Tag: India GDP

India can’t achieve 10% GDP in absence of labour laws says Enam Holdings’ Director Manish Chokhani

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Director of Enam Holdings, Manish Chokhani believes that if the government led by Narendra Modi comes to power for the third successive term, then India can touch the 10% economic growth mark. However, for that the government will have to legislate some important laws.

Speaking during a panel discussion at CNBC-TV18’s India Exchange programme on Thursday, April 4, in Mumbai, Chokhani pointed out that the BJP, which is likely to retain power in New Delhi, could accelerate the pace to reach 10% gross domestic product (GDP) by making some key decisions. It includes passing farm laws, labour reforms, administrative reforms and judicial reforms, among others.

Chokhani said, “10% growth cannot happen in the absence of labour laws. (It can be done by) getting people out of agriculture, getting urbanisation and skilling them… (These) small things add up and that gives you the takeoff to the 10% growth number. I’m quite hopeful that this government comes and does.”

Meanwhile, Chairman and co-founder of Motilal Oswal Financial Services, Raamdeo Agrawal, stressed on the need to harness the power of the stock market. He pointed out that by utilising the power of the stock market, India could turn into a $10 trillion market economy in the next four to five years.

“I think one of the things which most governments miss out on is the power of wealth creation by the stock market. I think last year, the capital market created upwards of ₹120-130 lakh crore on a GDP of about ₹300 lakh crore,” Agrawal said.

He highlighted that the power of the stock market is a differentiator between India and China and its the difference between the US and the rest of the world, Agrawal added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

World Bank upgrades India’s growth forecast to 7.5% for FY24, pegs rate at 6.6% for FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian economy is expected to have grown 7.5% in the 2023-24 fiscal year, the World Bank said in its latest report on April 2, revising its earlier forecast of 6.3%. This compares to the Reserve Bank of India’s (RBI) real GDP growth rate projection of 7.3%.

While the World Bank expects higher growth for the last fiscal year on the back of robust growth in the third quarter, it estimates growth to moderate to 6.6% in the 2024-25 fiscal year before it picks up again in subsequent years as a “decade of robust public investment yields growth dividends.”

The forecast is lower than that of India’s central bank, which has pegged the growth rate at 7% for FY25. For Q1, RBI has estimated 7.2% GDP growth, Q2 GDP is estimated at 6.8%, Q3 at 7% and Q4 at 6.9%.

The World Bank, in its latest South Asia Development Update, asserted that the expected slowdown in growth between FY23/24 and FY24/25 mainly reflects a “deceleration in investment from its elevated pace in the previous year”. Growth in services and industry is expected to remain robust, the latter aided by strong construction and real estate activity, it noted.

The World Bank is of the view that inflationary pressures shall subside, creating more policy space for easing financial conditions. Over the medium term, the fiscal deficit and government debt are projected to decline, supported by robust output growth and consolidation efforts by the central government, it added.

Also Read: Peter Cardillo of Spartan Cap explains why the US Fed might lower interest rates twice this year

According to the report, South Asia is expected to remain the fastest-growing region in the world for the next two years, with growth projected to be 6.1% in 2025.

In neighbouring Bangladesh, output is expected to rise by 5.7% in FY25 with high inflation and restrictions on trade and foreign exchange constraining economic activity, the report said.

It added that following the contraction in FY23, Pakistan’s economy is expected to grow by 2.3% in FY25 as business confidence improves. In Sri Lanka, output growth is expected to strengthen to 2.5% in 2025, with modest recoveries in reserves, remittances, and tourism.

Martin Raiser, World Bank Vice President for South Asia, believes that South Asia’s growth prospects remain bright in the short run, but fragile fiscal positions and increasing climate shocks are dark clouds on the horizon.

He suggests nations adopt policies to boost private investment and strengthen employment growth to make growth more resilient.

