Bhubaneswar:

The slowing of India’s economic growth to a 15-month low of 6.7 per cent in the April-June quarter was due to “lower” government spending in the wake of the enforcement of the model code of conduct for the recent Lok Sabha polls, RBI Governor Shaktikanta Das said on Saturday.

The RBI had projected a growth rate of 7.1 per cent for the April-June quarter of this fiscal.

“The Reserve Bank projected a growth rate of 7.1 per cent for the first quarter. However, the first advance estimation data released by the National Statistical Office showed the growth rate at 6.7 per cent,” Governor Das said.

The components and main drivers responsible for the GDP growth like consumption, investment, manufacturing, services and construction have registered a growth of more than 7 per cent, he said.

Only two aspects have pulled the growth rate slightly down. Those are—government (both central and state) expenditure and agriculture, the RBI governor pointed out.

He said the government expenditure was low during the first quarter perhaps due to elections (April to June) and operation of model code of conduct by the Election Commission.

“We would expect the government expenditure to pick up in coming quarters and provide the required support to growth,” Mr Das said.

Similarly, the agriculture sector has recorded a minimal growth rate of around 2 per cent in the April to June quarter. However, the monsoon was very good and spread all over India except a few areas. So, everyone is optimistic and positive about the agriculture sector, he noted.

“Under these circumstances, we have reasonably confident expectations that the annual growth rate of 7.2 per cent projected by the RBI will be materialized in coming quarters,” the governor asserted.

Das said that GST, inflation targeting framework and Insolvency & Bankruptcy Code (IBC) are the three major reforms made during the past 10 years.

Addressing a national conference of chartered accountants (CAs) here, he said, “The primary functioning of the RBI, as defined in its preamble, is to maintain price stability, while keeping in mind the objective of growth. This was a major structural reform made by the government in 2016 by amending the RBI Act.” With this amendment, the RBI is mandated by the law to maintain the price stability with keeping the inflation at 4 per cent, with a leeway of 2 percentage points on either side, he said.

When Covid hit, the RBI reduced the repo rate by 250 basis points. Similarly, after the Ukraine war started, due to various international factors and some domestic weather events, the inflation rose to 7.8 per cent. So, at that time, the central bank had quickly increased the interest rate, he pointed out.

Stating that quality of audit in any organization is very important Das advised the CAs to do a true diagnosis of the health of a company like doctors.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

India’s gross domestic product slowed to a quarter low of 6.7 per cent in April-June this fiscal against 8.2 per cent in the year-ago period, mainly due to poor showing by the farm sector, shows government data.

Growth in Asia’s third-largest economy had been well above 7 per cent during previous quarters.

The previous GDP low was 6.2 per cent in January-March 2023.

India remains the fastest-growing major economy, as China’s GDP growth in the April-June quarter was 4.7 per cent.

The agriculture sector recorded a 2 per cent growth, down from 3.7 per cent in the April-June quarter of 2023-24, as per the National Statistical Office (NSO) data released on Friday.

However, the growth in the manufacturing sector accelerated to 7 per cent in the first quarter of the current fiscal compared to 5 per cent in the year-ago period.
 

New Delhi:

Minister of State for Finance Pankaj Chaudhary said that the first Union Budget of the third Modi government will be based on his mantra of “Sabka Saath Sabka Vikas.” Finance Minister Nirmala Sitharaman will present the full budget for 2024-25 on Tuesday.

“This budget is based on PM Modi’s mantra of Sabka Saath Sabka Vikas,” MoS Chaudhary said.

Chaudhary was among the first members of FM Nirmala Sitharaman’s team to reach the North Block offices of the Finance Ministry ahead of the budget presentation. Vivek Joshi, Secretary of the Department of Financial Services, and Chief Economic Advisor V. Anantha Nageswaran have also reached the ministry ahead of FM Sitharaman.

