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The overall size of the budget has remained almost unchanged from the interim one presented in February, indicating the government's strong commitment to move along the <keyword id="20099794" type="General" weightage="20" keywordseo="fiscal-prudence" source="keywords">fiscal prudence</keyword> path, said experts on Tuesday. According to the <keyword id="19908389" type="General" weightage="100" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> 2024-25 presented by Finance Minister Nirmala Sitharaman, the total expenditure in Budget Estimates (BE) 2024-25 is estimated at Rs 48,20,512 crore of which total <keyword id="20018917" type="General" weightage="20" keywordseo="capital-expenditure" source="keywords">capital expenditure</keyword> is Rs 11,11,111 crore. The total expenditure in the Interim Budget presented in February was estimated at Rs 47,65,768 crore of which total capital expenditure was Rs 11.11 lakh crore. Debadatta Chand, Managing Director &amp; CEO, <keyword id="19920717" type="General" weightage="20" keywordseo="Bank-of-Baroda" source="keywords" meta.keywordsubtype="org" meta.entityname="Bank of Baroda" meta.hostid="261" meta.entityid="Bank of Baroda">Bank of Baroda</keyword>, said the Union Budget complements the main takeaways from the Economic Survey and focusses clearly on medium term development of the economy. "The overall size of the budget has remained almost unchanged from the interim one. The budget has shown strong intent on moving along the fiscal prudence path and targeted the <keyword id="19942084" type="General" weightage="20" keywordseo="fiscal-deficit" source="keywords">fiscal deficit</keyword> at 4.9 per cent for the year," he said. The said action will keep the growth steady as well as robust not only for economy but also banking. Aditi Nayar, Chief Economist, ICRA Limited, said the budget has kept the capital expenditure unchanged and pared the fiscal deficit to 4.9 per cent of GDP. "The anticipated reiteration of the reduction in the fiscal deficit to below 4.5 per cent of GDP in FY2026 is welcome. Interestingly, the new medium term fiscal consolidation path has been linked to a reduction in the debt/GDP ratio instead of continued compression of the fiscal deficit/GDP ratio," she said. Buoyed by improvement in revenue collection, the government has lowered fiscal deficit target to 4.9 per cent for the current <keyword id="19910979" type="General" weightage="20" keywordseo="financial-year" source="keywords">financial year</keyword> as against 5.1 per cent estimated in February's interim budget. Ranen Banerjee, Partner and Leader Economic Advisory, PwC India, said that fiscal prudence is the highlight of the full Union Budget 2024-25. The government has gone with realistic projections on its revenue and expenditure estimates and refrained from announcing overly populist measures. "The majority of the allocations, including the capex allocation, are as outlined in the interim budget, thus providing continuity. The capex being kept at INR 11.11 trillion was expected, given that the ability to consume this allocation is limited due to disruption from the elections in the first quarter and the second quarter being typically slowed down by the monsoons," Banerjee said. Institute of Chartered Accountants of India (ICAI) President Ranjeet Kumar Agarwal said the government has announced five schemes to facilitate employment and skilling for 4.1 crore youth over the next five years with a central outlay of Rs 2 lakh crore. "This is a welcome step that will create a skilled workforce to address the existing deficit and generate <keyword id="19972727" type="General" weightage="20" keywordseo="employment-opportunities" source="keywords">employment opportunities</keyword>. Additionally, financial support for loans up to Rs 10 lakh for higher education will help students pursue higher education and acquire skills," he added. Indian Institute of Insolvency Professionals of ICAI (IIIPI) Chairman Ashok Haldia said the budget proposals for an integrated technology platform and sprucing up NCLT infrastructure will provide a fillip to the Insolvency and Bankruptcy Code (IBC) regime. IIIPI is promoted by ICAI. Meanwhile, Kumarmangalam Vijay, Partner, JSA Advocates and Solicitors, opined that in its new avatar, it seems that the Modi government is keen to deliver on its promise of 'ease of doing business'. "Its focus on making it simpler is evident from the abolition of the angel tax, the increase in new income tax regime thresholds, new Vivad se Vishwas Scheme 2024 for the resolution of pending cases and the increase in the threshold for appeal by tax departments at various