Also Read: Experts anticipate RBI to keep interest rates unchanged in April

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s real GDP growth likely to moderate to 6.8% in FY25: S&P Global Ratings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After a better-than-expected 7.6% growth in the fiscal year 2024, as estimated by the National Statistical Office, India’s real GDP growth is expected to moderate to 6.8% in the fiscal year 2025 (ending March 2025), according to the report released by S&P Global Ratings.

Growth is expected to pick up in trade-dependent developed economies such as South Korea, Taiwan, and Singapore, and fall in relatively domestic demand-led ones such as Japan and Australia. However, for Asian emerging market economies, robust growth is projected with India, Indonesia, the Philippines, and Vietnam in the lead.

The “Economic Outlook Asia-Pacific Q2 2024” report highlights that largely domestic demand-led economies such as India, Japan, and Australia, the impact of higher interest rates and inflation on household spending power reduced sequential GDP growth in the second half.

The report forecasts potential rate cuts of up to 75 basis points in economies such as India, Indonesia, New Zealand, and the Philippines, with the median reduction expected to be around 50 basis points. However, these moves are anticipated to occur predominantly in the latter half of the year.

In India, consumer inflation is expected to decline further to an average of 4.5% in the fiscal 2025. The Consumer Price Index or CPI, which measures retail inflation by examining the changes in prices of most common consumer goods and services, stood at 5.09 for February. 

According to the report, slowing inflation, a smaller fiscal deficit and lower US policy rates will lay the ground for the Reserve Bank of India to start cutting rates. 

In the face of global economic uncertainties, most Asia-Pacific central banks are adopting a cautious approach towards initiating interest rate cuts, according to the report. It highlights that Asia-Pacific economies are closely monitoring the actions of the United States’ Federal Reserve, aiming to prevent potential capital outflows and currency instability by refraining from significant rate reductions ahead of the US central bank.

Louis Kuijs, the Chief Economist for S&P Global Ratings Asia-Pacific, noted that while some central banks in the region may consider rate cuts in the coming months, they are likely to wait for signals from the US Fed before taking decisive action.

Despite risks surrounding the US economy, including concerns about inflation and a potential economic slowdown, Asia-Pacific central banks remain cautious about easing monetary policy due to the impact of higher US interest rates on capital outflows in the region.

In China, GDP growth is expected to decelerate to 4.6% in 2024, reflecting ongoing weaknesses in the property market and moderate macroeconomic policy support.

The report emphasises that while inflationary pressures have softened, Asia-Pacific central banks are closely monitoring economic indicators, with the possibility of rate cuts becoming more compelling if current policy rates continue to affect demand.

Also Read: India needs to focus on structural reforms, says World Economic Forum’s MD Jeremy Jurgens

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Foreign Portfolio investors invest over ₹6,100 crore in March so far on strong economic growth

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Foreign Portfolio Investors (FPIs) are turning steady buyers as they bought Indian equities worth ₹6,139 crore so far this month driven by strong economic growth, market resilience and decline in US bond yields. This came following a modest investment of ₹1,539 crore in February and massive outflow of ₹25,743 crore in January, data with the depositories snowed.

“FPI inflows have shown a positive trend as compared to the previous month. Thanks to the recent announcement of Q3 GDP numbers at 8.4%, persistence performance of large Indian corporates being major factors for turning the tide green for the Indian equity market,” Manoj Purohit, Partner and leader – FS Tax, Tax and Regulatory Services, BDO India, said.

On the regulatory front, announcements such as removal of UAE from the grey list, SEBI’s consultation paper for easing disclosures norms for regulated FPIs have been the major catalysts to put India on the forefront for potential long term investments for the foreign fraternity, he added.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, attributed this renewed interest in Indian equities to three reasons — resilience of Indian markets, steady drop in the US bond yields (the 10-year yield has declined from above 4.3% to 4.08% now) and strong GDP growth. These positive developments and the sustained flow of funds into the market — both directly and through institutions — can keep the market resilient.