Minister Sitharaman is set to present the Union Budget 2024 in Parliament today, marking her seventh consecutive budget and eclipsing the late Moraji Desai’s record of six consecutive budgets, which is likely to focus on changes in the income tax structure and improving the ease of doing business in India. Sitharaman tabled the Economic Survey 2023-24 along with the statistical appendix on Monday.

Sitharaman will lay on the table a statement (in English and Hindi) of the estimated receipts and expenditures of the government for the year 2024-25 in the Rajya Sabha.

She will table the budget one hour after the conclusion of the presentation of the Union Budget 2024-25 in the Lok Sabha.

The Finance Minister also laid on the table, under subsection (1) of Section 3 of the Fiscal Responsibility and Budget Management Act, 2003, a copy each (in English and Hindi) of the following papers: medium-term fiscal policy strategy statement and macro-economic framework statement. The Finance Minister will further lay on the table statements (in English and Hindi) of the estimated receipts and expenditures (2024-25) of the Union Territory of Jammu and Kashmir (with the legislature).

With this upcoming budget presentation, Finance Minister Nirmala Sitharaman will surpass the record set by former Prime Minister Morarji Desai, who presented five annual budgets and one interim budget between 1959 and 1964 as finance minister. The budget session of Parliament began on July 22 and, according to schedule, will end on August 12.

On Monday, the Economic Survey tabled in Parliament conservatively projected India’s real GDP growth of 6.5-7 per cent, cognizant of the fact that market expectations are on the higher side. Real GDP growth is the reported economic growth minus inflation.

India’s real GDP grew by 8.2 per cent in 2023-24, exceeding the 8 per cent mark in three out of four quarters. According to official data from the Indian government, the country’s GDP grew by an impressive 8.2 per cent during the financial year 2023-24. India’s economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22, respectively.

Mumbai:

India is at the threshold of a major structural shift in its growth trajectory, highlighted Shaktikanta Das, Reserve Bank of India Governor, on Tuesday during his address at the 188th AGM (Annual General Meeting) of Bombay Chamber of Commerce & Industry.

The governor added that India is moving ahead towards 8 per cent GDP growth in a sustained manner, adding that the average growth India recorded in the last three years is 8.3 per cent.

“If you look at the average growth India recorded over the three years, the average comes to 8.3 per cent and the current year we have given a projection of 7.2 per cent growth,” said the Governor.

He also stated that during the last year, the Indian economy has contributed a major share to the global economy and called it an achievement for India.

“Indian economy in the last financial year 2023-24 contributed to 18.5 per cent of the global growth, i.e., 18.5 per cent of the global growth was driven by India. It is an achievement; it was much lower 7 or 8 years ago and I think the IMF projects this growth to go up,” he said.

He highlighted that the major drivers of this growth are the implementation of GST, the Insolvency and Bankruptcy Code, and Flexible Inflation Targeting.

“The main drivers of this growth, particularly in the last three years, are the various structural reforms which have been undertaken and several other policy initiatives that have been undertaken in the country, including GST,” he added.

Highlighting the importance and achievements of GST, the governor added, “It (GST) has the advantage of avoiding the multiplicity of taxes. GST is one of India’s biggest structural reforms since 1947.”

He added that GST has settled down in India well because there are instances where some countries have rolled back GST after implementation. But now GST collections have touched 1.7 lakh crore in a month and it is in a range of 1.5 to 1.7 lakh crore every month.

He also shared that India is poised to become the third-largest economy from the current fifth-largest

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Congress leader Jairam Ramesh
| Photo Credit: PTI

As financial markets went for a tumble on June 4 after the trends of the Lok Sabha poll results showed that the BJP was not getting a majority on its own, the Congress said the markets were given an artificial booster dose by the exit polls and have now turned turbulent.

The Congress also recalled the words of former Prime Minister Manmohan Singh in 2004 to say that the party is committed to an orderly and healthy development of the financial markets that reflect the fundamentals of the economy.

For constituency-wise real-time updates, visit our Election Results page

Congress general secretary Jairam Ramesh said the party-led United Progressive Alliance (UPA) government provided a fear-free and intimidation-free 10-year period (2004-14) for the private sector that helped the country achieve its highest Gross domestic product(GDP) growth.

“Financial markets that were given an artificial booster dose by the exit polls are turbulent today. In this context, it is wise to recall the words of Dr. Manmohan Singh on May 17th 2004, the last occasion on which the markets were faced with prospect of such regime change,” Mr. Ramesh said in a post on X.

Recalling Mr. Singh’s words, he said, “There is absolutely no need for panic in the market. Very soon the alliance will unveil its Current Market Price[CMP]. The CMP will demonstrate the commitment of the United Progressive Alliance to fiscal discipline, realistic growth-oriented tax policies, control of unproductive and wasteful public expenditure and increased emphasis on agricultural growth, education, health, food security and social security in the context of a fast-growing economy that is integrating with the world as well.” “The Congress is committed to the orderly and healthy development of the financial markets that reflect the fundamentals of the economy. Our tax policies and foreign direct investment regime will be pro-growth and will create an environment favourable for both Indian and foreign enterprises,” Mr. Ramesh said, quoting Mr. Singh’s words.

Election Results 2024: NDA leading in 12 seats with less than 1% vote margin, in 16 seats with 1-2.5%

He added that what followed in 2004 was a “fear-free and intimidation-free decade for the private sector — a decade of the highest GDP growth India has ever seen, along with the highest private investment as a share of GDP”.

Early trends of the Lok Sabha poll results on June 4 threw up disappointing results for the BJP-led NDA, which appears to be losing big in its strongholds of Uttar Pradesh, Haryana and Rajasthan, although it is expected to form the government with about 290 seats.

 The Reserve Bank’s Annual Report for 2023-24 said that the Indian economy is navigating the drag from an adverse global macroeconomic and financial environment.
| Photo Credit: REUTERS

Indian economy is likely to grow at 7% in the current fiscal year starting April, the Reserve Bank of India (RBI) said in its annual report released on May 30.

The Indian economy, it said, expanded at a robust pace in 2023-24 (April 2023 to March 2024 financial year), with real GDP growth accelerating to 7.6% from 7.0% in the previous year – the third successive year of 7% or above growth.

“The real GDP growth for 2024-25 is projected at 7.0% with risks evenly balanced,” it said.

India’s GDP growth is robust on the back of solid investment demand which is supported by healthy balance sheets of banks and corporates, the government’s focus on capital expenditure and prudent monetary, regulatory and fiscal policies, the RBI said. The Reserve Bank’s Annual Report for 2023-24 said that the Indian economy is navigating the drag from an adverse global macroeconomic and financial environment.

Indian economy, the report said, is well-placed to step up growth trajectory over the next decade in an environment of macroeconomic and financial stability.

“As headline inflation eases towards the target, it will spur consumption demand especially in rural areas,” it said.

It further said the external sector’s strength and buffers in the form of foreign exchange reserves will insulate domestic economic activity from global spillovers.

The report, however, added that geopolitical tensions, geoeconomic fragmentation, global financial market volatility, international commodity price movements and erratic weather developments pose downside risks to the growth outlook and upside risks to the inflation outlook.

The RBI also emphasised that the Indian economy would have to navigate challenges posed by rapid adoption of AI/ML (artificial intelligence/machine learning) technologies as well as recurrent climate shocks.

The annual report is a statutory report of RBI’s central board of directors. The report covers the working and functions of the Reserve Bank of India for the April 2023-March 2024 period.

“Indian GDP data are not seasonally adjusted, and they are also revised multiple times before they are finalised three years after the close of the relevant financial year,” the Finance Ministry said. File
| Photo Credit: PTI

The Finance Ministry on September 15 scotched aspersions cast by “certain sections” on the credibility of Indian GDP data, which showed a 7.8% uptick in the first quarter of this year, stressing that Indian GDP data is not seasonally adjusted and is finalised three years later so “it is wrong to look at the underlying economic activity based on GDP indicators alone”.

“Ideally, critics would have done well to look at several other growth indicators to see if other data match their conclusions. Purchasing Managers’ Indices indicate that the manufacturing and services sectors are growing. Bank credit growth is in double digits. Consumption is improving, and the government has vigorously ramped up capital expenditure,” the Ministry said in a long post on social media platform X, formerly known as Twitter.

“Higher frequency data must be relied upon to form a view of the strength of the economic activity,” the Ministry said, adding that “if anything, India’s growth numbers might understate the reality because manufacturing growth indicated by the Index of Industrial Production (IIP) is far lower than what manufacturing companies are reporting”.

“Indian GDP data are not seasonally adjusted, and they are also revised multiple times before they are finalised three years after the close of the relevant financial year… Many international agencies have revised up their growth forecast for FY24 (financial year 2023-24) after the first quarter data for FY24 was released. They would not have done so if the underlying economic activity was weak,” the Ministry asserted.

The Ministry also called out references to nominal GDP growth being lower than real GDP growth as “a new bogey being spread to discredit the GDP numbers and indicate that underlying economic activity is quite weak” and said both do not stand up to scrutiny.

“India’s GDP deflator is dominated by the Wholesale Price Index (WPI) [which] peaked in the first quarter of 2022-23 due to the oil and food price increases in the wake of the war in Ukraine and supply-side disruptions. Prices began to come down from August 2022 onwards. Hence, WPI is now contracting year on year. It will soon pass once the statistical base effect disappears,” the Ministry statement noted.

“If inflation were higher, critics would argue that nominal GDP growth is much higher because of inflation and that there was little underlying activity. MoSPI calculates quarterly GVA in real terms first, and then, using the deflator, nominal values are obtained. No wonder nominal growth rates have slowed, with WPI contracting in recent months. This will normalise in the coming months,” the statement pointed out.

Editorial |An uneven rebound: On the economy

“India’s real GDP growth was 7.8% year on year in the first quarter of 2023-24. This is as per the Income or Production Approach. As per the expenditure approach, it would have been lower. So, a balancing figure – statistical discrepancy – is added to the expenditure approach estimate. These discrepancies are both positive and negative. Over time, they wash out,” the Ministry pointed out.

“In fact, in FY23 and FY22, the ‘statistical discrepancy’ was negative. In other words, growth as per the Income Approach was lower. Using the expenditure approach, it would have been higher than the 7.2% reported for FY23 and higher than the 9.1% reported for FY22,” it emphasised.

“India consistently uses the Income Side approach for calculating GDP growth for various reasons. It does not switch between the two approaches depending on which one is favourable,” the Ministry underlined.

“So, arguing that nominal GDP growth is more reliable because India has issues with its calculation of GDP deflator is to invent an argument where none exists. This is just to justify the liking for nominal GDP growth because it has been moderating in recent quarters after the high growth in the first fiscal quarter of FY23. In other words, critics want to latch on to anything that does not paint the Indian economy in a good light,” the Ministry concluded.

New Delhi:

Chief Economic Adviser V Anantha Nageswaran on Thursday said the economy is expected to grow at 6.5 per cent in the current fiscal notwithstanding deficient rains in August.

India recorded economic growth of 7.8 per cent in the April-June quarter of 2023-24 against 13.1 per cent in the year-ago period.

India’s economy in Q1 grew at the fastest pace in a year, on the shoulders of a boost in capital expenditure both at central and state levels, along with stronger consumption demand, especially in rural areas, and improved performance in the services sector, he said.

“There is momentum in economic activity in general and it is not driven by price-related distortions. Therefore our projections still are very comfortably placed at 6.5 per cent for the current financial year,” he said.

Risk is evenly distributed to around 6.5 per cent growth projection for FY2023-24, he said while briefing media following the release of first quarter GDP numbers.

Rising crude prices may warrant attention and prolonged geopolitical uncertainty and likely tighter financial conditions with continued monetary tightening can pose challenges to growth, he added.

With regard to price situation, Mr Nageswaran said food inflation is likely to subside with the arrival of fresh stock in the market and government pre-emptive measures.

Tomato prices are likely to decline with the arrival of fresh stocks by early September while enhanced imports of tur dal are expected to moderate pulse inflation, he said.

However, he said, August rain has been deficient and both the government and the Reserve Bank will be watching the food price developments.

During the first quarter, inflation stood at 4.6 per cent, lower than many developed and emerging economies.

“Food inflation was dominated by specific commodities. So, I think there is no real cause for concern that inflation would spike out of control and both the government and the Reserve Bank are taking measures in their respective domain to ensure that there is adequate supply and availability and that any price increase is moderated,” he said.

With regard to fiscal deficit, Mr Nageswaran said there is no threat to the 5.9 per cent fiscal deficit announced in the Budget despite the expected shortfall with respect to disinvestment.

To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs 11.8 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at Rs 15.4 lakh crore.

In Budget Estimates 2023-24, the Finance Minister had that the total receipts other than borrowings and the total expenditure are estimated at Rs 27.2 lakh crore and Rs 45 lakh crore respectively. Moreover, the net tax receipts are estimated at Rs 23.3 lakh crore.

Continuing the path of fiscal consolidation, the government intends to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26.

Talking about drivers of growth, Mr Nageswaran said investment and consumer momentum will underpin solid growth prospects over the upcoming year.

The private sector capital formation, supported by the government’s capex push, is underway, and that is a big plus for economic growth, employment and income gains for households, he said.

He further said that the new investment projects announced by the private sector have been highest in Q1 of FY2023-24 in 14 years.

The Union government’s single-minded focus on capital expenditure over the years has crowded in the private sector and it has rubbed off on state governments too..

Expansion of public digital platforms and path-breaking measures such as PM Gati Shakti, the National Logistics Policy, and the Production-Linked Incentive schemes would boost manufacturing output, he said.

A slowdown in the global economy and trade may moderate export growth, but it may be overall better for India, he added..

With regard to consumption, he said, the rural demand for FMCGs has increased especially for high-value goods. The same trend is evident for small towns, contributing to growth, he added.

The CEA said that in spite of the global slowdown, the services sector exports have shown a remarkable performance and both manufacturing and services sectors are expanding and income growth is evident in the recovery in rural demand.

The residential real estate sector will underpin growth in the construction material sector, he added.

Moody’s on August 18 affirmed India’s sovereign rating at ‘Baa3’ with a stable outlook and said high growth will support a gradual increase in income levels, which will further contribute to economic strength.
| Photo Credit: Reuters

Moody’s on August 18 affirmed India’s sovereign rating at ‘Baa3’ with a stable outlook and said high growth will support a gradual increase in income levels, which will further contribute to economic strength.

Moody’s said it expects India’s economic growth to outpace all other G20 economies through at least the next two years, driven by domestic demand.

“Moody’s Investors Service has today affirmed the Government of India’s long-term local and foreign-currency issuer ratings and the local-currency senior unsecured rating atBaa3. Moody’s has also affirmed India’s other short-term local-currency rating at P-3. The outlook remains stable,” it said in a statement.

Baa3 is the lowest investment grade rating.

All three global rating agencies, Fitch, S&P and Moody’s, have the lowest investment grade rating on India, with a stable outlook. The ratings are looked at by investors as a barometer of a country’s creditworthiness and affect borrowing costs.

It said although potential growth has come down in the past 7-10 years, the Indian economy is likely to continue to grow rapidly by international standards.

“High GDP growth will contribute to gradually rising income levels and overall economic resilience. In turn, this will support gradual fiscal consolidation and government debt stabilization, albeit at high levels. In addition, the financial sector continues to strengthen, alleviating much of the economic and contingent liability risks that had previously driven downward rating pressure,” Moody’s said.