) will be 2022-23…will be implemented from February 2026,” Mr. Garg said.

The 26-member Advisory Committee on National Accounts Statistics (ACNAS), which was constituted under the Chairmanship of Biswanath Goldar, is expected to complete the exercise by early 2026.

Regularly updating the base year is essential to ensure that indices accurately reflect changes in the economy’s structure, such as shift in consumption pattern, sector weight and the incorporation of new sectors.

Mr. Garg said that MoSPI is in process of starting procedure of economic census.

He also pitched for promoting data driven decision making.

Mr. Garg also favoured better data governance by way of uniform guidelines.

He lamented that some of the affluent neighbourhood are refusing to talk to ministry’s surveyors.

Representational image only. File
| Photo Credit: Reuters

“India’s real Gross Domestic Product (GDP) growth slumped to a multi-quarter low of 5.4% in the July to September 2024 quarter (Q2 of 2024-25), from a five-quarter nadir of 6.7% in Q1, with Gross Value Added (GVA) growth slowing to 5.8% from 6.8% in Q1,” as per the National Statistical Office (NSO).

Real GDP growth stood at 8.1% in the second quarter of 2023-24, while GVA growth was 7.7% in that quarter.

Reserve Bank of India (RBI) officials, had in its October bulletin, estimated GDP growth of 6.8% in Q2 citing economic activity indicators, while the Central bank’s official estimate, as enunciated in its latest monetary policy review, was 7%.

Barring Agriculture and Services sectors, all segments of the economy reported a sharp deceleration from a year ago, with Mining and Quarrying GVA slipping into the red with a contraction of 0.1%, from an 11.1% uptick in Q2 last year.

Agriculture, livestock, forestry and fishing GVA grew 3.5%, more than double the 1.7% uptick recorded a year ago.

Manufacturing growth also hit a bump to drop to a mere 2.2% from 14.3% in Q2 of last year, while construction GVA rose 7.7%, about half the 13.6% uptick a year earlier.

Electricity, gas, water supply and other utility services’ GVA rose 3.3%, compared to 10.5% in July-September of 2023.

Public Administration, Defence and other services led the acceleration among services, with GVA rising 9.2% from 7.7% last year. GVA for trade, hotels, transport, communication and services related to broadcasting improved 6.6% from 4.5% a year earlier, while it was 6.7% higher for financial, real estate and professional services, marginally better than the 6.2% rise in Q2 of 2023-24.

“Despite sluggish growth observed in manufacturing (2.2%), mining and quarrying (-0.1%) sectors in Q2 of FY 2024-25, real GVA in H1 (April-September) has recorded a growth rate of 6.2%,” the NSO noted.

On the bright side, the NSO highlighted a rebound in consumption spending, pointing to a 6% growth in Private Final Consumption Expenditure (PFCE) in Q2 this year over the growth rate of 2.6% a year ago. However, this marks a slowdown from the first quarter of this year, when PFCE had risen 7.4%, the fastest in six quarters.

Growth in gross fixed capital formation, an indicator of capital investments in the economy, slipped to 5.4% from 7.5% in Q1, reflecting the slowest pace in at least six quarters.

While the RBI has projected a full-year GDP growth of 7.2% and the Finance Ministry expects growth in the 6.5% to 7% range, this may require a sharp rebound in the second half of the year with real GDP rising 6% between April and September as per the NSO data. This is the slowest six-month growth print since the second half of 2022-23 when GDP rose 5.3%, and markedly lower than the 8.2% rise recorded in the first half of 2023-24.

India’s gross domestic product slowed to a quarter low of 6.7 per cent in April-June this fiscal against 8.2 per cent in the year-ago period, mainly due to poor showing by the farm sector, shows government data.

Growth in Asia’s third-largest economy had been well above 7 per cent during previous quarters.

The previous GDP low was 6.2 per cent in January-March 2023.

India remains the fastest-growing major economy, as China’s GDP growth in the April-June quarter was 4.7 per cent.

The agriculture sector recorded a 2 per cent growth, down from 3.7 per cent in the April-June quarter of 2023-24, as per the National Statistical Office (NSO) data released on Friday.

However, the growth in the manufacturing sector accelerated to 7 per cent in the first quarter of the current fiscal compared to 5 per cent in the year-ago period.
 

Arvind Virmani, NITI Ayog member. File
| Photo Credit: Special arrangement

“The Indian economy will grow around 7% in the current fiscal year and is on track to maintain a similar growth rate for several years,” NITI Aayog member Arvind Virmani said on July 12.

Mr. Virmani said there are new challenges facing the country and they will have to be dealt with. “Indian economy will grow at 7% plus minus point 0.5%… I expect that we are on track to grow at 7% for several years from today,” he told PTI in an interview.

Last month, the Reserve Bank of India (RBI) pegged the FY25 gross domestic product (GDP)growth rate at 7.2%. Responding to a question on the decline in private consumption expenditures in the last fiscal year, Mr. Virmani said it is actually recovering now.