“However, high valuations are a matter of concern. Valuations in the mid and small cap segments are excessive and unjustifiable. Correction in this segment is only a matter of time,” Vijayakumar said. Apart from equities, FPIs have injected ₹1,025 crore in the debt market during the period under review. This came in the backdrop of Bloomberg announcing India’s bonds inclusion in its Emerging Market (EM) Local Currency Government Index and related indices from January 31 next year.

Moreover, FPIs have been injecting money in the debt markets for the past few months driven by upcoming inclusion of Indian government bonds in the JP Morgan Index. They infused ₹22,419 crore in February, ₹19,836 crore in January, and ₹18,302 crore in December.

JP Morgan Chase & Co. in September last year announced that it will add Indian government bonds to its benchmark emerging market index from June 2024. This landmark inclusion is anticipated to benefit India by attracting around $20-40 billion in the subsequent 18 to 24 months. This inflow is expected to make Indian bonds more accessible to foreign investors and potentially strengthen the rupee, thereby bolstering the economy.

Overall, the total outflow for this year so far stood at over ₹18,000 crore in equities and an inflow of ₹43,280 crore in debt market.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

View: India’s ease of doing business transformation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In the past decade from 2014 to 2024, India has taken its place as a Top 5 global economy, on track to soon reach third rank behind only the US and China. This formidable trajectory is also reflected in the remarkable leap forward in the Nation’s Ease of Doing Business (EoDB) rank – from 142 in 2014 to 63rd rank in 2019.

Numerous measures across multiple economic sectors have converged towards this favourable EoDB trajectory. The Goods and Services Tax Network (GSTN) unified the country’s states and UTs under one intra-national economic market system by integrating many fragmented tax systems. Heavily digitalised, the GSTN system has wielded multiple breakthroughs in making trade across the country more efficient, increasing tax collections, and decreasing supply chain costs and the overall level of taxation and prices.

The Insolvency and Bankruptcy Code (IBC) was a gamechanger by allowing assets to remain as viable units instead of being made piecemeal, and by allowing creditors to initiate both liquidation, and reorganisation and continuation of essential goods or services critical to protecting and preserving the value of the debtor during the proceedings. IBC also helps with preserving and recovering capital from failed assets, and ring-fences successful bidders of stressed assets from the risk of criminal proceedings. IBC has increased loan repayments and reduced delinquent accounts.

India is one of the few countries worldwide investing over $1 trillion annually in the economy, government and private, combined via Gross Capital Formation. This amounts to a significant 31% of the nation’s GDP. To boost trade activities, significant investments have been made towards increasing the capacities of India’s ports, airports, freight, railways and other critical aspects of trade-related logistics. The trip from Bangalore to Delhi previously took four days, now it’s possible in two. Goods carriage speeds have exceeded 45kmph, from an average of 25kmph earlier. The Dedicated Eastern and Western Corridors for exclusive goods movement up and down the country have been a game-changer. Between GST and infrastructure development, supply chain costs are reducing from 14% of GDP to 8-9%.

Impact of ‘Make in India’

Apart from improving the physical infrastructure, measures like electronic sealing of containers, electronic submission of supporting documents with digital signatures, machine-based automated clearance of imported goods and use of handheld devices for on-the-spot clearances have been taken to improve port operations and reduce turnaround times.

The ‘Make in India’ scheme has paid significant dividends to India’s export and employment outlook. The country is now the second largest manufacturer of mobile phones globally, with Apple producing $10 billion worth of iPhones in the last ten months itself. Value-added mobile manufacturing has steadily increased from 10% to 25%. The PLI schemes in strategic industries are incentivising the expansion of Indian manufacturing and production and making the nation globally competitive. Significant growth has been observed in sectors like pharmaceuticals, heavy chemicals, and electronics. The EV industry got its head start due to various incentives. Expanding the semiconductor industry via large grants to three companies will create a strong foundation for the industry in India while sending a strong signal globally about India’s seriousness regarding business expansion and growth. Bangalore already hosts the largest concentration of chip designers and testers in the world, at 300,000+. This will accelerate India’s growth in semiconductors and chip manufacturing.