levels, decriminalising the non-reporting of shares received from non-resident employers and reducing the period for re-opening of the cases," Vijay said. The Institute of Company Secretaries of India (ICSI) said there has been a focus on the manufacturing sector in the budget. Measures have been taken for simplifying the FDI/ODI rules and regulations, and the <keyword id="21847964" type="General" weightage="20" keywordseo="tax-regimes" source="keywords">tax regimes</keyword>. The enhanced Mudra loan limit and the abolition of angel tax are all set to incentivize the startup and MSME ecosystem of the country. "The nine priorities identified in this progressive and inclusive budget 2024 are aimed at generating ample opportunities for all. Besides agricultural reforms, the budget focuses on skilling, educating and employing the youth, a priority that the ICSI has been concentrating on," said ICSI President B Narasimhan. Rajesh Magow, Co-Founder and Group CEO, MakeMyTrip, said the government's continued emphasis on infrastructure development is commendable. Enhanced road infrastructure will bolster the travel and tourism sector. "We also welcome the initiatives to develop iconic spiritual and cultural sites into world-class tourist hotspots," Magow said. Furthermore, he said the provision of credit for TCS against income tax under 'Income from Salaries' is logical and will provide much-desired relief to taxpayers who travel internationally.

Budget size almost unchanged from interim, shows govt's commitment to fiscal prudence: Experts

<ul><li>The overall credit demand stands at $220 billion, yet only $165 billion is serviceable, says a report by Redseer and GetVantage.</li><li>Formal lending systems like banks have only been able to service 30% of the overall credit demand.</li><li>Alternate finance systems like recurring-revenue advances and trade receivable financing have the potential to double their share in five years. </li></ul>Indian digital small and medium sized enterprises (SMEs) are on a growth path but suffer from a working capital deficit of around $112 billion — as only $53 billion was injected via various channels. As per a report by Redseer and GetVantage, the overall credit demand stands at $220 billion, yet only $165 billion is serviceable. “Small businesses account for 90% of credit demand but continue to struggle to raise capital, owing to poor business metrics, limited assets, and uncertain growth projections. If the current economic and regulatory climate continues, this gap is likely to widen significantly over the next five years,” said Kanishka Mohan, partner at Redseer. Moreso, as more businesses go digital along with growth in new-age businesses, the demand for credit will only grow. The report estimates that in the next five years, as the number of digital SMEs doubles, the demand for credit is expected to cross $570 billion. Advantage Alt-Fi Formal lending systems like banks have only been able to service 30% of the overall credit demand. Lack of collateral and clear documentation has always been a hindrance for traditional lenders such as commercial banks to provide adequate capital to SMEs. That presents an unprecedented opportunity for alternate-financing platforms, NBFCs and traditional financial lenders (Trad-Fi) like banks to collaborate and catalyze economic growth by prioritizing compliance, governance, inclusion and innovation, opines Bhavik Vasa, founder &amp; CEO of GetVantage. Alternate finance systems include third-party lenders such as revenue-based financing platforms, recurring-revenue advances and trade receivable financing etc. Alternate-finance provides access and flexibility which make these quasi-equity solutions ideal for SMEs. “India is a nation of small businesses, and modern businesses in India deserve modern capital solutions that are fair, accessible, and flexible. Alternate-financing has a vital role to play in extending the limited reach of traditional lenders to serve millions of new-economy businesses and emerging sectors,” says Vasa. At present, the share of alternate finance is around 5%, which Redseer estimates can double to reach to around 11% in the next five years. India has 64 million micro, small, and medium sized enterprises (MSMEs), which contribute to 30% of the nation’s GDP. The sector which is recognized as a crucial growth engine is riddled with challenges such as limited digitization and strained access to capital. Redseer says that only 12% or 7.7 million MSMEs in India are digitized. Yet, businesses that have been able to shift their operations online partly have been able to achieve scale as they could take advantage of new economic opportunities and cost efficiencies.