“The effect of the pandemic was to draw down savings… and very different from previous financial shocks,” he said. Explaining further, Mr. Virmani said it is like what he calls a double drought situation.

“We also had, of course, El Nino last year, but what the pandemic did was that it resulted in people having to draw down their savings… So, the obvious reaction is to rebuild your savings, which tend to reduce current consumption,” he noted.

“If people were buying branded goods, they will buy less branded or ordinary goods and save part of that money,” he said, explaining that this shows a slide in consumption.

Mr. Virmani said history shows that coalition partners can slow privatisation in States in which the regional ally is in power, but that is not a big issue.

“I see no reason why privatisation cannot happen in the other States and it may also happen in these States (where coalition parties are in power). I am just giving you a historical example,” he said.

With support from N. Chandrababu Naidu’s Telugu Desam Party (TDP) and Nitish Kumar-led JD(U), along with other alliance partners, the NDA crossed the halfway mark in the recently held Lok Sabha elections to form the government at the Centre.

On the decline in foreign direct investments (FDI) to India, despite it being the fastest growing economy, Mr. Virmani said riskless return of investment is much higher in the U.S. and other developed countries than in emerging markets.

“As soon as interest rates begin to come down in the U.S., I expect the FDI into emerging markets, including India, to increase,” he said.

The problem of high food inflation will be “less severe” in India going ahead, as modern supply chains with diversified sources can help quickly address sudden spikes in prices of specific food items, RBI Monetary Policy Committee (MPC) member Ashima Goyal said on April 25.

Stressing that the share of food in the household budget is high in India, Ms. Goyal said policy needs to focus on increasing agricultural productivity, since stable agricultural prices are important for non-inflationary growth.

Also Read | Extreme weather may pose risk to inflation, says RBI Bulletin

“As India develops, this problem (high food inflation) will get less severe, for a number of reasons. Modern supply chains with diversified sources respond quickly to large spikes in specific items,” she told PTI.

Ms, Goyal further pointed out that one does not hear of tomato or onion prices spiking in advanced economies.

“We naturally have diverse geographic regions, better integrated markets sourcing from different regions can help mitigate climate change induced food price spikes,” she said.

Moreover, as the weight of food in consumption falls and food consumption itself becomes more diversified, the impact and size of future food price shocks falls, she noted.

Ms. Goyal stressed that under flexible inflation targeting, expectations get better anchored.

She cited the example of East Asia, where food prices were allowed to rise and agriculture was subsidized only after food budget shares fell.

Also Read | Inflation drops to 10-month low in March, but no relief on food bills yet

“India unfortunately opted for a distorting system of subsidies to farmers as well as to consumers,” she said, adding that given India’s huge population this was very expensive and reduced the space for government investment in agriculture.

Besides, Ms. Goyal said it also kept inflation high as procurement prices rose each year.

She said agricultural productivity is finally rising supported by a policy reset, along with the availability of new technologies even though further policy adjustment is required, she stressed.

According to official figures, retail inflation declined to a five-month low of 4.85% in March, mainly due to cooling down of food prices. The inflation in the food basket was at 8.52% in March, down from 8.66% in February.

RBI Governor Shaktikanta Das has recently said that the baseline projections show inflation moderating to 4.5% in 2024-25, from 5.4% in 2023-24, and 6.7% in 2022-23.

Replying to a question on India’s current macroeconomic situation, Ms. Goyal said conditions have been created for sustainable and inclusive growth.

“We are seeing results since 2021 with continued robust growth, reduction in multi-dimensional poverty, more assets and infrastructure sustainably helping the lower income groups, more opportunities for youth,” she said.

Ms. Goyal said inequality has risen but the famous ‘Kuznets inverted U-curve’ tells us that this is normal in a period of high growth and should come down over time.

But for the economy to continue on such a path, the eminent economist said policy continuity is very important.

“Policy lessons on what worked must be internalized, domestic policy shocks avoided and external shocks smoothed, even as supply-side enabling reforms continue,” Ms. Goyal suggested.

She emphasised on the need of enhancing the economy’s resilience and diversity saying, “we live in troubled times of geopolitical, geoeconomic and climate fragilities.”

Also Read | Indian economy projected to grow 6.5% in 2024: UNCTAD

During 2023-24, the economy is likely to record a growth rate of near 8% on account of good performance of manufacturing and infrastructure sectors.

Recently, the International Monetary Fund (IMF) raised India’s growth projection to 6.8% for 2024, from its January forecast of 6.5%, citing bullish domestic demand conditions and a rising working-age population.

The Asian Development Bank (ADB) also raised India’s GDP growth forecast for the current fiscal to 7%, from 6.7% earlier, saying the robust growth will be driven by public and private sector investment demand and gradual improvement in consumer demand.