Several measures to simplify the process of starting businesses have been taken to boost entrepreneurship and business expansion. Forms like SPICe+ and AGILE PRO integrate various services like PAN, TAN, DIN and GSTN into one, and are processed within two to three days. A single window for construction permits has also been introduced via OBPS.

The tax systems, both direct and indirect, have been automated and efficiency has accelerated. More than 97% of tax assessments are completed within 30 days of filing. Digitalisation has significantly increased tax collections. Digitalisation across the economy has tremendously benefitted common citizens and their productivity—like accessing birth and death certificates, and land records, and registering purchases of land and other assets.

More reforms needed

While there is tremendous progress in increasing the velocity of business and EoDB in India, addressing the following fundamental issues over the next five years will accelerate the ascent. Reforms are sorely needed in India’s justice system. Today commercial disputes take any time between 5-15 years to resolve, working its way through the courts. The system is overloaded with hardly 21 judges/million population, whereas the optimum number is between 50 and 100.

Court proceedings often drag on with frequent adjournments. Lack of judicial capacity, archaic laws (despite repealing numerous old laws), and complicated processes impede justice and EoDB. The Commercial Courts Act 2015 and Amendment in 2018 provided for increasing the number of commercial courts across all levels—district, town and state, decreasing the monetary limit of commercial disputes to include a wider number of beneficiaries, and the use of IT and digitalisation services to hasten court operations, the implementation must accelerate so commercial disputes can be settled within two and three years as in developed economies.

Unnecessary tax disputes are hurting India’s brand equity. The quantum of tax disputes has increased from ₹4.5 lakh crore in 2014 to around ₹12 lakh crore in 2023. Many of these disputes are overturned on appeal necessitating action to eliminate unnecessary high-pitch assessments. Accountability for wrong assessments and tax disputes must be increased, and broad administrative reforms must be enacted to curb any arbitrary powers.

It is also incumbent on government organisations to respond to queries and give approvals within defined time limits to enhance EoDB. For example, while the RBI has complete autonomy on regulatory matters and conducts its role as the government’s banker admirably, their response time to queries or approvals required for business has been lacklustre. Many startups have relocated outside India due to the RBI’s lack of response in the matter of their handling of foreign currencies. RBI must create a KYC-driven digital depository system for investment in unlisted companies, as exists for listed companies.

Overall, the Indian government’s massive drive towards digitalisation, digital and financial inclusion, improvement of processes, and removal of unnecessary approvals over the past decade has paid rich dividends. India is steadily positioning itself as the world’s growth engine over the next 25-50 years. Accelerating India’s EoDB ranking is of vital importance to increase the velocity of business. Some critical measures that are required over the next five years to improve judicial capacity, decrease tax disputes and ease the flow of foreign currency in and out of the country will have an outsized impact on the EoDB in India.

—The authors, Dr TV Mohandas Pai is Chairman at Aaron Capital and former CFO and Board Member of Infosys, and Nisha Holla, is Technology Fellow, C-CAMP(Centre for Cellular & Molecular Platforms). Views expressed are personal

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s chief economic advisor nudges agencies to reappraise India’s GDP growth closer to 7%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s Chief Economic Advisor (CEA) V Anantha Nageswaran has prompted various agencies to reassess their projections for India’s Gross Domestic Product (GDP) growth, advocating for figures closer to 7% or higher for the fiscal year 2025.

Citing optimistic forecasts from the Reserve Bank of India (RBI) for the fiscal year 2025, Nageswaran emphasised the need for a reassessment in light of potential growth prospects.

Nageswaran underscored the significance of rural income improvements in the upcoming fiscal year, predicated on favourable agricultural conditions. He highlighted the impact of a normal monsoon and robust Kharif and Rabi crop yields on the anticipated growth trajectory.

