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Union Finance Minister <keyword id="19916618" type="General" weightage="100" keywordseo="Nirmala-Sitharaman" source="keywords">Nirmala Sitharaman</keyword> highlighted India's significant progress in electrification, <keyword id="23692737" type="General" weightage="20" keywordseo="water-accessibility" source="keywords">water accessibility</keyword>, and <keyword id="20879840" type="General" weightage="20" keywordseo="economic-empowerment" source="keywords">economic empowerment</keyword> during a fireside chat with John J Hamre, President and CEO of the Center for Strategic and International Studies (CSIS), in Washington, DC. Highlighting the progress made in <keyword id="23003732" type="General" weightage="20" keywordseo="rural-electrification" source="keywords">rural electrification</keyword>, <keyword id="19916494" type="General" weightage="20" keywordseo="sitharaman" source="keywords">Sitharaman</keyword> highlighted that every village in India now has access to electricity. She noted that in 2014, many villages across India, including those near state capitals, lacked even basic infrastructure for electrification. She said "I don't think any village in India is unelectrified today. Households have received the connections. So, if I remember the situation in 2014, there were still many villages in many parts of India, some even very close to the state capital, provincial headquarters, without even a pole to receive the electric wires. Now, all that has been overcome. Houses have got their electricity." The Finance Minister also discussed the <keyword id="19971121" type="General" weightage="20" keywordseo="Jal-Jeevan-Mission" source="keywords">Jal Jeevan Mission</keyword>, a program initiated by Prime Minister Narendra Modi to provide tap water connections to every household. She explained, "Earlier, one tap water connection was provided to a village, from where everyone would take water to their home. But under the 'Jal Jeevan Mission,' each and every house gets a tap water connection." Sitharaman emphasized the positive impact of this initiative on health, sanitation, and convenience for millions of Indian families. Turning to the economic empowerment of <keyword id="20101496" type="General" weightage="20" keywordseo="municipalities" source="keywords">municipalities</keyword> and urban centers, Sitharaman noted that these local governments are receiving increased autonomy and financial support. She explained that municipalities receive a portion of taxes collected by the central government, along with additional funds based on the Finance Commission's recommendations. "Over and above, today, we are enhancing their capacities to raise resources from the market. Municipalities are a very powerful instrument of economic development and they, on their own, are raising a lot of resources," she added. Sitharaman also expressed confidence in India's economic growth and its appeal to <keyword id="20632552" type="General" weightage="20" keywordseo="global-investors" source="keywords">global investors</keyword>. "The policies are working, reforms are happening, and they shall continue to happen," she stated, adding that "greater liberalisation of the economy will be there and, in a way, we are accessing newer markets and speaking about the <keyword id="19948184" type="General" weightage="20" keywordseo="Indian-economy" source="keywords">Indian economy</keyword> in more avenues and platforms that will attract more investors." With ongoing reforms and increased global engagement, Sitharaman noted, India is solidifying its position as a significant player on the world stage, expanding its economic reach and inviting foreign investment.

No village in India left without access to electricity, claims FM Nirmala Sitharaman

New Delhi: India has proven the 'fallacy' of incompatibility of rapid <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> and a democratic political system, and the continuity of government and policies give industry the confidence of <keyword id="22932843" type="General" weightage="20" keywordseo="sustained-high-growth" source="keywords">sustained high growth</keyword>, <keyword id="19909974" type="General" weightage="100" keywordseo="Maruti-Suzuki" source="keywords" meta.keywordsubtype="org" meta.entityname="Maruti Suzuki" meta.hostid="261" meta.entityid="Maruti Suzuki">Maruti Suzuki</keyword> India Chairman R C Bhargava said on Tuesday. In his address to shareholders in the company's Annual General Meeting held virtually, he asserted that India's <keyword id="20442128" type="General" weightage="20" keywordseo="democratic-processes" source="keywords">democratic processes</keyword> will lead it to a sustained and more equitable society. Bhargava also said the industry and the government can work with trust and confidence with each other to achieve the goal of India becoming a developed country by 2047. "Over the years, I've heard people arguing that rapid economic development and a democratic political system are not really compatible. Our country has proved the fallacy of this line of thinking," he said. Asserting his point, Bhargava said, "We are now the fastest growing economy in the world, and our prime minister is one of the most respected global leaders." Periodically, he said, "the world has seen how deeply committed we are to the democratic processes." Referring to the recent general elections, he said it has "once again shown that hundreds of millions of people can vote in a peaceful manner and accept the results of that process." Bhargava, however, admitted that "the policies and strategies for equitable and rapid economic growth and development did take some time in being established". ".. But we did find the right path through peaceful democratic processes. This is in sharp contrast to what we have seen around us in many parts of the world and in our neighborhood," he said, without naming Bangladesh which is currently in turmoil following student-led violent protests that led to a regime change. "The continuity of the government and its policies to bring in faster economic growth with greater inclusivity and equity gives industry confidence of sustained high growth," Bhargava said. He further said industry and government can work with trust and confidence with each other to achieve the goal of India becoming a developed country by 2047. "It is the democratic processes which will lead us to a sustained and more equitable society," he said.