India’s small digital businesses have a capital problem and this will only grow

Mumbai: The Reserve Bank is unlikely to cut the benchmark <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword> in its forthcoming bi-monthly monetary policy review later in the week as <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword> is still a cause of concern, and there is a possibility of the Middle East crisis deteriorating further, impacting crude oil and commodity prices, say experts. Earlier this month, the government reconstituted the Reserve Bank's rate-setting panel -- <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC). The reconstituted panel, with three newly appointed external members, will commence its maiden meeting on Monday. MPC Chairman RBI Governor Shaktikanta Das will reveal the outcome of the three-day discussion on Wednesday (October 9). The <keyword id="19899810" type="General" weightage="100" 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) has kept the repo or short-term lending rate unchanged at 6.5 per cent since February 2023, and experts think some easing could only be possible in December. The government has tasked the central bank to ensure that Consumer Price Index (CPI) based retail inflation remains at 4 per cent with a margin of 2 per cent on either side. In the current context, experts feel that the RBI may not follow the US Federal Reserve, which lowered the benchmark rates by 50 basis points, and the central banks of some developed nations, which have reduced the interest rates. "We do not expect any change in the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> or stance by MPC. The reason is that inflation for September and October will be above 5 per cent, and the present low inflation is due to the base effect. Besides, core inflation is inching upwards," said Madan Sabnavis, Chief Economist, Bank of Baroda. Further, the recent Iran-Israel imbroglio can intensify, and there is uncertainty here, he said. "Hence, the status quo is the most likely option even for new members. Inflation forecast may be lowered by 10-20 bps and no change in GDP forecast likely," said Sabnavis. The central bank last hiked the repo rate to 6.5 per cent in February 2023 and since then, it has held the rate at the same level. Icra Chief Economist Aditi Nayar said that given the undershooting in the initial first quarter GDP growth relative to the MPC's forecast and the likely sizeable undershooting in the second quarter CPI inflation print as well, "we believe a stance change to neutral may be appropriate in the October 2024 policy review". This could be followed by a shallow rate-cutting cycle of 25 bps each in December 2024 and February 2025, she added. "The abundant monsoon offers some insurance for crop inflation. The impact of global political developments and geopolitical uncertainty on the growth inflation dynamics remains a risk," Nayar added. An HSBC report said three developments stand out -- softer growth numbers have trickled in recently, inflation has been falling, and the external environment has moved from rate hikes to cuts. "We believe the RBI doesn't gain from waiting any longer. We think it will change its stance from a hawkish 'withdrawal of accommodation' to 'neutral' in the upcoming 9 October policy meeting, followed by repo rate cuts of 25 bps each in the December and February meetings, taking the repo rate to 6 per cent," the report said. The RBI kept the repo rate unchanged at 6.5 per cent in its August bi-monthly review amid risks from higher food inflation. This was the ninth consecutive MPC meeting, which decided to maintain the status quo on the rate front. Pradeep Aggarwal, founder and chairman, Signature Global (India) Limited, said while the real estate industry, developer community, and homebuyers are hoping for an interest rate cut in the upcoming monetary policy review, the RBI is likely to hold on to the interest rate cuts for the tenth consecutive time. "The apex bank still seems uncomfortable with the overall retail inflation scenario, particularly food inflation. As such, it is expected to maintain the status quo. The recent interest rate cut by the US Federal Reserve has ignited similar hopes even in India, but the domestic scenario is very different," he added. SBM Bank India Head Treasury Mandar Pitale believed that the MPC has persistently advocated a restrictive policy until inflation aligns durably towards the 4 per cent target. "With the unfavourable base effect taking the next couple of CPI prints near 5 per cent plus or minus, it will pose a major challenge for MPC to start easing from the October meeting," Pitale said, adding that the MPC is also expected to deliberate upon the global factors like growth-inflation behaviour in developed economies. The government has appointed Ram Singh, Saugata Bhattacharya, and Nagesh Kumar as external members of the MPC. They have replaced Ashima Goyal, Shashanka Bhide, and Jayanth R Varma. Apart from the Governor, the other internal members are the RBI Deputy Governor in charge of monetary policy Michael Debabrata Patra and the Executive Director monetary policy department of RBI Rajiv Ranjan. In an off-cycle meeting in May 2022, the MPC raised the policy rate by 40 basis points and it was followed by rate hikes of varying sizes, in the subsequent meetings till February 2023. The repo rate was raised by 250 basis points cumulatively between May 2022 and February 2023.