“There is a case for many agencies to reappraise their estimates of potential GDP growth in India to closer to 7% if not above,” said Nageswaran. “And let’s also remember that the RBI is projecting 7% GDP growth for FY25 as well.”

Nageswaran’s remarks come against the backdrop of modest agricultural growth during the first nine months of fiscal year 2024, attributed to erratic monsoon patterns. While Kharif harvests recorded lower yields, the CEA expressed optimism regarding the promising Rabi sowing figures.

“Agri growth for the first 9 months in FY24 has been somewhat lacklustre because of an erratic monsoon, kharif harvest is on the lower side, but the good news is that the Rabi sowing has been quite good compared to last year,” noted Nageswaran. “Predictions of withdrawal of El Niño also make the case for a normal monsoon in the next financial year as well as good harvests for both Kharif and Rabi crops next year.”

Anticipating a rebound in the agricultural sector’s value-added contributions in FY25, Nageswaran emphasised the ripple effect on rural incomes, projecting a positive trajectory for economic growth in tandem with agricultural prosperity.

Nageswaran’s call for a reassessment of GDP growth estimates signals a potential shift in economic outlook, with emphasis on the agricultural sector’s pivotal role in shaping India’s economic landscape in the coming fiscal year.

Meanwhile, in its latest report released on Monday, March 4, Moody’s said with the waning of global headwinds, it forecasts around 6.8% growth in the calendar year 2024, followed by 6.4% in 2025.

Also Read: GVA-GDP Divergence: Storm in a tea cup? CEA dismisses concerns by saying ‘it’s nothing new’

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Can India be what China was in the early 2000s? Insights from Manulife’s Rana Gupta

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The growing interest in the Indian market of late had led investors to increasingly wonder if India can potentially emulate China’s economic boom in the early 2000s, says Rana Gupta, Senior Portfolio Manager at Manulife Investment Management.

In an interaction with CNBC-TV18, Gupta noted that India, with its $4 trillion economy and $4 trillion market capitalisation, represents a sizeable and fluid market. “India stands out significantly among emerging markets due to its size, growth potential, and the substantial value it can contribute,” he added.

India’s GDP growth for the third quarter of the fiscal year 2023-24 surpassed expectations, coming in at 8.4% compared to the estimated 6.7%. The National Statistical Office’s (NSO’s) second advance estimate also projects a higher GDP growth rate of 7.6% for the entire fiscal year, up from the initial estimate of 7.3%.

In a recent interaction with CNBC-TV18, Mugunthan Siva, Managing Director of India Avenue Investment Management  had also pointed out that India is attracting long-term investors due to its strong economy and healthy corporate earnings growth. China, however, is seeing a surge in short-term interest.

“Seven years ago, it was very difficult to sell an ‘India only’ story and over the last one-two years, that story has become much easier to position simply because India’s growth rate stands out relative to the other economies,” he said, adding that investors might be adding some China exposure because the valuations are so cheap.

Also Read | India’s GDP growth surprises again

China’s economy, on the other hand, has been grappling with several key issues, including an unfolding property crisis and stubborn deflation. A recent stock market rout has underscored an erosion of investor confidence, despite Beijing’s attempt to turn things around, notably by unleashing more long-term cash for banks and broadening developer access to loans.

The latest factory production also decreased for the fifth consecutive month in February, indicating that low demand continues to pose a challenge for the economy.

Rana Gupta also shared his views on other global markets. He noted that the US and Japan continue to do well, but the US strength is largely tech led while Japan is driven more by the restructuring of businesses. He also pointed out that recently South Korea and some other ASEAN markets have also joined the list of strong performers.

Also Read | China factory activity slows as weak demand hampers growth

For the entire interview, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s GDP growth surprises again

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s gross domestic product (GDP) growth for the third quarter (October-December) of the fiscal year 2023-24 has surpassed expectations, coming in at 8.4% compared to the estimated 6.7%, according to data released by the Ministry of Statistics & Programme Implementation on Thursday, February 29.

