Fitch Ratings has revised India's GDP growth estimate to 12.8 per cent for the fiscal year beginning April 1 from its previous estimate of 11 per cent, saying its recovery from the depths of the lockdown-induced recession has been swifter than expected. In its latest Global Economic Outlook (GEO), Fitch said revision is on the back of "a stronger carryover effect, a looser fiscal stance and better virus containment." "India's second half of 2020 rebound also took GDP back above its pre-pandemic level and we have revised up our 2021-2022 forecast to 12.8 per cent from 11.0 per cent," it said. "Nevertheless, we expect the level of Indian GDP to remain well below our pre-pandemic forecast trajectory."
Indian GDP will grow at 8.5 per cent in 2021-22, and the rate will accelerate further to 9.8 per cent in 2022-23, a foreign brokerage said on Tuesday. The GDP had contracted by 7.3 per cent in the pandemic-hit FY21, and is widely expected to grow at a faster pace due to the base effect in 2021-22. The Reserve Bank of India (RBI) expects a 9.5 per cent growth in 2021-22, and the same to slow down to 7.8 per cent as things normalise.
Structural reforms, pro-people programmes and employment opportunities helped the economy get new vigour, the finance minister said. After contracting by 5.8 per cent in 2020-21, the economy recorded a growth of 9.1 per cent in 2021-22.
The Reserve Bank on Wednesday retained the GDP growth forecast at 9.5 per cent for the current fiscal but cautioned that the economic recovery is not yet strong enough to be self-sustaining and durable.
Make minimum payments on all debts, then use extra funds to tackle the smallest debt first.
A British brokerage on Tuesday cut India's FY22 GDP growth estimate by a sharp 0.80 per cent to 9.2 per cent, saying the economic impact of the second wave of infections has been deeper than initially expected. Barclays chief India economist Rahul Bajoria also mentioned the slow pace of vaccinations in the country and the rolling lockdowns across many states for the estimate. It can be noted that last month has seen a slew of similar forecasts from analysts, even as the RBI maintained its estimate of a 10.5 per cent growth in real GDP.
Geopolitical events, macroeconomic data and quarterly earnings of corporates would guide the stock market in a holiday-shortened week ahead, analysts said. Stock markets will remain closed on Wednesday for Ram Navami. "This week promises to be crucial for the market as fresh worries about a potential conflict between Iran and Israel emerge.
India is likely to grow by 7.5 per cent in the first quarter of the current financial year, driven by rising aggregate demand and non-food spending in the rural economy, according to an article in the RBI's May Bulletin released on Tuesday. The Indian economy has demonstrated marked resilience in the face of geopolitical headwinds impacting the supply chain, said an article on the state of the economy published in the May Bulletin.
S&P Global Ratings on Wednesday upgraded India's sovereign rating outlook to positive from stable while retaining the rating at 'BBB-' on robust growth and improved quality of government expenditure. S&P said it could upgrade India's sovereign rating in the next 2 years if the country adopts a cautious fiscal and monetary policy that diminishes the government's elevated debt and interest burden while bolstering economic resilience.
Listed companies' net profit as a percentage of gross domestic product (GDP) has hit a decadal high and is expected to edge even higher over the next two financial years. According to an analysis by ICICI Securities, India's Inc net profit stood at Rs 8.4 trillion, or 4 per cent of GDP of Rs 210 trillion for the trailing 12-month period ending September. This is the highest since financial year 2011-12 (FY12), when it was at 4.6 per cent.
'The Indian government is better prepared this time and has reached out to all contenders and not putting all eggs in one basket.'
Moody's Investors Service on Thursday slashed India's economic growth projection to 8.8 per cent for 2022 from 9.1 per cent earlier, citing high inflation. In its update to Global Macro Outlook 2022-23, Moody's said high-frequency data suggests that the growth momentum from December quarter 2021 carried through into the first four months this year. However, the rise in crude oil, food and fertilizer prices will weigh on household finances and spending in the months ahead.
India can sustain 8 per cent annual GDP growth and the conducive macroeconomic configuration may become a launching pad for a step-up in the country's growth trajectory, said an article on the 'State of Economy' in the central bank's March Bulletin published on Tuesday. Over the period 2021-24, gross domestic product (GDP) growth has averaged above 8 per cent. The global economy is losing steam, with growth slowing in some of the most resilient economies and high frequency indicators, pointing to further levelling in the period ahead, said the article authored by a team led by RBI Deputy Governor Michael Debabrata Patra.
India, the world's fifth largest economy in the world, is likely to overtake Japan to become the world's third-largest economy with a GDP of $7.3 trillion by 2030, S&P Global Market Intelligence said in its latest issue of PMI. After two years of rapid economic growth in 2021 and 2022, the Indian economy has continued to show sustained strong growth during the 2023 calendar year. India's gross domestic product (GDP) is expected to grow 6.2-6.3 per cent in the fiscal year ending in March 2024, being the fastest-growing major economy this fiscal year.
India spends significantly less on defence than could be expected from a country that faces simultaneous armed threats from two hostile neighbours -- China and Pakistan.
Mortgage finance remains a structural growth opportunity in India with a policy focus on affordable housing, housing shortages, low mortgage penetration, and rising incomes as drivers. Affordable Housing Finance Companies (AHFCs) serve the mass market, low-income segments, which is the least-serviced category, and to operate in this segment, the mortgage provider needs good assessment skills. AHFCs and HFCs have also been increasing exposure in other mortgage segments (loan against property, developer loans among others).
India's economic growth surged to 20.1 per cent in the April-June quarter of this fiscal, helped by a low base of the year-ago period, despite a devastating second wave of COVID-19. The gross domestic product (GDP) had contracted by 24.4 per cent in the corresponding April-June quarter of 2020-21, according to data released by the National Statistical Office (NSO) on Tuesday. The government had imposed a nationwide lockdown at the onset of the COVID-19 pandemic last year.
In a paper, EAC-PM accused Subramanian of "cherry-picking high-frequency indicators" to express his skepticism about the growth rates after 2011-12.
There are reports that the government will soon cut income taxes by about Rs 50,000 crore to boost consumption.
Prime Minister Modi, I suggest that, instead, you distribute about one lakh crore rupees per year to the 80 crore poor, which will boost both consumption and economic growth, suggests Kalyan Singhal, McCurdy Professor of Business at the University of Baltimore.
The new IIP series based on the new base year, is expected to lead to better capturing of ground data
The Indian economy is expected to grow around 10 per cent during the current financial year on the likelihood of fewer COVID-19-linked supply disruptions and buoyancy in the global economy, said Poonam Gupta, director general of economic think-tank NCAER. The real challenge, however, would be to sustain a growth rate of 7-8 per cent in years to come, she said. "We could see annual growth in the ballpark range of about 10 per cent. "The reasons for this perceived optimism are: fewer supply disruptions; increased pent-up demand in the traditional and contact-intensive services; and a buoyant global economy.
Now that the economy is growing at a higher-than-expected rate, it is time to accelerate the pace of fiscal consolidation, and the Budget could be a good starting point, argues Rajesh Kumar.
Nirmala Sitharaman on Wednesday assumed charge as the Finance and Corporate Affairs Minister for the second consecutive term and is slated to soon present the final Budget for FY '25 that is going to set the tone for the Modi 3.0 government's priorities and direction for Viksit Bharat. Upon her reaching the North Block office, Sitharaman was greeted by Finance Secretary T V Somanathan and other top officials. Minister of State for Finance Pankaj Chaudhary was also present. Chaudhary assumed charge on Tuesday evening.
Stating that growth impulses and the fast-moving indicators are strong, Reserve Bank Governor Shaktikanta Das on Wednesday exuded confidence of the economy clipping at the projected 9.5 per cent this fiscal. Giving all the credit for the faster-than-expected recovery of the economy to the government, Das said the central bank has only been supporting the government in reviving the economy ravaged by the pandemic. Citing a slew of measures the government has taken since the pandemic struck in March 2020, the governor specifically mentioned tax cuts on fuels, tax resolution for the telecom sector, annulling of the retro tax legislation, sale of Air India, plans to sell some of the public sector banks and PLI scheme as the major reforms and growth-drivers bearing fruits now.
The finance minister's assertion that industry should not expect any spectacular announcements in the 2024 interim Budget suggest that the electoral imperatives of more tax concessions or higher expenditure on welfarist programmes could be far less pronounced than they were before the 2019 interim Budget, expects A K Bhattacharya.
Moody's Investors Service on Wednesday said the outlook for global banks for 2024 is negative as central banks' tighter monetary policies have resulted in lower GDP growth. It said Indian banks' profitability will increase further on lower provisioning expenses and robust growth in higher-yielding retail segments. "Our outlook for global banks for 2024 is negative as central banks' tighter monetary policies have resulted in lower GDP growth.
Reserve Bank of India (RBI) is unlikely to cut the benchmark interest rate at its upcoming monetary policy review meeting, taking place soon after the announcement of the Lok Sabha election results, amid inflation challenges, said experts. The Monetary Policy Committee (MPC) may also refrain from rate cut as economic growth is picking up, notwithstanding the elevated interest rate of 6.5 per cent (repo) prevailing since February 2023. The meeting of the Reserve Bank Governor Shaktikanta Das headed MPC is scheduled for June 5 to 7.
Finance Minister Nirmala Sitharaman on Thursday announced a Rs 11.11 lakh crore spending on infrastructure and vowed to continue reforms as she resisted resorting to populist measures in Modi government's last Budget before general elections, instead choosing to stay on the path of cutting deficit while bolstering measures for focus groups.
Despite the rally in equities over the last few years, India, according to Christopher Wood, global head of equity strategy at Jefferies, is still in early stages of an equity cult. Any changes to the capital gains tax for equities - both long-term and short-term - in Budget 2024 scheduled to be announced on July 23, he believes, can trigger a bigger correction that what the markets witnessed post the Lok Sabha election outcome on June 4 that saw the Bharatiya Janata Party (BJP) lose majority, though it was able to form the government with the help of coalition partners.
'The real repo rate is very high in terms of core inflation.'
The Indian economy needs to generate an average of nearly 78.5 lakh jobs annually until 2030 in the non-farm sector to cater to the rising workforce, according to the Economic Survey for 2023-24. The Survey tabled in Parliament on Monday also laid emphasis on the private sector's role to create employment in the country saying "In more than one respect, the action lies with the private sector. "In terms of financial performance, the corporate sector has never had it so good."
S&P Global Ratings on Wednesday slashed India's GDP growth forecast for the current financial year to 9.8 per cent saying the second Covid wave may derail the budding recovery in the economy and credit conditions.
State Bank of India chairman Dinesh Kumar Khara has pitched for tax relief on interest income, saying it would help banks to garner savings that could be used for funding long-term infra projects. Currently, banks are required to deduct tax when interest income from deposits held in all the bank branches put together is more than Rs 40,000 in a year. With regard to savings accounts, interest earned up to Rs 10,000 is exempt from tax.
'The structural story of India is a multi-decadal story.' 'One should stay invested in that story and avoid reacting to what is happening globally.'
Fitch Ratings on Tuesday raised India's growth forecast for the current fiscal to 7.2 per cent, from 7 per cent projected in March, saying elevated consumer confidence will drive spending, besides increased investments. In June update to its global economic outlook report, Fitch said it expects inflation to decline to 4.5 per cent by end of this year and RBI to cut policy interest rates by 25 basis points to 6.25 per cent.
Chief executive officers (CEOs) across sectors have expressed intentions to expand capacities, expecting the government's target to invest a record Rs 11.11 trillion on infrastructure development will act as a catalyst for a jump in consumer demand. "With the government planning a capex of Rs 11.11 trillion, private sector investment will come in a big way. Companies will be preparing for it right from today," H M Bangur, chairman of Shree Cement, told Business Standard. For the past few years, the investment scene in India has been dominated by government capital expenditures; private investments in the manufacturing sector have remained muted.
Equity markets may witness a gradual up-move this week with some volatility as both election and earnings season are nearing their end, analysts said, adding that global trends and trading activity of foreign investors would hold significance in dictating investors' sentiment. Benchmark indices, which had a record-breaking rally last week, would also track global oil benchmark Brent crude and the rupee-dollar trend. The monthly derivatives expiry on Thursday may also fuel volatility in markets.
Instead of failing young Indians, the government should now focus laser-like on education, skilling, healthcare, and the environment, says Mihir S Sharma.
Hopes of revival and earnings growth in 2020, surprise tax cuts, and robust foreign flows - thanks to easy global monetary policies - are a few reasons why the markets have managed to digest the low GDP footprint. Select bluechips such as Reliance Industries, Bajaj Finance, Asian Paints, and ICICI Bank have gained sharply this year. On the other hand, YES Bank, Zee Entertainment, and Indiabulls Housing have seen a sharp fall.
Long-term macro trends indicate growth in demand for air travel. Trends from the ticketing website MakeMyTrip indicate a likely annual growth of between 11-17 per cent in Indian air travel demand over FY24-30. Through that period, InterGlobe Aviation or IndiGo may continue to make gains in market share in both domestic and international travel, aided by large fleet additions. IndiGo is the largest global customer of Airbus by far with 950 aircraft orders outstanding.
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