Continuity of government, policies give industry confidence of sustained high growth: Maruti Suzuki Chief

India’s Chief Economic Advisor (CEA), <keyword id="20690607" type="General" weightage="20" keywordseo="V-Anantha-Nageswaran" source="keywords">V Anantha Nageswaran</keyword>, remains optimistic about the nation’s economic prospects despite a slower-than-expected <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> in the second quarter of FY2024-25. Speaking at the Bharat @100 Summit hosted by Assocham, he said that the fundamental health of the economy remains robust, according to a report by aNI. Nageswaran highlighted several indicators demonstrating the economy’s resilience. “If you run through the checklist for the <keyword id="19948184" type="General" weightage="100" keywordseo="Indian-economy" source="keywords">Indian economy</keyword>, the health is pretty robust,” he noted, pointing to controlled levels of external debt as a share of GDP, declining non-performing assets in the banking system, and stable inflation trends. Although certain food items have caused inflationary spikes, their impact is limited within the overall consumer price index basket, he explained. The CEA praised the shift in fiscal expenditure priorities over the past seven years, with greater focus on capital investments rather than revenue spending. This reallocation, he suggested, has bolstered long-term economic stability and growth potential. India’s GDP growth for the July-September quarter was 5.4%, significantly below the Reserve Bank of India’s forecast of 7%. While this has sparked concerns among economists, Nageswaran urged against overreacting. Erratic monsoons and excessive rainfall disrupted economic activity in Q2, he explained, while global uncertainties and supply chain pressures further weighed on growth. Despite these challenges, he maintained confidence in the broader growth narrative, citing improvements in key economic metrics. For instance, India’s gross capital formation has risen from 27.3% of GDP in the second decade of the 2000s to 30.8% today. Private consumption remains steady, and exports—spanning both services and manufacturing—continue to perform well even amid challenging global conditions. Nageswaran also underscored India’s growing competitiveness in international trade. He noted that the nation’s total <keyword id="24325087" type="General" weightage="20" keywordseo="exports-as-a-percentage-of-GDP" source="keywords">exports as a percentage of GDP</keyword> now surpass China’s, showcasing its resilience and adaptability in a shifting global trade environment. However, he cautioned against reading too much into quarterly fluctuations, highlighting the impact of geopolitical developments such as trade restrictions from the US on critical minerals and rare earths, as well as policy shifts in China. These external factors, he suggested, are likely to persist and may continue influencing short-term economic trends. (with ANI inputs)

Indian economy is resilient despite Q2 challenges, says CEA Nageswaran

<keyword id="20599258" type="General" weightage="20" keywordseo="Indian-consumers" source="keywords">Indian consumers</keyword> demonstrated a significant increase in their <keyword id="21084888" type="General" weightage="100" keywordseo="credit-card-spending" source="keywords">credit card spending</keyword> in July this year, marking a 19% increase compared to the same month last year. According to a report released by <keyword id="19945737" type="General" weightage="20" keywordseo="SBI-Securities" source="keywords" meta.keywordsubtype="org" meta.entityname="SBI Securities" meta.hostid="261" meta.entityid="SBI Securities">SBI Securities</keyword>, the total expenditure by credit card users across the country reached an impressive Rs 1.7 trillion. This substantial uptick highlights the growing reliance on credit cards for transactions, reflecting broader economic trends and <keyword id="20740758" type="General" weightage="20" keywordseo="consumer-confidence" source="keywords">consumer confidence</keyword>. The report also highlighted a considerable increase in <keyword id="21118324" type="General" weightage="20" keywordseo="transaction-volumes" source="keywords">transaction volumes</keyword>, which surged by 39% year-on-year, reaching a total of 38.4 crore transactions in July 2024. This increase in the number of transactions underscores the widespread adoption and usage of credit cards as a preferred <keyword id="20632158" type="General" weightage="20" keywordseo="payment-method" source="keywords">payment method</keyword> among Indian consumers. "Credit card spending in India increased 19% YoY to Rs 1.7 trillion in Jul'24. The transaction volume during the month was 38.4 crore, up 39% YoY" said the report. The report also noted that among the banks, <keyword id="19895995" type="General" weightage="20" keywordseo="HDFC-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="HDFC Bank" meta.hostid="261" meta.entityid="HDFC Bank">HDFC Bank</keyword> emerged as the leader in terms of transaction volumes, with its credit cards facilitating 9.9 crore transactions during the month. <keyword id="19900482" type="General" weightage="20" keywordseo="ICICI-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="ICICI Bank" meta.hostid="261" meta.entityid="ICICI Bank">ICICI Bank</keyword> followed closely with 7.1 crore transactions, while SBI secured the third position with 6.3 crore transactions. In terms of transaction value, HDFC Bank again led the way, with a total spend of Rs 44,369 crore through its credit cards in July. ICICI Bank and SBI followed with Rs 34,566 crore and Rs 26,878 crore, respectively. The report said "In Jul'24, transaction volumes was led by cards issued by HDFC Bank (9.9 crore) followed by ICICI Bank (7.1 crore) and SBI (6.3 crore)". Additionally, the <keyword id="22988051" type="General" weightage="20" keywordseo="average-transaction-value" source="keywords">average transaction value</keyword> (ATV) also saw a marginal increase of 1.4% month-on-month in July 2024. This marks the first increase in ATV in ten months, suggesting a shift in consumer behaviour towards higher-value transactions after a period of stagnation. Overall, these figures reflect the growth of credit card usage in India, driven by increased consumer confidence and the convenience offered by credit card transactions.

Indians credit card spending increases 19% YoY to Rs 1.7 trillion in July 2024

<keyword id="19900795" type="General" weightage="20" keywordseo="foreign-investors" source="keywords">Foreign investors</keyword> are currently making a beeline for <keyword id="19894886" type="General" weightage="100" keywordseo="China" source="keywords">China</keyword>, enthused by the gush of <keyword id="23496485" type="General" weightage="20" keywordseo="financial-stimulus" source="keywords">financial stimulus</keyword> injected by the government into the Chinese economy. While this may have temporarily sent their stock markets soaring, a recent report by the <keyword id="19899824" type="General" weightage="20" keywordseo="World-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="World Bank" meta.hostid="261" meta.entityid="World Bank">World Bank</keyword> notes that this might not be enough to push back the <keyword id="19904090" type="General" weightage="20" keywordseo="economic-slowdown" source="keywords">economic slowdown</keyword> that has already set in. China's growth rate is projected to slack further to 4.3% in 2025, down from its present rate of 4.8%. The <keyword id="19916574" type="General" weightage="20" keywordseo="OECD" source="keywords" meta.keywordsubtype="org" meta.entityname="OECD" meta.hostid="261" meta.entityid="OECD">OECD</keyword> also expects the country's growth to slow down to 4.5% in 2025 Experts believe that the recent economic push by the government, which includes lowering reserve requirement ratio (RRR) by 0.5% to 6.6%, lowering mortgage rates, injecting $142 billion into banks, among others, are too little to sustain long-term recovery. Notably, lowering RRR frees up $140 billion for banks to lend, while reducing mortgages and minimum down payments for housing purchases are directed to spur up the Chinese real estate segment. Per <keyword id="19906485" type="General" weightage="20" keywordseo="Goldman-Sachs" source="keywords" meta.keywordsubtype="org" meta.entityname="Goldman Sachs" meta.hostid="261" meta.entityid="Goldman Sachs">Goldman Sachs</keyword>, weak domestic demand, dwindling consumer confidence and spending and an endless real-estate crisis are some of the main reasons for the slowdown.The average Chinese citizen still grapples with job insecurity, stagnant salaries, and depreciating real estate and equity values. For instance, China's last public holiday of the year, the Golden Week, which ended on October 7 and commemorates the nation's founding, saw 2% less spending per domestic trip, as compared to pre-pandemic levels. "Low tourism spending per head and subdued services prices highlight the still weak domestic demand and continued consumption downgrading in the country,” the analysts at GS noted. <h2>Its all temporary</h2>The <keyword id="21360606" type="General" weightage="20" keywordseo="Hang-Seng-index" source="keywords">Hang Seng index</keyword>, which is up by 4.22% today, has been seeing a meteoric rise over the past few weeks. Inching up by a little over 24% over the last month, the Chinese markets have been seeing an significant influx of foreign investment, largely at the expense of other emerging markets like India. Foreign investors had offloaded shares worth Rs 27,142 crore between the first and third of this month, after foreign investments reached a staggering record-high of Rs 93,538 crore in September, as per NSDL data. Over the last 10 days, FIIs have constantly been net sellers, while DIIs have been net buyers. As of October 10th, DII (Domestic Institutional Investors) have put in Rs 50,183 crores in Indian markets, almost balancing out Rs 49,305.29 crore withdrawn by foreign investors. But whether this trend of FII inflow in China continues will largely depend on the fundamentals their economy, an area where India has an edge, thanks to strong confidence of domestic investors. Viram Shah, CEO of Vested Finance highlights that while the Hang Seng index's recent 26% surge over the last month has caught investors' attention, and while this bullish trend is expected to continue, driven by low Chinese stock valuations and hopes for economic improvement from government stimulus, there lies a long road ahead. "Foreign Portfolio Investors (FPIs) pulled out $5.4 billion from Indian equities over five consecutive sessions, ending Monday, October 7. While this suggests a possible rotation of funds from India to China, how long this shift will last will depend on the Chinese government’s ability to resolve the structural economic issues. While the market rally is encouraging, more policy steps are needed to boost economic activity and confidence in China", he added.

All eyes on China: Rush of foreign investors can do little to stave off a slowdown, says World Bank

Issues related to data privacy and rising <keyword id="20127272" type="General" weightage="20" keywordseo="online-frauds" source="keywords">online frauds</keyword> are emerging as significant hurdles in the growth of e-commerce in India, said the <keyword id="20613906" type="General" weightage="20" keywordseo="Economic-Survey" source="keywords" meta.keywordsubtype="org" meta.entityname="Economic Survey" meta.hostid="261" meta.entityid="Economic Survey">Economic Survey</keyword> 2023-24 tabled in Parliament on Monday. Citing third-party data, the survey said that the e-commerce industry in India is expected to cross USD 350 billion by 2030 and called for the need to educate users on the safe use of e-commerce platforms. "The rise of e-commerce is constrained by inadequate skills required for online selling, such as cataloguing. <keyword id="22505774" type="General" weightage="20" keywordseo="data-privacy-issues" source="keywords">Data privacy issues</keyword> and increasing online fraud have turned out to be the most significant hurdle in the growth of e-commerce in India. It becomes imperative to educate users on the safe use of e-commerce platforms," the survey said. The survey mentioned that India's e-commerce market has gained significant momentum during the past few years, owing to technological advancements, evolving new-age business models coupled with government initiatives like the Digital India program, UPI, One District - One Product (ODOP), Open Network for Digital Commerce (ONDC), new foreign trade policy, easing of FDI limits and Consumer Protection (E-Commerce) (Amendment) Rules 2021. It has identified data privacy and <keyword id="19906883" type="General" weightage="20" keywordseo="cybersecurity" source="keywords">cybersecurity</keyword> as critical concerns in the <keyword id="22505776" type="General" weightage="20" keywordseo="digitisation-of-services" source="keywords">digitisation of services</keyword> in the country and called for adopting strong security measures, compliance with privacy regulations, and innovation, among others. "Data privacy and cybersecurity have become critical concerns with the increasing digitisation of services," according to the survey. It said that the government is spearheading data protection laws and cybersecurity policies to safeguard consumer data and strengthen cybersecurity measures in the services sector. "To further embrace technology with confidence, ensuring the adoption of strong security measures, compliance with privacy regulations, and fostering innovation in security technologies are essential," the survey noted. It said the future of e-commerce is built on the enhanced <keyword id="20290101" type="General" weightage="20" keywordseo="user-experience" source="keywords">user experience</keyword> through <keyword id="19899640" type="General" weightage="20" keywordseo="AI" source="keywords">AI</keyword>, seamless <keyword id="21332958" type="General" weightage="20" keywordseo="digital-payment-methods" source="keywords">digital payment methods</keyword>, innovations like UPI, and business engineering data analytics for business operations and enhancements. The survey mentioned that the buyer ecosystem in India is evolving at a very sharp rate, and business models will need to innovate to serve the needs of a diverse shopper base regarding service expectations, price sensitivity and language requirements. "Local language platforms are needed as the shopper base expands to tier-2 and tier-3 cities. Growing startups and innovative social media platforms provide an opportunity to test unique business models that might be targeted to specific demographic cohorts," the survey said.

Data privacy issues, online frauds emerging as e-commerce growth hurdles: Eco Survey

<ul class="summary-list"><li>Dollar dominance faces key challenges in the future, Brookings researchers said.</li><li>The think tank pointed to four forces that could be make the greenback less attractive. </li></ul>There are a handful of challenges to the dollar's top status in financial markets, according to researchers from the Brookings Institution.In a recent <a target="_blank" class="" href="https://www.brookings.edu/articles/the-changing-role-of-the-us-dollar/">note</a>, the think tank pointed to the US dollar's shifting status in global financial markets, with the use of the <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-imf-stealth-erosion-global-us-dollar-forex-reserves-sanctions-2024-6">greenback declining steadily </a>over the past several decades. While the <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dedollarization-dollar-dominance-currency-war-trade-usd-reserves-explained-2024-5">dollar still dominates</a> central bank reserves and world trade, the currency accounted for 59% of all global reserves at the start of 2024, down from 71% of reserve in 1999, according to estimates from the International Monetary Fund.<div type="image" title="Dollar's share of global reserves graph" height="1138" width="1145" msid="112816893" hostid="261" sizebytes="59508"></div>Meanwhile, the share of nontraditional currency reserves has edged higher. Currencies like the Australian dollar, the Swiss franc, and Chinese yuan accounted for 11% of all central bank reserves at the start of this year, up from 2% recorded in 1999, per IMF data.<div type="image" title="Share of nontraditional currency reserves" height="1162" width="1151" msid="112816894" hostid="261" sizebytes="62210"></div>That decline has sparked some fear among investors that the dollar could soon be ousted from its top-dog position in financial markets. While most experts say that <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-usd-yuan-china-russia-brics-currency-2024-7">likely isn't happening anytime soon</a>, the think tank said the dollar's dominant status faces key challenges, pointing to four factors in particular.<h2 id="eb86da1f-7f18-4189-b9a3-3748f015a7bb">1. US sanctions</h2>The US began implementing sanctions on Russia and its allies after Moscow began its invasion of Ukraine in 2022. That's sparked a de-dollarization drive in Russia and other BRICS nations, which have suggested they're looking to shift away from the dollar as a reaction to Western trade restrictions.Russia, in particular, has taken steps to heavily de-dollarize its economy, with the nation adopting a <a target="_blank" href="https://www.businessinsider.com/dedollarization-russia-china-yuan-ruble-exchange-rate-benchmark-new-sanctions-2024-6">yuan-to-ruble exchange rate</a>, proposing a <a target="_blank" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-dominance-currencies-brics-china-russia-india-putin-2023-7">rival currency to the greenback</a>, and reportedly spearheading an <a target="_blank" href="https://www.businessinsider.com/dedollarization-russia-actively-working-brics-local-currencies-platform-us-dollar-2024-6">alternative payment platform</a> that wouldn't be reliant on the dollar.China, which saw its companies hit with <a target="_blank" href="https://home.treasury.gov/news/press-releases/jy2546">secondary sanctions</a> from the US Treasury last week, has also signaled a shift away from the dollar, <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-china-yuan-cny-trade-usd-sanctions-protection-reserve-currency-2024-5">promoting its yuan as an alternative</a>."If the United States is capricious with sanctions, acts unilaterally, and fails to develop a doctrine of economic statecraft, the dollar could be dethroned," Brookings researchers said, citing <a target="_blank" class="" href="https://www.businessinsider.com/economic-sanctions-russia-us-dollar-dominance-yellen-alternative-yuan-dedollarization-2023-4">comments</a> from US Treasury Secretary Janet Yellen.<h2 id="eff7251a-f1be-40d0-8494-5988c77ddab7">2. US debt</h2>The US's rising debt load could make currency holders more wary of the dollar, especially if there are concerns that the US may not be able to pay back its dues.While the US debt balance hasn't yet breached unsustainable levels, the government's rapid pace of spending has done little to ease markets. Fitch, for instance, <a target="_blank" href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8#:~:text=Fitch%20downgraded%20the%20US's%20credit,the%20debt%20limit%20until%202025.">downgraded the US</a><a target="_blank" class="" href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8#:~:text=Fitch%20downgraded%20the%20US's%20credit,the%20debt%20limit%20until%202025."> credit rating</a> last year, citing a "steady deterioration in standards of governance.""Bickering over appropriations, Congress has shut the government down several times. Further political instability could erode investor confidence in the dollar," the researchers said.<h2 id="c18d8d68-8ac9-451c-b2c2-8ff5942f963f">3. Improved payment technology</h2>More advanced payment systems have made it easier to exchange nontraditional currencies. That could weigh on demand for the US dollar, which has traditionally been seen as the most attractive medium of exchange."Typically, converting such currencies to dollars, and vice versa, has been easier and cheaper than exchanging them for one another. But China and India, for example, will soon no longer need to exchange their respective currencies for dollars to conduct trade cheaply. Rather, exchanging renminbi for rupees directly will become cheaper. Consequently, the reliance on 'vehicle currencies,' particularly the dollar, will decline," Eswar Prasad, a senior fellow at the Brookings Institution, said in a previous note.<h2 id="0b9967af-c144-471b-8ee3-4faf7baad925">4. Central bank digital currencies</h2>Digital currencies issued by central banks could also make it easier and cheaper to nontraditional currencies. China is developing one such <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/dollar-dominance-outlook-china-india-digital-currency-race-fed-innovation-2024-1">CBDC</a>, and CIPS, China's Cross-border Interbank payment system, has been "growing rapidly" over the past few years, the think-tank noted.The Fed has created its own instant payment network, but hasn't moved to create a CBDC, with Powell suggesting last year that a <a target="_blank" class="" href="https://www.federalreserve.gov/faqs/is-fednow-replacing-cash-is-it-a-central-bank-digital-currency.htm">digital currency would require approval from lawmakers</a>. That means the US risks falling behind other countries, where digital payment tech is rapidly developing, Brookings researchers said.Still, despite warnings, most currency experts <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-currency-usd-dominance-china-yuan-economy-2024-5">do not believe de-dollarization</a> is a near-term threat to the US or its currency. At the moment, there are no close competitors to the greenback in financial markets — and countries that try to de-dollarize anyway <a target="_blank" class="" href="https://markets.businessinsider.com/news/currencies/de-dollarization-dollar-war-usd-yuan-china-russia-brics-currency-2024-7">risk a host of economic consequences</a>, like slower growth and lost investment value, one commodities vet told Business Insider.