This growth rate surpassed economists’ forecasts, which had projected 6.7% as per a Reuters poll, and was higher than the revised growth of 8.1% in the previous quarter. It’s the second consecutive quarter where the government’s GDP estimate has exceeded street expectations.

The National Statistical Office’s (NSO) second advance estimate also forecasts a higher GDP growth rate of 7.6% for the entire fiscal year, up from the initial estimate of 7.3%.

Notably, the growth in the third quarter was primarily driven by double-digit expansion in the manufacturing sector at 11.6%, closely followed by the construction industry, which recorded a growth rate of 9.5%.

Despite this positive trend, the agriculture sector’s gross value added (GVA) experienced a contraction of 0.8%

‘Unlikely to be sustainable’

Economists elaborated on the “sharp upside surprise” in the GDP number announced ahead of the general election. “The Q3 data on India’s growth threw up a divergent trend, with the GVA growth moderating broadly on expected lines to 6.5%, and the GDP expanding by a much higher than anticipated 8.4%. This wide gap followed from a surge in the growth of net indirect taxes to a six-quarter high of 32% in this quarter, which is unlikely to be sustainable,” said Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd.

“Amidst the sharp upside surprise in the headline GDP growth number, the contraction in the GoI’s revex and capex, as well as the slide in the core sector growth in January 2024, offer some sobering trends,” Nayar added.

Suman Chowdhury, Chief Economist & Head of Research, Acuité Ratings, said, “One of the key reasons for the material shift in the GDP print is the revisions in the GDP data for some quarters of the previous fiscal.”

“What is noteworthy is the significant differential between GVA (6.5%) and GDP (8.4%) growth in the third quarter. The manufacturing sector has grown by 11.6% YoY in Q3FY24 which may be partly due to higher operating margins driven by lower raw material costs… Given the revised GDP data, we may need to rework our estimates for FY24. Clearly, the higher-than-expected momentum in the economy may lead to a tight monetary policy from RBI for a longer period and any reversal in the current stance is unlikely over the next six months,” Chowdhury added.

Madhavi Arora, Lead Economist at Emkay Global Financial Services said, “I think we all have underestimated India’s underlying growth story. At the beginning of the year if you had asked any of us if we are expecting 7% growth in FY24? Most of us would have been sceptical. Most of the forecasts were hovering close to sub 6.5%. We all have gone through the year and every quarter the number has surprised on the upside. Historical data also has been revised up on a net basis which shows that the revised data which also incorporates the unorganised sector has not been as weak as we initially estimated. So it shows that the underlying momentum has been somewhere missed by most of us.”

“Unfortunately, what I am seeing at least for this particular year is that there has been very wide divergence on a quarterly basis between private consumption and gross fixed capital formation (GFCF). So you are coming to a situation which is very much like a China growth model in the 2003-2012 period where you see a massive growth in investments but not a very strong consumption story. However, China was an export led economy and so they were able to export that excess capacity outside of their economy and could lower the deficit level. In India currently you don’t have a very strong consumption demand, but the investment capacity has increased massively over the last couple of years and exports have remained sideways if not weakened in FY24. So that implies that the excess capacity is going to stay in the country given that we are not a export led economy and would eventually lead to a supply led fall in inflation domestically. And that is reflected in the fact that in the last one year the core inflation has been steadily coming off while food has been volatile for whatever reasons. So the intrinsic demand in the economy is relatively low, while supply side is actually improving dramatically. So the near term impact will be lower intrinsic inflation, but maybe in the medium term you could actually see a higher potential growth also,” Arora added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indian economy likely to have expanded 7% in December quarter: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The country’s real GDP growth for the December quarter is all set to come at a higher-than-anticipated 7%, a German brokerage said on Monday.

“We are forecasting October-December 2023 real GDP to have grown 7.0% year-on-year during the quarter, which is higher than what we had previously anticipated,” analysts at Deutsche Bank said in a note.

