Tag: indian economy

Explained: Here’s why there won’t be an Economic Survey this year ahead of the interim budget

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

Listen to the Article (6 Minutes)

This year, the Centre is not going to present the Economic Survey—a document prepared by the Chief Economic Advisor (CEA) and presented by the Finance Minister in Lok Sabha, typically a day ahead of the Union Budget on February 1 each year. This is because 2024 is an election year and the regular Budget process may be disrupted if there is a change in government.

Instead, the Centre has come out with a report on India’s journey from the past 10 years titled ‘Indian Economy–A Review’. The report, which also shares glimpses of the outlook for the economy in the coming years, has been prepared by the office of the CEA V Anantha Nageswaran.

The report clearly mentions that it is not an Economic Survey of India, which it says will be presented before the full Budget after the general elections.

The report ‘Indian Economy—A Review’ says the country will become a $5 trillion economy in the next three years and can aspire for $7 trillion by 2030.

Previous Economic Survey

The last Economic Survey pegged India’s GDP growth for fiscal 2023–24 in a broad range of 6-6.8%, depending on the trajectory of economic and political developments globally. The survey’s baseline forecast for real GDP growth is 6.5%. The Economic Survey 2021–22 projected India to grow by 8–8.5%.

The country’s first Economic Survey was presented in 1950–51. Until 1964, the Economic Survey and the Union Budget were presented together.

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

Govt estimates FY25 GDP growth at closer to 7%

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

Listen to the Article (6 Minutes)

The strength of domestic demand has driven the economy to an over 7% growth rate in the last three years. The robustness seen in domestic demand, namely, private consumption and investment, traces its origin to the reforms and measures implemented by the government over the last ten years.

The supply side has also been strengthened with investment in infrastructure—physical and digital—and measures that aim to boost manufacturing. These have combined to provide an impetus to economic activity in the country.

Accordingly, in FY25, real GDP growth will likely be closer to 7%. The findings have been shared in a report ‘Indian Economy—A Review’ prepared by the office of the Chief Economic Adviser V Anantha Nageswaran, taking stock of the state of the Indian economy and its journey in the last ten years.

Economic Survey to come after Lok Sabha elections

This is not the Economic Survey of India prepared by the Department of Economic Affairs, the report said, while adding that it will come before the full budget after the general elections.

There is, however, considerable scope for the growth rate to rise well above 7% by 2030. The speed with which physical infrastructure is being built will allow the ICOR to decline, translating private investments into output quickly.

The IBC has strengthened balance sheets and, in the process, has freed up economic capital that was otherwise rendered unproductive.

The rapidly expanding digital infrastructure is continuously improving institutional efficiency.

Technological progress is picking up pace with rising collaboration with foreign partners in the production of goods and services. Decisive steps have been taken to speed up human capital formation.

Finally, the overall investment climate is increasingly becoming more favourable with sustained enhancements in the ease of doing business.

Finance Ministry in its economic review for the month of January says, #FY25 real #GDP growth is seen closer to 7% with scope for growth rate to even above this level. Also, the Ministry says India can aspire to become $7 trillion economy over 6-7 years pic.twitter.com/FZbIZgnnyE

— CNBC-TV18 (@CNBCTV18Live) January 29, 2024

The unification of the domestic markets brought in by the adoption of the GST incentivises production on a larger scale while reducing logistics costs.

The expansion of the tax base that the GST facilitates will strengthen the finances of the Union and state governments, enabling growth-enhancing public expenditures.

The rising credibility of the RBI in restraining inflation will anchor inflationary expectations, providing a stable interest rate environment for businesses and the public to make long-term investment and spending decisions, respectively.

Challenges ahead

First: Increased geoeconomic fragmentation, slowdown of hyper-globalisation are likely to result in further friend shoring and onshoring, friend shoring and onshoring are already having repercussions on global trade and global growth.

Second, trade-off between energy security and economic growth versus energy transition is a multifaceted issue having various dimensions: geopolitical, technological, fiscal, economic, and social, and the policy actions being pursued by individual countries impacting other economies.

Third, the advent of artificial intelligence (AI) poses a big challenge to governments around the world due to the questions it poses to employment, particularly in services sector.

This was recently highlighted in an IMF paper estimating that 40% of global employment is exposed to AI, with the benefits of complementarity operating beside the risks of displacement.

Further, the paper suggests that developing economies must invest in infrastructure and a digitally skilled labour force to fully harness AI’s potential.

Fourth, domestically, ensuring the availability of a talented and appropriately skilled workforce to the industry, age-appropriate learning outcomes in schools at all levels, and a healthy and fit population are important policy priorities in the coming years. A healthy, educated, and skilled population augments the economically productive workforce.

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

Interim Budget 2024: Government unlikely to announce big bang populist schemes, say economists

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

Listen to the Article (6 Minutes)

The announcement of the interim budget for 2024 is less than 10 days away and economists believe the government is unlikely to announce big bang populist schemes.

According to Samiran Chakraborty, Chief India Economist at Citi, historical trends suggest that interim budgets usually refrain from introducing entirely new schemes, except for instances like the PM Kisan scheme in 2019.

“By our estimate, if the government has to meet both the targets of reducing the fiscal deficit by a substantial amount and keeping the capex focus intact, then the scope for further increase in the populist schemes is relatively limited.

But some small tweaks can always be done, like we have estimated that if the PM Kisan scheme, amount is increased from ₹6,000 to ₹9,000 the additional burden on the exchequer is only about 0.1% of GDP.

So those kinds of small changes can happen but don’t expect a big bang, populist scheme,” Samiran Chakraborty stated in an interview with CNBC-TV18.

Kaushik Das, chief economist of Deutsche Bank, anticipates the government adhering to the broader fiscal deficit consolidation plan, aiming for a figure of around 5.3%.

As of the conclusion of November 2023, data from the Controller General of Accounts (CGA) reveals that the fiscal deficit of the Indian government has exceeded 50% of the full-year budget estimate (BE), reaching ₹9.06 lakh crore.

In absolute terms, the fiscal deficit, representing the difference between expenditure and revenue, amounted to ₹9,06,584 crore during the April-November period of 2023-24.

In contrast, during the corresponding period in the previous year, the deficit accounted for 58.9% of the BE for 2022-23. The government has projected a fiscal deficit of ₹17.86 lakh crore for the fiscal year 2023-24, equivalent to 5.9% of the GDP.

Soumya Kanti Ghosh, Group CEA at State Bank of India, envisions the possibility of a roadmap outlining the government’s broader plans for the next few years, possibly focusing on key programs like the Prime Minister Awas Yojana.

Ghosh also anticipates positive surprises in capital expenditure, with an expected growth rate of 13% to 14%, bringing it close to 3.5% of GDP in the next fiscal year.

CNBC-TV18 had earlier reported that there is a proposal to push for a minimum 15-20% increase in capital expenditure in the upcoming interim budget. The government had initially allocated Rs 7.5 lakh crore for capex in FY23, and this was later raised to ₹10 lakh crore for FY24.

The sources indicate that a significant portion of the increased capex will be directed toward infrastructure and strategic ministries, such as the Ministry of Road Transport and Highways, the Railway Ministry, and the Defense Ministry. This initiative aims not only to stimulate growth but also to generate employment opportunities.

Chakraborty notes that the central government’s tax-to-GDP ratio is nearing an all-time high despite lower GST rates, reflecting improved compliance. The real surprise, according to him, lies in non-tax revenue, with expectations of a significantly higher Reserve Bank of India (RBI) dividend and continued profits from public sector undertakings (PSUs) in FY24 potentially boosting non-tax revenue for FY25.

Watch the accompanying video for the entire conversation.

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

Aditya Birla Sun Life AMC’s CEO foresees India as the prime destination for global investment

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

Listen to the Article (6 Minutes)

A Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, expressed optimism about India’s economic performance, emphasising the solid foundation built for the future.

He anticipates a favourable momentum for India as global interest rates decrease, leading to increased flows into emerging markets, with India poised to be the primary beneficiary.

“India so far has not only been one of the best-performing economies in the world, but the way we have built the base for the future, we will continue to see the momentum more in favour of India. As interest rates start coming down globally, the emerging market flows will go up and therefore India will become the largest recipient of those flows,” Balasubramanian said in an interview with CNBC-TV18.

Foreign investment in Indian government bonds experienced a notable surge in the final quarter of 2023, reaching a six-year high, driven in part by JPMorgan’s decision to include the debt in its indexes.

During October–December, overseas investors purchased government bonds totalling ₹350 billion ($4.2 billion), contributing to the highest annual total since 2017, as indicated by clearing house data.

Balasubramanian also shared insights on the interest rate scenarios, predicting a potential reduction in rates by the United States in the latter half of the current calendar year. He believes the US will experience a slowdown in job rates and inflation, leading to the initiation of a rate-cut cycle in the same period. For India, he anticipates flat interest rates in the current year, with any rate cuts likely to occur in 2025.

The Reserve Bank of India at its December 8, 2023, policy meeting, left the lending rate unchanged at 6.5%. The Monetary Policy Committee aimed to focus on the “withdrawal of accommodation,” and the RBI expected inflation to persist above its comfort level through the financial year ending March 2024.

Balasubramanian also highlighted the growing prominence of the mutual funds industry among investors. He emphasised the increasing popularity of systematic investment plans (SIPs) as the preferred method for saving money in mutual funds. Predicting a continued rise in SIP numbers, he expected incremental considerations to be directed towards SIPs.

In December 2023, equity mutual funds witnessed their 34th consecutive month of inflows, reaching ₹16,997 crore, reflecting sustained investor interest in equities despite market fluctuations, according to data from the Association of Mutual Funds in India (AMFI).

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 to grow by 7.3% in 2023-24, says government

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

Listen to the Article (6 Minutes)

The National Statistical Office (NSO) on Friday, January 5, reported that the Indian economy is expected grow 7.3% in the fiscal year 2023-24 against 7.2% it recorded in the previous fiscal.

“Real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 is estimated to attain a level of ₹171.79 lakh crore, as against the Provisional Estimate of GDP for the year 2022-23 of ₹160.06 lakh crore, released on 31st May 2023,” the NSO said in its initial advance estimates of national accounts.

The GDP at current prices in the year 2023-24 is estimated at ₹296.58 lakh crore against the provisional estimate of GDP of ₹272.41 lakh crore for the year 2022-23, released on May 31, 2023, it stated. The growth in nominal GDP during 2023-24 is estimated at 8.9% against 16.1% in 2022-23, it added.

Also Read: Inflation likely to be a big focus area for budget 2024

The FY24 estimate for the farm sector growth stood at 1.8%, reflecting a slowdown compared to the 4% in the previous year. A robust growth of 8.1% is anticipated in the mining sector — almost doubling the 4.6% growth achieved in the previous fiscal.

The government projected a growth of 6.5% for the manufacturing sector, again a substantial improvement over 1.3% in the preceding year. The construction industry is poised to expand, with an estimated growth rate of 10.7% compared to the 10% in FY23.

Overall, the industrial sector is expected to grow by 7.9%, indicating an improvement from 4.4% in the previous fiscal. The services sector, while still growing positively, is expected to decelerate with a growth rate of 7.7%, against 9.5% in the previous year.

Also Read: India’s services growth at three-month high in Dec on buoyant demand

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

Bank of Baroda chief economist projects 6.8% GDP growth for India in FY24-25

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

Listen to the Article (6 Minutes)

Madan Sabnavis, Chief Economist at Bank of Baroda, on Monday (January 1) said he holds an optimistic outlook for India’s economic growth in the fiscal year 2024-2025, projecting a robust 6.8%.

This comes after CNBC-TV18 conducted a survey among a group of economists to gather insights into their projections for the Indian economy in 2024. As per the survey results, a majority of 60% of respondents anticipate the Indian economy to achieve a growth rate of 6.2-6.4% in FY25, while 30% foresee the GDP reaching approximately 7% in the same fiscal year.

In contrast to some economists’ expectations, Sabnavis emphasised India’s unique domestic orientation, highlighting the significant impact of a large population and consuming class on the nation’s economic resilience. He attributed the optimistic forecast to the fulfilment of preconditions for higher growth during the current financial year.

“I think the Indian economy is a domestic-oriented economy. And that’s one of the reasons why there is a bit of decoupling which takes place, notwithstanding what happens in the global sphere. Exports of goods and services are something that definitely adds that delta to the overall growth process,” he said.

Sabnavis anticipated a boost in GDP driven by two key factors — the expected normal monsoon, leading to a rise in rural demand; and a potential acceleration in private sector investment, particularly in industries that have not attracted significant private interest so far. He emphasised the pivotal role of agriculture, expecting a positive base effect and improved rural spending.

Reflecting on the past two years, Sabnavis underscored the proactive response of the Indian government and the Reserve Bank of India (RBI) in maintaining economic stability. The government’s strategic focus on capital expenditure and the RBI’s accommodative monetary policy, with the repo rate currently at 6.5%, have played instrumental roles in sustaining economic momentum.

Sabnavis contrasted this with the global scenario, where higher interest rates are anticipated to impact investment decisions and potentially slow down growth in 2024.

The economist contended that the tailwinds favouring India, including a proactive government, accommodative monetary policy, and a strong domestic focus, position the country well for achieving a 7% growth rate in the upcoming fiscal year.

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

CNBC-TV18 Poll: Majority economists expect India’s FY25 GDP to be between 6.2% and 6.4%

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

Listen to the Article (6 Minutes)

The global economy navigated a challenging 2023, enduring some setbacks but managing reasonably well with the anticipation of a soft landing in 2024.

Against this backdrop, CNBC-TV18 conducted a survey among a group of economists to gather insights into their projections for the Indian economy in 2024.

As per the survey results, a majority of 60% of respondents anticipate the Indian economy to achieve a growth rate ranging between 6.2% and 6.4% in FY25, while 30% foresee the GDP reaching approximately 7% in the same fiscal year.

On November 30, India disclosed its gross domestic product (GDP) figures for the July-August quarter, revealing a growth of 7.6%. This marked a slight decrease from the previous quarter’s GDP growth of 7.8% and an increase from the 6.2% recorded in the same period last year.

Despite recent indications from the Reserve Bank of India (RBI) Governor regarding a potential pickup in private capital expenditure, government spending is expected to remain the primary catalyst for growth in 2024.

A significant portion of the surveyed economists believe that the government’s fiscal deficit will experience a slight decrease, moving from the targeted 5.9% for FY24 to a range of 5.5%-5.8% for FY25.

By the conclusion of November 2023, the fiscal deficit of the Indian government has exceeded 50% of the full-year budget estimate (BE), totaling ₹9.06 lakh crore, as per data disclosed by the Controller General of Accounts (CGA) on Friday, December 29.

In contrast, during the same period in the previous year, the deficit was at 58.9% of the BE for 2022-23. The government’s anticipated fiscal deficit for the fiscal year 2023-24 is ₹17.86 lakh crore, equivalent to 5.9% of the GDP.

Compared to the previous year, the rupee demonstrated resilience throughout 2023, and a majority of economists predict it to trade within the range of 82 to 84 against the dollar in 2024.

In terms of inflation, there is a widespread expectation for it to hover around 4.5-5%, slightly higher than the elusive 4% mid-point targeted by the RBI.

In November, India experienced a three-month high in retail inflation, reaching 5.55%, as indicated by data released by the National Statistics Office (NSO) on December 12. This surge was attributed to the increasing prices of kitchen essentials.

In comparison, the retail inflation stood at 4.87% in October and 5.88% in November of the previous year. The data from the National Statistical Office revealed that the rate of price increase in the food basket rose to 8.7%, up from 6.61% in October and 4.67% in November 2022.

Looking ahead to monetary policy, a majority of respondents anticipate a repo rate cut by the RBI in the second quarter of FY25. Half of the respondents predicted the repo rate to reach 6% by the close of 2024.

Interestingly, a unanimous consensus emerged among the respondents concerning the 10-year bond yield range, projected to be between 6.75% and 7% by the end of 2024.

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

Taimur Baig of DBS highlights three factors that will shape markets in 2024

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

Listen to the Article (6 Minutes)

Taimur Baig, Managing Director and Chief Economist at DBS Group Research, highlighted three key factors that will capture investors’ attention in the upcoming year: China’s economic performance, foreign fund inflows and the momentum of Indian stocks, and the broader trajectory of the US economy.

In 2024, Baig noted, it’s essential to consider assets that performed poorly in 2023 and whether they have the potential for improvement. Despite negative sentiment and capital withdrawals from China, the contrarian perspective suggests that Chinese equities might offer surprises or room for improvement in the coming year.

However, he also believes that a strong momentum in market tends to continue for a while. This mean for markets like India and US, the momentum could continue for a while even in the new year.

“We’re finally seeing substantial amount of exchange traded fund (ETF) money, substantial amount of active portfolio money being allocated to India, which was quite not the case in 2022 and early 2023, when India was driven by local investors. Now we’re going to see foreign participation, I expect that momentum to continue through the first two quarters of 2024, if not longer,” he said.

Also Read | This PSU has had its best year since 2009 — Is there more to come in 2024?

According to him, the US economy is set to enter the new year with a promising mix characterised by slowing inflation, the potential for interest rate cuts, and a steady real economy.

“The US economy will step into ’24 with an absolute Goldilocks mix, slowing inflation, likelihood of interest rate cuts, but not much slowdown in the real economy. So, China undervaluation, momentum for Indian stocks, momentum for the US economy would be my three big themes for 2024,” Baig stated.

Also Read | Motilal Oswal highlights this PSU as its top pick for 2024

Also Read | Market outlook 2024: Vinit Sambre bets on these sectors

For more details, watch the accompanying video

Also, catch all the live updates on markets with CNBC-TV18.com’s blog

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 economic growth to boost corporate sector: Fitch Ratings

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

Listen to the Article (6 Minutes)

Leading credit rating firm Fitch Ratings expects that India’s resilient economic growth will boost the demand of the corporate sector.

In its latest research report on ’India Corporates: Sector Trends 2024’, Fitch said that this is a sequel to the robust performance of the corporate sector in 2023 and will offset weakness from slowing growth in the key overseas markets.

Rising demand and easing input cost pressure should boost the margins of the corporates in the next financial year, Fitch said.

Fitch said that with strong domestic demand growth, it is expected that India will be among the world’s fastest-growing countries, with resilient GDP growth of 6.5% during the fiscal 2024-25.

This is despite a challenging global backdrop and the cumulative impact of the recent monetary tightening, it said.

Sectors like cement, electricity and petroleum products are expected to witness a strong demand with high-frequency data in 2023 sustained well above pre-COVID pandemic levels.

Fitch said that India’s improving infrastructure will also boost steel demand. Slowing down in the US and the Eurozone is likely to moderate growth of the IT services.

Fitch said rising domestic auto sales volume should drive revenues of the auto suppliers, while travel and tourism conditions also improved in 2023.

Also read: IMF report on India debt: Government says report only talks of “worst case scenario”

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