The 4 forces that will challenge the dominance of the dollar, according to economic researchers

If there is one word to aptly describe the ongoing 2024 Lok Sabha <keyword id="20515965" type="General" weightage="20" keywordseo="election-results" source="keywords">election results</keyword>, specifically for the incumbent party, it would be jolting, startling, and perhaps, even surprising. The exit polls were wide off the mark, and then some. Less than a week ago, India reported a remarkable <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> rate of 8.2% for the fiscal year 2023-24. Over the weekend, exit polls predicted a clear and easy majority for the ruling Bharatiya Janata Party (BJP) and its alliance NDA. Consequently, benchmark indexes, Sensex and <keyword id="6354813" type="General" weightage="20" keywordseo="Nifty" source="Orion">Nifty</keyword>, both zoomed more than 3 per cent on Monday, breaching the all-time high records. On Tuesday, the tides turned! Putting a harsh full stop on the ruling party’s “abki baar 400 paar” narrative, the electoral situation on Tuesday evening shows less than 300 seats to the NDA and over 230 seats to the opposing INDIA bloc. What’s even more concerning for the ruling party is its tally dropping from 303 in 2019 to less than 245 this year. Consequently, on Tuesday, Sensex witnessed the steepest drop in over four years since the pandemic, recording a drop of 4,389 to settle just over 72,000. Nifty also dipped by almost 6%, standing at 21,884 points. If the trends hold, the BJP will lack a clear, simple majority on its own for the next five years, even if it manages to form a government with its pre-poll allies. The question is, how stable the new government would be, what would be the overall impact of this verdict on India’s economy, and what’s the story behind the jitters exhibited by the markets on Tuesday? <cmsannotation type="cmsannotation" annotationid="India’s incredible economic growth story" comment="subhead" text="India’s incredible economic growth story">India’s incredible <keyword id="19900794" type="General" weightage="100" keywordseo="economic-growth" source="keywords">economic growth</keyword> story </cmsannotation>Perched to be the world’s 3rd largest economy by 2027, India’s current GDP value stands at $3.9 trillion. As per FM <keyword id="20200167" type="General" weightage="20" keywordseo="Nirmala-Seetharaman" source="keywords">Nirmala Seetharaman</keyword>, the Indian economy is anticipated to grow at a rate of close to 7% in FY25 and hit $7 trillion by 2030. The <keyword id="3530620" type="General" weightage="20" keywordseo="Gross-Value-Added" source="Orion">Gross Value Added</keyword> (GVA) data supports the optimistic outlook, with a growth rate of 7.2% in FY24 compared to 6.7% in FY23. And notably, this strong economic growth has come at a time when most of the major economies across the globe are grappling with a slowdown. While few expect India to maintain a robust growth of 8.2%, most economists agree that GDP growth could moderate to around 7% in FY25. But most of these growth forecasts are contingent on a stable government and policy reforms at the centre. So, does the sharp fall in benchmark indices on Tuesday foretell a twist in India’s growth story? <cmsannotation type="cmsannotation" annotationid="Is there a twist in the tale?" comment="subhead" text="Is there a twist in the tale?">Is there a twist in the tale? </cmsannotation>Firstly, the <keyword id="16791710" type="General" weightage="20" keywordseo="foreign-portfolio-inflows" source="Orion">foreign portfolio inflows</keyword> (FPI), indicative of the global confidence reposed in the Indian markets, have been on a consistent decline over the past 3 months. As of 4th June 2024, foreign institutional investors had withdrawn a total of Rs 14,339 crores from the Indian equity markets while investing Rs 55,273 crores in debt instruments, which are traditionally reflective of safety, security, and a low-risk and change appetite. Foreign institutional investors had also withdrawn Rs 25,586 crores during May 2024, and Rs 8,671 crores during April 2024. If anything, the Indian market stands atop the strong confidence of domestic investors. The AUM (assets under management) of the Indian mutual fund industry stood at a record high of around $57 lakh crores in April 2024, even as the SIP AUM hit a record high of Rs 11.26 lakh crore. "The steep fall is due to the results so far falling short of the exit polls which the market had discounted yesterday. If BJP doesn't get a majority on its own there will be disappointment and this is getting reflected in the market. Also it is possible that Modi 3.O may not be as reform-oriented as the market expected and may turn more welfare- oriented," said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. <cmsannotation type="cmsannotation" annotationid="Cautiously optimistic investors could prevail" comment="subhead" text="Cautiously optimistic investors could prevail">Cautiously optimistic investors could prevail </cmsannotation>But does this mean India’s growth story stands threatened or even jeopardized? Even though social media is flooded with memes that might lead one to believe it is all over for India’s story, the country remains the fastest growing economy amongst all G-20 nations in 2024, compelling almost all rating agencies to positively hike the country’s potential growth rate. But, equally noticeable is the fact that India’s private consumption, a major indicator of the economy’s growth, jumped by only 3.5% over the last 3 months of 2024. India now makes up 6.7% of the world’s GDP by purchasing power parity (PPP). As figures go, India is set to become a $10 trillion economy by 2030. Veteran investors like Raamdeo Agrawal, who heads Motilal Oswal Financial Services, believe that India’s potential growth rate of 8-8.5% is not going anywhere and that NDA’s leadership is here to stay. In his words, if an investor has managed to make 4-5x in the last 3-4 years, one will have to give in 20-30%. But that is where you will have to persist as an investor. "With the NDA still looking to form a government, though with the important support of coalition partners, markets look jittery about the prospects of strong decision making. Markets believe that the reformistic approach, which was a hallmark of the previous two terms, might take a backseat in the third term. However, our sense is that it is still early to jump to conclusions and should ideally wait for a clearer picture," said Manish Chowdhury, Head of Research, StoxBox. But all in all, the NDA government is most likely to stay for the full term, and those who bet on the same stand to stay safe despite the surprisingly strong performance of the INDIA alliance. However, in the end, the only one who wins in the market stays put in the market in the long run. Because NDA, or INDIA, compounding is here to stay, all set to immensely benefit long-term investors. (With inputs ANI)

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