The official data on quarterly growth will be released on February 29. In the three months ended September 2023, the economy had clocked a 7.6% growth.

The German brokerage said its estimate is based on a proprietary index of five high-frequency indicators, including industrial production, exports, non-oil-non-gold imports, bank credit and consumer goods.

It said that another indicator comprising nearly 65 high-frequency indicators is also pointing towards 7% growth for the December quarter. ”The Indian economy has exhibited remarkable resilience despite the Russia-Ukraine war of last year and Covid before that, with growth momentum holding up far better than anticipated,” the report said.

Corporate sector data suggests that the gross profit momentum has remained buoyant which has led to the expectation of the industrial sector real gross value added growth to come at about 7-8% in the October-December period, it added. The brokerage said it will review the FY24 growth estimate of 6.8% after the release of the official data on February 29.

On a long-term basis, India is likely to deliver a minimum 6-6.5% real GDP growth which is significantly higher than comparable emerging markets over the next two decades, the brokerage said.

It attributed the same to the reforms agenda aimed at formalisation, digitisation, privatisation, urbanisation, financial sector liberalisation and boosting India’s infrastructure and manufacturing base.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s GDP growth to slow down to 6.5% in FY25, projects Ind-Ra

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India Ratings and Research (Ind-Ra) projects a GDP growth of 6.5% for FY25, a modest decrease from the previous fiscal year’s 7.3%. Despite this dip, the analysis suggests a robust economic recovery propelled by consistent government capital expenditure, strong corporate performance, and a balanced banking sector. The prospect of a forthcoming private corporate capex cycle adds a positive dimension to the outlook.

The report flags concerns about consumption demand, particularly in goods and services favored by households in the upper income bracket. While government capex drives aggregate demand, Ind-Ra emphasizes the necessity for a more diversified consumption demand growth, urging a focus on households with lower incomes. Although the private sector’s greenfield capex remains sluggish, the report identifies signs hinting at the potential for a new cycle.

The outlook for global exports in FY25 is challenging due to the growth slowdown in advanced economies and increased trade distortions/geopolitical fragmentation. India’s goods and services exports experienced a negative growth rate of 0.14% during the first 10 months of FY24. Additionally, the rise in Wholesale Price Index (WPI) inflation, similar to the producers’ price index, poses concerns for gross value added (GVA) and corporate profitability in FY25. WPI, which was in deflation from April to October 2023, has shifted to inflation since November 2023.

“A rise in input cost, if is not adequately passed into output prices, will reduce value addition/corporate margin. Given that consumption is not broad-based, producers will find it difficult to pass on the higher input cost to output prices,” says Sunil Kumar Sinha, Principal Economist, Ind-Ra.

Ind-Ra anticipates Government Final Consumption Expenditure (GFCE) to grow at 4.2% YoY in FY25, underscoring the ongoing significance of government capex. Despite a shift in focus, the report projects Gross Fixed Capital Formation (GFCF) to grow at 8.1% YoY, sustained by government capital expenditure.

The report issues a caution regarding challenges for India’s exports in FY25, citing global headwinds such as a growth slowdown in advanced economies and rising trade distortions. Despite the recovery of global supply chains, restrictive trade policies pose risks. Ind-Ra expects goods and services exports to grow at 5.8% YoY, navigating these challenges.

In terms of sectoral insights, Ind-Ra provides a forecast of 7.3% YoY growth in the services sector for FY25. The report notes concerns about monsoon rainfall and industrial growth. On inflation, it expects retail and wholesale inflation at 4.8% and 2.2%, respectively, in FY25. The fiscal deficit target of 5.1% of GDP for FY25 is considered challenging but achievable, backed by better-than-expected revenue collections.

Despite concerns over negative net exports, Ind-Ra expects the current account deficit to remain manageable at 1.4% of GDP in FY25. The agency anticipates an improvement in capital account flows, contributing to a net addition of USD 68.4 billion in forex reserves, providing stability to the Indian rupee.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow