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India's economy is expected to grow at 7-7.2 per cent in the current fiscal year driven by robust economic fundamentals and continuity in domestic policy reforms, <keyword id="20006170" type="General" weightage="100" keywordseo="Deloitte-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Deloitte India" meta.hostid="261" meta.entityid="Deloitte India">Deloitte India</keyword> said on Monday. The August update of <keyword id="19896400" type="General" weightage="20" keywordseo="deloitte" source="keywords">Deloitte</keyword>'s India Economic Outlook said several initiatives in the <keyword id="19908389" type="General" weightage="20" keywordseo="union-budget" source="keywords">Union Budget</keyword> 2024-25 toward improving agriculture productivity, creating jobs for the youth, and in manufacturing and addressing the challenge of access to finance for micro, small, and medium enterprises (MSMEs), would help improve supply-side demand, curb inflation, and prop up <keyword id="20139791" type="General" weightage="20" keywordseo="consumer-spending" source="keywords">consumer spending</keyword>, especially in rural areas. Deloitte India Economist Rumki Majumdar said, India will witness robust growth in the second half after a period of uncertainty in the first six months of the year. "Key contributing factors include the continuity in domestic policy reforms, reduced uncertainties in the US post-elections, and more synchronous global growth within a low inflation regime. "Additionally, improved global liquidity conditions, as central banks in the West ease their monetary policy stance, will enhance capital flows and drive higher investments, particularly in the private sector," Majumdar said. Observing that strong economic fundamentals would drive <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> between 7 per cent and 7.2 per cent in FY25, the Economic Outlook report said effectively addressing the urban-rural consumer spending gaps, inflation, and employment concerns can significantly enhance the affordability of aspirational rural consumers. "The much-desirable policy pivot was evident in the Union Budget presented last month. Reducing the urban and rural spending gap in the coming years will ensure sustained consumer demand from a larger consumer base," it added. Deloitte India's growth projection is at par with that of RBI, which projected FY'25 growth at 7.2 per cent. It is higher than Finance Ministry's Economic Survey which estimated GDP expansion between 6.5-7 per cent. The <keyword id="19948184" type="General" weightage="20" keywordseo="Indian-economy" source="keywords">Indian economy</keyword> grew at 8.2 per cent in 2023-24 fiscal year. The report further said despite strong growth, private consumption spending has remained modest over the past five years. The pandemic, high global and domestic inflation, consequent tightening of financial conditions, and the effects of poor agriculture output on rural demand seem to have capped private consumption growth in India. But a Deloitte research showed that India is witnessing distinct and broad-based shifts in consumption patterns. There is a broad-based shift in the composition of consumption towards more non-food and discretionary items, reflecting changing lifestyles and preferences that are here to stay. According to the Household Consumption Expenditure Survey, spending on discretionary goods and services (including conveyance) has gone up both in rural and urban India, with the former quickly catching up in spending on discretionary durable goods (including automobiles, electric and electronic goods) with the latter in just one decade. "Demand for processed food has been among the highest in most states, suggesting a shift towards ready-to-eat options. Rapid urbanization, increasing women's participation in the workforce, and enhanced marketing and availability are driving these changing dietary habits," the report said. According to Deloitte research, if increasing income in states results in a relatively equitable distribution and higher rural spending, businesses can tap into a larger proportion of the state's population that resides in rural areas. This gives businesses access to a large consumer base and a sustainable consumer spending demand, as compared to states with a widening gap.

Indian economy likely to grow at 7-7.2 percent in FY25,Deloitte India says

Strong growth and a narrower <keyword id="19942084" type="General" weightage="20" keywordseo="fiscal-deficit" source="keywords">fiscal deficit</keyword> can lead to a <keyword id="20424939" type="General" weightage="20" keywordseo="sovereign-rating" source="keywords">sovereign rating</keyword> upgrade for <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>, a German brokerage said on Monday. The government's commitments on fiscal deficit to 5.1 per cent in FY25 and further down to 4.5 per cent in FY26 "look more credible now", analysts at <keyword id="19960549" type="General" weightage="20" keywordseo="Deutsche-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="Deutsche Bank" meta.hostid="261" meta.entityid="Deutsche Bank">Deutsche Bank</keyword> said, pointing out that the number came in at 5.6 per cent in FY24 as against the budgeted 5.8 per cent. Courtesy the higher than expected dividend announcement by the <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) at Rs 2.1 lakh crore, the fiscal deficit for FY25 can come down to 5 per cent as against the budgeted 5.1 per cent. On growth, the note said it expects real GDP expansion to come at 6.9 per cent in FY25 and go down further to 6.5 per cent in FY26. "Strong growth, lower fiscal deficit opens up room for ratings upgrade," the note said. "A faster-than-anticipated pace of fiscal consolidation could pave the way for a sooner-rather-than-later sovereign rating upgrade for India," the analysts said. It can be noted that global rating agency <keyword id="20043943" type="General" weightage="20" keywordseo="SP" source="keywords" meta.keywordsubtype="org" meta.entityname="S&amp;P" meta.hostid="261" meta.entityid="S&amp;P">S&amp;P</keyword> had last week revised up the outlook on its sovereign rating for India to "positive" from "stable" earlier. On Friday, official data suggested that the economy grew at a faster clip of 8.2 per cent in the March quarter, which takes the FY24 real <keyword id="19972825" type="General" weightage="100" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> to 7.6 per cent. The note said the Indian economy has exhibited "remarkable resilience" despite higher rates for longer, the Russia-Ukraine war and Covid prior to that, though a strong pickup in real GDP growth during FY24 can be also attributed materially to a very low <keyword id="21922336" type="General" weightage="20" keywordseo="GDP-deflator" source="keywords">GDP deflator</keyword>. It explained that nominal GDP growth slowed to 9.6 per cent in FY24, from 14.2 per cent in FY23 and 19 per cent in FY22. But in real terms, GDP growth accelerated to 8.2 per cent in FY24 from 7 per cent in FY23, thanks to a collapse in the GDP deflator to 1.4 per cent in FY24 from 7.6 per cent year-on-year in FY23 and 9.4 per cent in FY22. Deutsche Bank also advised caution on reading the headline GDP numbers, pointing out that while the real GDP grew 8.2 per cent, real GVA (gross value added) growth was 1 percentage point lower at 7.2 per cent.

Strong growth, lower fiscal deficit may lead to India rating upgrade: Deutsche Bank

Ahead of the union <keyword id="19936553" type="General" weightage="20" keywordseo="budget" source="keywords">budget</keyword> 2024, which is set to be presented on the 22nd July, finance minister Nirmala Sitharaman kicked off pre-budget consultations on 19th June. In their pre-budget memorandum to the <keyword id="19900485" type="General" weightage="20" keywordseo="finance-ministry" source="keywords" meta.keywordsubtype="org" meta.entityname="finance ministry" meta.hostid="261" meta.entityid="finance ministry">finance ministry</keyword>, the <keyword id="20366533" type="General" weightage="20" keywordseo="PHD-Chamber-of-Commerce-and-Industry" source="keywords" meta.keywordsubtype="org" meta.entityname="PHD Chamber of Commerce and Industry" meta.hostid="261" meta.entityid="PHD Chamber of Commerce and Industry">PHD Chamber of Commerce and Industry</keyword> proposed 10 reforms it deemed essential for <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>’s journey towards <keyword id="19916816" type="General" weightage="20" keywordseo="Viksit-Bharat" source="keywords" meta.keywordsubtype="org" meta.entityname="Viksit Bharat" meta.hostid="261" meta.entityid="Viksit Bharat">Viksit Bharat</keyword>. Amongst the proposals submitted were introducing reforms to enhance the share of the manufacturing sector in India’s <keyword id="19904293" type="General" weightage="20" keywordseo="GDP" source="keywords">GDP</keyword> to 25% by 2030, and the expansion of the <keyword id="19981334" type="General" weightage="20" keywordseo="PLI-scheme" source="keywords">PLI scheme</keyword> beyond its existing scope of 14 sectors. In addition to this, <keyword id="20366532" type="General" weightage="100" keywordseo="PHDCCI" source="keywords" meta.keywordsubtype="org" meta.entityname="PHDCCI" meta.hostid="261" meta.entityid="PHDCCI">PHDCCI</keyword> also emphasised on rationalising direct taxes for the middle class, infrastructure enhancement and smart village development, with special focus on tier-2 and 3 cities. As per Sanjeev Agrawal, President, PHDCCI, “In order to strengthen the share of the manufacturing sector in the country's GDP, we recommend the status quo on the corporate tax rate at 22% for existing companies and 15% for new manufacturing companies incorporated after October 1, 2019. The middle class must be spared from the 30% tax rate and this rate must be applicable only to those with taxable income above Rs. 40 lakh, this will support consumption demand in this country”. In addition to this, PHDCCI also emphasised on strengthening linkages between universities and industries for bettering research and development activities in the country, and also appealed for reducing cost of doing business. Here’s a snapshot of some prominent demands placed forth by the PHDCCI ahead of the budget : <ol><li>Change in NPA classification limit from the present 90 days to 180 days</li><li>Fostering AI education, skill development and competitiveness in the service sector</li><li>Increase agricultural exports to US$100 billion in the next 3 years via increased public investments in infrastructure,</li><li>Ensure the presence of schools within a radius of 1 km, colleges within a 10 km radius and universities within a 25 km radius in the next five years.</li><li>Make health centres available within the radius of 1 km and hospitals within the radius of 10 km.</li><li>Propose a Voluntary Disclosure Scheme (VDS) for legal cases older than 10 years, offering settlement opportunities at a nominal 15% penalty. </li></ol>

Bolster manufacturing sector, consumption this budget: PHDCCI to FinMin

<ul class="summary-list"><li>Russia's GDP growth slowed to 4% in Q2, while inflation continued to rise.</li><li>Economists have long been warning that the Russian economy is showing signs of "overheating."</li></ul>Russia's economic growth slowed to 4% in the second quarter of 2024, down from 5.4% in Q1, <a target="_blank" class="" href="https://www.france24.com/en/live-news/20240809-russian-economic-growth-dips-in-second-quarter-as-inflation-rises">AFP reported</a>, citing official data released on Friday.While the Russian economy continues to expand, it marked the lowest quarterly GDP growth result since the beginning of 2023, the report said.It comes as the Kremlin battles rising inflation and warnings that the economy is overheating.Russia's economic growth has come off the back of huge Kremlin spending on its military campaign in Ukraine, which it launched in February 2022.While that spending helped quell earlier predictions of an imminent recession linked to Western sanctions, it has led to rampant inflation.Inflation hit 9.13% year-on-year in July, the AFP report said, citing data from the Rosstat statistics agency.The country has also been <a target="_blank" class="" href="https://www.businessinsider.com/russian-economy-overheating-consumer-spending-tourism-central-bank-interest-rate-2024-7">going through a consumption boom</a>, driven by the state's heavy defense spending and labor shortages."Consumer activity remains high amid a significant increase in households' incomes and positive consumer sentiment,'" Russia's central bank said in July."Labour shortages continue to grow. In these conditions, the growth in domestic demand does not result in a proportional expansion of the supply of goods and services but rather increases the costs of businesses and, consequently, intensifies inflationary pressures," it added.Russia's central bank hiked its key interest rate to 18% last month after inflation "accelerated" and was "developing significantly above the Bank of Russia's April forecast," it said.Russia's economy is also facing a severe <a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-population-decline-worker-shortage-growth-outlook-ukraine-war-2024-8">demographic crisis</a>, with the <a target="_blank" class="" href="https://www.businessinsider.com/putin-calls-russians-more-babies-ethnic-survival-economy-2024-2">nation's population</a> potentially shrinking by 50% by the end of the century, according to a report by the Atlantic Council written by Harley Balzer, an emeritus professor at Georgetown University.The report highlights Russia's long-standing population decline, which it says has now been exacerbated by the ongoing war in Ukraine.This decline could increase pressure on Russia's labor shortages and lead to lower growth and productivity."Unless Russia's leaders can develop and finance a more effective set of policies, the only solutions to population decline will be a combination of incorporating non-Russian territory and/or immigration from Asia and Africa," Balzer wrote in the report.

Russia's GDP growth slowed in Q2 while inflation continued to soar on the back of heavy state spending: report

New Delhi [India], June 5 (ANI): The Bharatiya Janata Party (<keyword id="19894848" type="General" weightage="20" keywordseo="bjp" source="keywords">BJP</keyword>)-led National Democratic Alliance (<keyword id="19938590" type="General" weightage="20" keywordseo="NDA" source="keywords">NDA</keyword>) secured a majority in the general elections, securing a third term for Prime Minister Narendra Modi. This victory indicates continuity in policy, particularly in <keyword id="21785272" type="General" weightage="20" keywordseo="infrastructure-spending" source="keywords">infrastructure spending</keyword> and boosting domestic manufacturing, which are expected to support robust <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>. However, the NDA's slim margin of victory and the BJP's loss of an outright majority in parliament may slow down more extensive economic and fiscal reforms, potentially impeding <keyword id="20101140" type="General" weightage="20" keywordseo="fiscal-consolidation" source="keywords">fiscal consolidation</keyword> efforts. In fiscal 2023-24, India's real GDP accelerated to 8.2 per cent from 7.0 per cent the previous year, driven by significant gains in gross fixed capital formation as the government's infrastructure programs gained momentum, even as private consumption remained subdued. <keyword id="20227907" type="General" weightage="20" keywordseo="Moodys" source="keywords" meta.keywordsubtype="org" meta.entityname="Moody's" meta.hostid="261" meta.entityid="Moody's">Moody's</keyword> projects India's economic strength to continue, with an anticipated real <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> of around 7 per cent over the three-year period from fiscal 2023-24 to 2025-26. This growth is expected to benefit from ongoing infrastructure development and digitalization efforts. Despite this outlook, structural weaknesses pose risks to long-term growth potential. High youth unemployment and low productivity growth in the agriculture sector constrain economic expansion. The agricultural sector's modernization has been stalled by political challenges, as evidenced by the repeal of key reforms in 2021 following widespread farmer protests. Additionally, gains in manufacturing have been uneven, limiting labour force diversification away from agriculture, which still accounts for 40 per cent of total employment. Foreign direct investment (FDI) inflows have declined over the past three years, despite a favourable geopolitical climate amid US-China tensions. This trend suggests persistent constraints within India's investment climate. To address these challenges, further structural reforms and enhanced implementation of existing initiatives, such as the production-linked incentive schemes to promote manufacturing, calibrated liberalisation of cross-border trade, and reconsideration of labour reforms, are necessary. The government's focus on fiscal consolidation is expected to continue, but significant improvements in debt ratios and interest servicing have yet to be realised. Since the trough in fiscal 2020-21, the central government's deficit has likely narrowed for three consecutive years. The interim budget for fiscal 2024-25 projects a deficit of around 5 per cent of GDP, aiming for a 4.5 per cent deficit by fiscal 2025-26. However, India's fiscal consolidation post-pandemic has not outpaced other emerging markets in Asia-Pacific, and its fiscal and debt metrics remain weaker than those of Indonesia, the Philippines, Thailand, and other Baa-rated peers globally. India's general government debt is projected to stabilise above 80 per cent of GDP over the next three years, compared to 70.5 per cent in fiscal 2018-19. General government interest payments are forecast to fall to around 24 per cent of general government revenue over the next two years, down from over 28 per cent in fiscal 2020-21, but still higher than the pre-pandemic ratio of less than 23 per cent. While increased budgetary allocations for infrastructure indicate an improvement in spending quality, debt servicing remains a significant portion of expenditure, reflecting ongoing constraints on fiscal flexibility. This situation underscores the need for the incoming government to balance fiscal consolidation with growth-supportive measures. The upcoming final budget for the fiscal year ending March 2025 will provide further insights into India's fiscal policy direction through 2029. As the Modi administration embarks on its third term, the focus will likely remain on sustaining economic growth while addressing the persistent <keyword id="21500054" type="General" weightage="20" keywordseo="fiscal-challenges" source="keywords">fiscal challenges</keyword> that hinder India's long-term economic potential.

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Indian economy likely to grow at 7-7.2 percent in FY25,Deloitte India says

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Strong growth, lower fiscal deficit may lead to India rating upgrade: Deutsche Bank

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Bolster manufacturing sector, consumption this budget: PHDCCI to FinMin

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Russia's GDP growth slowed in Q2 while inflation continued to soar on the back of heavy state spending: report

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Modi 3.0 will offer policy continuity, but BJP's loss of outright majority may slow down fiscal reforms: Moody's

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