Status-quo on interest rate likely, say experts ahead of RBI's policy review

The <keyword id="6354872" type="General" weightage="100" keywordseo="economic-survey" source="Orion">Economic Survey</keyword>, which was tabled earlier today by Finance Minister <keyword id="129243" type="General" weightage="20" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> estimated that in 2022-23, India's total workforce stood at nearly 56.5 crore. However, as data from the recent Periodic Labor Force Survey (PLFS) notes, their distribution is highly skewed, with over 45% of them engaged in agriculture, followed by 28.9% in services, 13% in construction, and 11.4% in manufacturing. At the same time, while the agriculture sector has grown at about 4.18% at constant prices over the last 5 years, India's service sector is estimated to have grown by around 7.6% in just the last financial year, as provisional estimates suggest. As such, the continued dominance of the agriculture sector as an employer, particularly when it comes to women, is concerning, especially as India's service sector, which contributes about 55% to the total size of economy, demands increasingly more workers, who possess specific, focused skill sets (think blockchain, AI, machine learning, 3D printing, web development and more). <h2>Encouraging trends</h2>The unemployment rate amongst youth, or those aged between 15-29 has come down sharply to 10% in 2022-23, from 17.8% in 2017-18. Nearly 75% of all new subscribers on EPFO payroll, a gauge for formal employment generation, are aged between 18 and 28. But while our economy keeps pace with employing young population, a staggering 57.3% of this workforce is self-employed, while another 18.3% work as unpaid laborers in households. The most prominent participant in both these categories happen to be women. As for regular wage or salaried workers, they constitute merely 20.9% of the workforce. Casual labor, characterized by sporadic, intermittent terms of employment, makes up for 21.8% of the workforce. Its not as if female labor workforce participation (FLFPR) is dwindling. In fact, as the survey notes, it has been rising for the last 6 years, with rural FLFPR inching up by 16.9 percentage points between 2017-18 and 2022-23. But the same rise is not to be seen in urban FLFPR, which inched up a meagre 5% to 25.4% in 2022-23. Pan-India, women participation in workforce jumped to 37%, largely driven by the thrust in rural FLFPR. The growth in terms of wages per worker in rural areas between FY15-22 was also higher in rural areas at 6.9%, as compared to 6.1% in urban areas. So, what can be done to rationalize this lopsidedness in employment? <h2>Developing the care economy </h2>In order to cater to the requirements of the growing workforce, the survey estimated that India will have to annually generate around 78.5 lakh non-farm jobs annually till 2030. And with India's care needs set to grow significantly in the next 25 years, it is time to develop India's care economy. Consider this-by 2050, the population of those aged between 0-14 years will decline to 18%, or 30 crore people, while those aged above 60 will swell to 20.8%, or a massive 34.7 crore person. Both these segments will need considerable care, which is currently an unpaid job both employed and unemployed women already undertake. Per NSO’s time use statistics for 2019, working-age women in India spend 5.6 hours per day on unpaid work, as opposed to just 30 mins for men. Even employed women end up spending 6x more time on unpaid care, compared to their male counterparts. As it is, studies notes that an additional hour of caregiving per day reduces women’s labor market participation by 20 percentage points, while having no effect on men. A recent report by CII pegged the economic value of women's unpaid domestic and care work to be a staggering 15-17% of GDP. As it is, care economy is one of the fastest growing sectors, expected to generate around 475 million jobs globally. In India, an investment of just 2% of GDP could lead to 11 million new jobs, 70% of which will go to women, accelerating their participation in labor force, the survey revealed. As such, developing India's care economy, both for catering to its young and silver dividend, will become a cornerstone for employment related policies in the times to come.

Economic Survey 2023-24: Where does India stand on the employment, and what's next?

<ul class="summary-list"><li>India's economy is on track to surpass the US and become the world's second-largest by 2075, Goldman Sachs forecasts. </li><li>Key drivers of the South Asian nation's growth include its technological advances and a large population. </li></ul>India's economy is on track to surpass the US by 2075 to become the world's second-largest after China, <a href="https://www.goldmansachs.com/intelligence/pages/how-india-could-rise-to-the-worlds-second-biggest-economy.html" target="_blank" rel="noopener">according to Goldman Sachs</a>.The Wall Street bank projects the South Asian nation's GDP surging to $52.5 trillion by then, compared with forecasts of $57 trillion and $51.5 trillion for China and the US, respectively. India's growth will be powered mainly by its large labor force, advances in technology and rising capital investment, the bank said in a note.At present, India is ranked the fifth-biggest economy in the world with a GDP of $3.74 billion and a per capita income of $2,600, <a href="https://www.imf.org/external/datamapper/NGDPD@WEO/IND/GBR" target="_blank" rel="noopener">according to the International Monetary Fund</a>. High-profile market experts like <a href="https://markets.businessinsider.com/news/stocks/ray-dalio-india-billionaire-investor-narendra-modi-elon-musk-tesla-2023-6" target="_blank" rel="noopener">Ray Dalio</a> and <a href="https://www.businessinsider.com/mark-mobius-bullish-india-korea-china-legendary-emerging-markets-investor-2023-6">Mark Mobius</a> have hailed the Asian nation as the next biggest investing opportunity. Even major companies including Apple, Tesla and SpaceX have leaned into the emerging economy as a hub for its supply chains instead of China.<h2>'Innovation and technology'</h2>"India has made more progress in innovation and technology than some may realize," Santanu Sengupta, Goldman Sachs's chief India economist, said. "Innovation and increasing worker productivity are going to be important for the world's fifth-biggest economy. In technical terms, that means greater output for each unit of labor and capital in India's economy," he added.But India also <a href="https://www.businessinsider.com/india-business-market-entry-barriers-tariffs-supply-chain-china-2023-6?r=US&amp;IR=T" target="_blank" rel="noopener">faces hurdles</a> in its journey toward economic superpower status. These include hefty import taxes, bureaucracy and red tape, and the dominance of domestic business tycoons – which make it harder for foreign companies to snap up any market share in key industries. <h2>Capital investments </h2>According to Goldman's Sengupta, capital investment, which refers to money invested in a business for its long-term growth, is going to be a key engineer of India's growth moving forward. "Driven by favorable demographics, India's savings rate is likely to increase with falling dependency ratios, rising incomes, and deeper financial sector development, which is likely to make the pool of capital available to drive further investment," he said. India's Prime Minister Narendra Modi has been a cheerleader for capital expenditure, recently urging the nation's private sector to boost investment and take advantage of the nation's 2023-24 budget, <a href="https://www.thehindu.com/news/national/pm-modi-asks-india-inc-to-step-up-investment/article66590176.ece" target="_blank" rel="noopener">per the Hindu newspaper</a>. <h2>Ballooning population </h2>Lastly, India has the opportunity to turbocharge its GDP by integrating its growing population into the labor force. The South Asian nation recently <a href="https://www.un.org/development/desa/dpad/publication/un-desa-policy-brief-no-153-india-overtakes-china-as-the-worlds-most-populous-country/" target="_blank" rel="noopener">overtook China</a> to become the world's most populous, with 1.4 billion people. "India's large population is clearly an opportunity, however the challenge is productively using the labor force, by increasing the labor force participation rate. That will mean creating the opportunities for this labor force to get absorbed and simultaneously training and upskilling the labor force," Sengupta said.

India's economy will surpass the US in size by 2075, thanks to its tech scene and growing population, Goldman Sachs says

<ul><li><keyword id="6358354" type="General" weightage="20" keywordseo="MSME" source="Orion">MSME</keyword> sector is estimated to grow at 15%-17% this year.</li><li>Almost every type and size of industry took a hit during the pandemic; MSMEs, however, were affected the most.</li><li>A recent report by RBI pegged the credit gap in the segment to be a staggering INR 20-25 trillion.</li></ul>Today Micro, Small, and Medium Enterprises (MSME) sector contribute over 27% ( more than INR 39 trillion ) of <keyword id="3658" type="General" weightage="20" keywordseo="india" source="Orion">India</keyword>'s <keyword id="35050" type="General" weightage="20" keywordseo="GDP" source="Orion">GDP</keyword> making them vital to our nation's economy. This is further estimated to grow at 15%-17% this year. With more than 60 million MSMEs in the country, accounting for significant formal and informal employment, they have been an essential source for innovation and job creation. Almost every type and size of industry took a hit during the pandemic; MSMEs, however, were affected the most because they lacked the necessary and sufficient resources to remain steady during the most challenging times. The competition with the larger firms has also stiffened due to the time it is taking to recover. Touted as the economic growth drivers, MSMEs do have access to formal credit, but there remains a gap in how effective it is. <div type="image" title="A recent report by RBI pegged the credit gap in the segment to be a staggering INR 20-25 trillion." msid="93451540" hostid="261" caption="&amp;lt;p&amp;gt;A recent report by RBI pegged the credit gap in the segment to be a staggering INR 20-25 trillion.&amp;lt;/p&amp;gt;"></div> With credit demand now exceeding the pre-pandemic levels, the need for a robust ecosystem to fill the gap is of prime importance. Additionally, with the government impetus and focus on the segment, there is no doubt that this is a problem worth solving. Alongside the government support, private sector financing options for MSMEs can come from <keyword id="1042660" type="General" weightage="20" keywordseo="Equity-financing" source="Orion">Equity financing</keyword>, <keyword id="105120" type="General" weightage="20" keywordseo="Debt-financing" source="Orion">Debt financing</keyword> or venture capital debt. Given the holding structures of most MSMEs, the preference remains for debt financing and here is where the <keyword id="34503" type="General" weightage="20" keywordseo="Financial-Institutions" source="Orion">Financial Institutions</keyword> ought to play the most crucial role. That said, this segment's distinct characteristics have hindered lending Institutions from fully capitalizing on the opportunity. Most businesses are seasonal and have uneven cashflows, making income assessment a challenge which is a key parameter for credit appraisal. A fast-changing competitive landscape can outpace the segment, adding to the risk for the lenders. <div type="image" title="A systemic relook at the segment for understanding the nuances and developing products and offerings that best cater to the borrower&amp;#39;s needs and suit the lender&amp;#39;s risk management framework is the need of the hour." msid="93451567" hostid="261" caption="&amp;lt;p&amp;gt;A systemic relook at the segment for understanding the nuances and developing products and offerings that best cater to the borrower&amp;#39;s needs and suit the lender&amp;#39;s risk management framework is the need of the hour.&amp;lt;/p&amp;gt;"></div> Traditionally, the loans have always been repaid in equal monthly instalments. Offerings that allow flexibility for bespoke, start-low, quarterly repayments etc. will complement the borrower's seasonality and uneven cash flow problem and still allow room for business growth. Quicker data-driven decisions, nuanced income assessments, and digital delivery of lending products will address the credit gap in a much more personalized manner. Given their significance to the GDP, MSMEs can make use of a more efficient credit ecosystem. With green shoots of economy visible, the time is opportune for lending institutions to rejuvenate the sluggish monetary ecosystem of MSMEs.

Financial Institutions Turning Towards MSME Lending

India was the fourth largest military spender globally in 2023 with an expenditure of USD 83.6 billion, behind the US, China and Russia, according to a report by an independent international think-tank. The report by Stockholm International Peace Research Institute (SIPRI) shared on its website in April also said the "rise" in global military spending last year can be attributed "primarily to the ongoing war in Ukraine and escalating geopolitical tensions in Asia and Oceania and the Middle East". The military expenditure went up in all five geographical regions, with major spending increases recorded in Europe, Asia and Oceania and the Middle East, it said. The report comes amid ongoing conflicts in various parts of the world such as the ones involving Israel-Hamas, Iran-Israel, Russian-Ukraine besides volatility in the Red Sea region. "World military expenditure increased for the ninth consecutive year in 2023, reaching a total of USD 2443 billion. The 6.8 per cent increase in 2023 was the steepest year-on-year rise since 2009 and pushed global spending to the highest level SIPRI has ever recorded," according to the report. The <keyword id="21404979" type="General" weightage="20" keywordseo="world-military-burden" source="keywords">world military burden</keyword> -- defined as military spending as a percentage of global gross domestic product (GDP) -- increased to 2.3 per cent in 2023. Average military expenditure as a share of government expenditure rose by 0.4 percentage points to 6.9 per cent in 2023 and world military spending per person was the highest since 1990 at USD 306, it added. With military expenditure of USD 83.6 billion in 2023, India was the "fourth largest spender globally". Indian spending was up by 4.2 per cent from 2022 and by 44 per cent from 2014. The increase in India's military spending was "mainly a result of growing personnel and operations costs" which made up almost 80 per cent of the total military budget in 2023, the <keyword id="20911352" type="General" weightage="20" keywordseo="SIPRI-report" source="keywords">SIPRI report</keyword> claimed. "This aligns with the government's priority to strengthen the operational readiness of the armed forces amid ongoing tensions with China and Pakistan. In comparison, capital outlays to fund military procurement remained relatively stable at around 22 per cent of the budget in 2023," it said. A total of 75 per cent of these outlays went towards equipments produced domestically, which was the highest level ever and up from 68 per cent in the previous year. The continued shift towards domestic procurement reflects India's goal of becoming self-reliant in arms development and production, the think-tank said in its repot fact sheet shared on its website. The Indian Army has maintained that deployment of its troops and other elements along the LAC is "extremely robust" and "balanced". The eastern <keyword id="21271073" type="General" weightage="20" keywordseo="Ladakh-border-standoff" source="keywords">Ladakh border standoff</keyword> erupted on May 5, 2020, following a violent clash in the Pangong Lake area. The ties between India and China nose-dived significantly following the clash in the Galwan Valley in June 2020 that marked the most serious military conflict between the two sides in decades. SIPRI is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament. Established in 1966, it provides data, analysis and recommendations based on open sources to policymakers, researchers, media and the interested public. The Stockholm-based think-tank monitors developments in military expenditure worldwide and maintains the most comprehensive, consistent and extensive publicly available data source on military expenditure, according to its online portal. The US military spending was USD 916 billion in 2023, which was 2.3 per cent more than in 2022 and 9.9 per cent more than in 2014, the report said. The US remained by far the largest spender in the world, allocating 3.1 times more to the military than the second largest spender China. "The biggest percentage increase among all US military spending categories in 2023 was for 'research, development, test and evaluation (RDT&amp;E)". The Stockholm-based think-tank also said in its report that Ukraine was the "eighth largest spender" in 2023 after a spending surge of 51 per cent to reach USD 64.8 billion. This gave Ukraine "a military burden of 37 per cent and represented 58 per cent of total government spending". "Ukraine's military spending in 2023 was 59 per cent the size of Russia's. However, Ukraine also received at least USD 35 billion in military aid during the year, including USD 25.4 billion from the US. Combined, this aid and Ukraine's own military spending were equivalent to about 91 per cent of Russian spending," the report claimed. According to the report, Russia's military spending increased by 24 per cent to an estimated USD 109 billion in 2023. "China, the world's second largest military spender, allocated an estimated USD 296 billion to the military in 2023, an increase of 6 per cent from 2022. This was the 29th consecutive year-on-year rise in China's military expenditure. China accounted for half of total military spending across the Asia and Oceania region. Several of China's neighbours have linked their own spending increases to China's rising military expenditure," the Stockholm-based think-tank claimed in its report. In 2023, the 31 <keyword id="20763732" type="General" weightage="20" keywordseo="NATO-members" source="keywords">NATO members</keyword> accounted for USD 1,341 billion, equal to 55 per cent of the world's military expenditure, the report said. 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India fourth largest military spender globally in 2023: SIPRI report

Noted <keyword id="48669" type="General" weightage="20" keywordseo="banker" source="Orion">banker</keyword> <keyword id="396965" type="General" weightage="20" keywordseo="kv-kamath" source="Orion">KV Kamath</keyword>, who now chairs the National Bank for Financing Infrastructure and Development (NaBFID), expects the digital sector to contribute a quarter of the incremental <keyword id="35050" type="General" weightage="20" keywordseo="gdp" source="Orion">GDP</keyword> by the time the economy becomes a USD 7 trillion giant by <keyword id="9422686" type="General" weightage="20" keywordseo="FY29" source="Orion">FY29</keyword>. Currently, the contribution of the digital economy is a low 4 per cent, whereas it is as much as 40 per cent in China. The government and planners see the economy becoming the third largest in the world by FY29, overtaking Japan, with a GDP of USD 7 trillion from the present USD 3.3 trillion. The digital economy -- the digital infrastructure, e-commerce and other digital payments and services segments--can be the country's biggest growth-driver and can contribute as much as 25 per cent of the incremental GDP by the time India becomes a USD 7-trillion economy by FY29. Currently, the share is a low 4 per cent, Kamath told PTI in an interaction over the weekend. "As much as 40 per cent of the Chinese economy come from the digital sector today, and I don't see any reason why we can't achieve this," the former ICICI Bank chairman quipped. The chairman of NaBFID, the newest development finance institution funded by the government, does not see any reason to stop pushing infrastructure investments as the economy has lot more appetite for more expressways, highways, airports, seaports, and high-speed railheads, discounting a question whether he sees any room for an encore of the banking crisis that befell on lenders after the government push on infrastructure during FY06-08. "The economy has more appetite for infrastructure and we still have a lot to do on the key infrastructure sectors of transport such as expressways, highways, airports, seaports, and high-speed railway networks. I would say on roads, we've to have more and more expressways going forward, large airports and dedicated high-speed railheads for both goods as well as passengers," Kamath said. "More important, we can have more urban rejuvenation projects. Why to limit this to the top cities alone? Let's build more world class cities and also upgrade the existing ones," he said. The economy will need more expressways, more airports and seaports to handle the demand of an economy that will be doubling from the present size to be the third largest with a USD7 trillion GDP over the next five years, he explained. He also does not see the asset quality of banks imploding again as happened in the last leg of the past decade as most of the infra companies went bust due to their excessive debt-driven expansion. When pointed out that the highly talked about NPA resolution -- from over 12 per cent to under-5 per cent now--come with a heavy cost on banks, having written off close to Rs 13 lakh crore since the IBC came into force as the recovery has been less than 30 per cent so far, Kamath said whatever progress has been made so far is the topping and as "we move forward and as the IBC system improves, there will be more incremental gains." On the funding part, he said, though banks will continue to remain an integral part of infra funding, there is a need to look at more sources that offer longer term funds. The <keyword id="49448" type="General" weightage="80" keywordseo="nhai" source="Orion">NHAI</keyword> has made a very good beginning with asset monetization through InVits. The whole infra segment, including the railways, should move into the monetization model and this is the most secure way of fundraising, he said. On the digital front, Kamath said, the NaBFID is actively looking to fund key areas in this space such as data centres , smart cities etc. The NaBFID was set up in 2021 with an Act of Parliament with Rs 20,000 crore capital and it made the first lending with a Rs 520 crore loan to the Banihal Qazigund Road Tunnel project in J&amp;K in December. The company expects to do around Rs 15,000 crore of funding by the end of this fiscal.

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