File picture of Reserve Bank of India (RBI) Governor Shaktikanta Das
| Photo Credit: ANI

Reserve Bank Governor Shaktikanta Das on Thursday (September 5, 2024) said the fundamental drivers of the Indian economy are gaining momentum and the country is moving on a sustainable growth path.

In the inaugural address at FIBAC 2024, the governor said that massive changes are taking shape in various economic sectors and markets, and the country is geared for orbital shifts.

“Our nation’s journey towards becoming an advanced economy is drawing strength from a unique blend of factors, and these factors would include a young and a dynamic population, a resilient and diverse economy, robust democracy, and a rich tradition of entrepreneurship and innovation,” Mr. Das said.

ALSO READ:​ The Hindu editorial n the World Bank’s India Development Update

Stressing that India’s growth story is intact and banks have robust balance sheets, he exhorted the private sector to step up investments in a big way.

He said data actually shows that the fundamental growth drivers of the Indian economy are actually gaining momentum and they are not slowing. “This gives us the confidence to say that the Indian growth story remains intact,” he said.

In his speech, the governor said past reforms like GST and IBC have yielded long-term positive outcomes, and emphasised the need for further reforms in land, labour, and agri markets.

While acknowledging that headline inflation matters, he said the balance between inflation and growth is well-poised.

With monsoon progressing well and healthy Kharif sowing, food inflation outlook could become more favourable, he added.

Mr. Das further said the financial sector must expand access and harness digital platforms to drive inclusive growth.

He also made a strong case for tailored products and services for women-led businesses and MSMEs without diluting underwriting standards.

Mr. Das further noted that only regulated entities will be allowed on Unified Lending Interface (ULI) platform to ensure prudent lending. “ULI will not be a select club of few players,” he said.

Bengaluru:

India is likely to soon overtake China as the most influential in a key emerging markets index, pulling in more foreign funds and adding fuel to a stock market rally that, though already among the best globally, is “only past the halfway mark”, Morgan Stanley said.

India’s weightage in the MSCI emerging markets index rose to 19.8% after a rejig in August, closing in on China’s 24.2%. India’s weightage has steadily increased from 9.2% in December 2020, while China’s has dropped from 39.1%.

“A rising weight essentially means more absolute foreign flows,” analysts led by Ridham Desai said in a note on Wednesday.

“In the context of India being underweight in the average emerging markets portfolio, this is even better for foreign portfolio flows.”

Foreign portfolio investors (FPIs) have bought shares worth 531.78 billion rupees ($6.33 billion) so far in 2024, and have remained net buyers since June, bolstered by policy continuity after the country’s elections and an imminent start to global interest rate cuts.

So far, the sustained inflows from domestic institutional investors, mutual funds and retail traders have helped power the benchmark Nifty 50 to record highs. Its 16% jump this year is more than most other markets, including China.

Mr Desai expects the rally to continue as fiscal consolidation allows private borrowing and spending to fuel the next leg of earnings growth and as higher FII inflows will keep liquidity in surplus, lending resilience.

“We think we are only past the halfway mark in the current bull market. A bull market peak for India is possibly still in the future and the weight in the EM index could have some more distance to travel before it peaks.”

Morgan Stanley retained India as its top pick among emerging markets and second favourite, behind Japan, in the Indo-Pacific region.

Among stocks, it prefers cyclicals over defensives and large-caps over small-caps. And among sectors, it is ‘overweight’ on financials, technology, consumer discretionary and industrials, and is ‘underweight’ on others. ($1 = 83.9690 Indian rupees)
 

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

Bengaluru:

India is likely to soon overtake China as the most influential in a key emerging markets index, pulling in more foreign funds and adding fuel to a stock market rally that, though already among the best globally, is “only past the halfway mark”, Morgan Stanley said.

India’s weightage in the MSCI emerging markets index rose to 19.8% after a rejig in August, closing in on China’s 24.2%. India’s weightage has steadily increased from 9.2% in December 2020, while China’s has dropped from 39.1%.

“A rising weight essentially means more absolute foreign flows,” analysts led by Ridham Desai said in a note on Wednesday.

“In the context of India being underweight in the average emerging markets portfolio, this is even better for foreign portfolio flows.”

Foreign portfolio investors (FPIs) have bought shares worth 531.78 billion rupees ($6.33 billion) so far in 2024, and have remained net buyers since June, bolstered by policy continuity after the country’s elections and an imminent start to global interest rate cuts.

So far, the sustained inflows from domestic institutional investors, mutual funds and retail traders have helped power the benchmark Nifty 50 to record highs. Its 16% jump this year is more than most other markets, including China.

Mr Desai expects the rally to continue as fiscal consolidation allows private borrowing and spending to fuel the next leg of earnings growth and as higher FII inflows will keep liquidity in surplus, lending resilience.

“We think we are only past the halfway mark in the current bull market. A bull market peak for India is possibly still in the future and the weight in the EM index could have some more distance to travel before it peaks.”

Morgan Stanley retained India as its top pick among emerging markets and second favourite, behind Japan, in the Indo-Pacific region.

Among stocks, it prefers cyclicals over defensives and large-caps over small-caps. And among sectors, it is ‘overweight’ on financials, technology, consumer discretionary and industrials, and is ‘underweight’ on others. ($1 = 83.9690 Indian rupees)
 

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

Image used for representation purpose only.

Business activity in India’s services sector accelerated at a five-month high pace in August, aided by productivity gains, a pullback in cost pressures which eased to a four-year low, and higher domestic demand. However, optimism among services firms about next year’s prospects slumped to a 13-month low, while it slipped to a 15-month low for India’s private sector manufacturers and services players on the whole, as per a private survey-based index. 

The seasonally adjusted HSBC India Services Business Activity Index, based on responses from 400-odd private players, rose to 60.9 in August from 60.3 in July. A reading of over 50 on the seasonally adjusted PMI indicates an expansion in activity levels.

Overall private sector activity, factoring in manufacturing firms, was unchanged from July levels as per the HSBC India Composite Output Index that had a reading of 60.7 in August. The uptick in Services was tempered by a seven-month low pace of growth in factories’ output.

Sales growth was also the weakest since May at a composite level. Input costs rose at their slowest pace in six months, with both the manufacturing and service sectors exhibiting the same pattern, said Pranjul Bhandari, chief India economist at HSBC. 

Overall new services orders grew at the strongest pace since April, although 5% of the surveyed firms indicated a deterioration in order books and fresh export business slowed down last month to a pace that was the weakest in six months. The growth in August was largely fuelled by an increase in domestic orders, Ms. Bhandari noted.

Among the services sectors, Finance & Insurance was the best-performing segment both in terms of output and new orders. Consumer services reported the highest uptick in input costs. While service providers signalled a further increase in their operating expenses, amid greater food, labour and transportation costs, the overall rate of inflation was the weakest since August 2020.

After reporting a seven-year peak surge in prices charged to customers in July, most firms resisted fresh price hikes in August, with less than 4% of survey participants raising their average selling price over July levels. These hikes were primarily led by transport, information and communication services firms.

Services firms continued to expand payrolls, but the hiring pace dropped to a four-month low in August, while Outstanding business volumes rose at the weakest rate since February.

“Whereas 21% of service providers foresee an increase in output over the course of the coming 12 months [only 1% expect a fall], compared with roughly 30% in July,” S&P Global, which compiles the index, said in a note, stressing that some firms were concerned about competitive pressures.

World Bank had in June projected India to grow at 6.6% for FY24. File
| Photo Credit: Reuters

The World Bank on Tuesday (September 3, 2024) raised the growth forecast for the Indian economy to 7% for the current fiscal year on the back of recovery in agri sector and rural demand.

World Bank had in June projected India to grow at 6.6% for FY24.

According to the World Bank Report released on Tuesday, India’s growth continues to be strong despite a challenging global environment.

Improvement in monsoon and private consumption have led to revising the India gross domestic product (GDP) forecast, said World Bank senior Economist Ran Li.

The growth rate of India, which accounts for the bulk of the South Asia region, is expected to remain strong at 7% in 2024-25, the World Bank said in the India Development Update.

Recovery in agriculture will partially offset a marginal moderation in industry, it said, adding that services will remain robust.

Rural private consumption will recover, thanks to the expected recovery in agriculture, the World Bank said.

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.
 

Mumbai:

Researchers at the Indian Institute of Technology Bombay (IIT Bombay) have uncovered how animals find their way back home without getting lost or being late by using a robot that mimics their movements.

This robot is designed to move on its own, much like an animal finding food and then to use light as a guide to return home (homing), the IIT Bombay said in a statement on Tuesday.

In a new study, researchers from the department of physics have used this robot to study the underlying principles of homing by animals.

“The primary goal of our research group was to understand the physics of active and living systems. We achieve this by performing experiments on centimetres-sized self-propelled programmable robots. In simple words, we model these robots to mimic the dynamics of living organisms, both at the individual and collective levels,” Dr Nitin Kumar, an assistant professor at the department of physics, IIT Bombay, said.

For their study, the researchers wanted to determine the time it took for the robot to return home, with increasing amounts of deviations from its homing path.

It was observed that the reorientation rate, the frequency at which the robot (or an animal) should adjust its direction for successful homing, originated from the degree of randomness in its path.

The researchers discovered an ‘optimal reorientation rate’ for a particular value of randomness beyond which the adverse effects of increased randomness are negated by more frequent reorientations, ultimately ensuring successful homing.

This suggested animals might have evolved to reorient themselves at an optimal rate to efficiently find their way home, regardless of the noise or unpredictability in their environment.

“The observation of a finite upper limit on return times indicates that the homing motion is inherently efficient. Our results demonstrated that if animals are always aware of the direction of their home and always correct their course whenever they deviate from the intended direction, they will surely get home within a finite time,” Kumar added.

Apart from physical experiments, the researchers also ran computer simulations where the robot’s movement mimicked animals.

This virtual robot combines active Brownian motion (the random motion of particles in a liquid or gas, caused by collisions with fast-moving atoms or molecules in the fluid) with occasional resets to its orientation to correct its course back towards home.

These simulations matched the experimental results, reinforcing the idea that randomness and reorientation work hand-in-hand to optimise homing.

“When we applied this model to the trajectories of a real biological system of a flock of homing pigeons, it showed a good agreement with our theory, validating our hypothesis of enhanced efficiency due to frequent course corrections,” Mr Kumar said.

He said in real and more complex systems, the homing cues might be more complicated than a simple uniform gradient towards home, as modelled in this experiment.

“In our future research, we aim to model these scenarios in our experiment by using a combination of spatiotemporal variations in light intensity and physical obstacles,” the assistant professor added.

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

Union Minister Piyush Goyal addresses a press conference, in New Delhi on July 30, 2024.
| Photo Credit: PTI

Commerce and Industry Minister Piyush Goyal on July 30 said there is no rethinking in the government to support foreign direct investments (FDI) from China as was pitched by the Economic Survey recently.

He said it was a report that always speaks about new ideas and gives out their own thinking.

The Survey, he said, is not at all binding on the government and there is no thinking on supporting Chinese investments in the country.

“There is no rethinking at present to support Chinese investments in the country,” the Minister told reporters in New Delhi.

In 2020, the government made its approval mandatory for FDI from countries that share landed border with India.

Countries which share land borders with India are China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan.

The Minister was responding on a pitch made by the pre-Budget Economic Survey on July 22 for seeking FDI from China to boost local manufacturing and tap the export market.

As the U.S. and Europe are shifting their immediate sourcing away from China, it is more effective to have Chinese companies invest in India and then, export the products to these markets rather than importing from the neighbouring country, the survey has said.

India faces two choices to benefit from the ‘China plus one strategy’ — it can integrate into China’s supply chain or promote FDI from China.

“Among these choices, focusing on FDI from China seems more promising for boosting India’s exports to the U.S., similar to how East Asian economies did in the past. Moreover, choosing FDI as a strategy to benefit from the China plus one approach appears more advantageous than relying on trade. This is because China is India’s top import partner, and the trade deficit with China has been growing,” it has added.

China stands at the 22nd position with only 0.37% share ($2.5 billion) in the total FDI equity inflow reported in India from April 2000 to March 2024.

The ties between the two countries nosedived significantly following the fierce clash in the Galwan Valley in June 2020 that marked the most serious military conflict between the two sides in decades.

The Indian and Chinese militaries have been locked in a stand-off since May 2020, and a full resolution of the border row has not yet been achieved, though the two sides have disengaged from several friction points.

India has been maintaining that its ties with China cannot be normal unless there is peace in the border areas.

Following these tensions, India has banned over 200 Chinese mobile apps like TikTok, WeChat, and Alibaba’s UC browser. The country has also rejected a major investment proposal from electric vehicle maker BYD.

However, earlier this year, the Competition Commission of India (CCI) cleared JSW Group’s proposed acquisition of a 38% stake in MG Motor India Pvt. Ltd.

MG Motor India is a wholly owned subsidiary of Shanghai-headquartered SAIC Motor.

Though India has received minimal FDI from China, the bilateral trade between the two nations has grown multi-fold.

China has emerged as the largest trading partner of India with $118.4 billion two-way commerce in 2023-24, edging past the U.S. India’s exports to China rose 8.7% to $16.67 billion in the last fiscal.

The main sectors that recorded healthy growth in exports to that country include iron ore, cotton yarn/fabrics/made-ups, handloom, spices, fruits and vegetables, plastic and linoleum.

Imports from the neighbouring country increased 3.24% to $101.7 billion. The trade deficit widened to $85 billion in the last fiscal year from $83.2 billion in 2022-23.

According to the commerce ministry data, China was India’s top trading partner from 2013-14 till 2017-18 and in 2020-21. Before China, the UAE was the country’s largest trading partner. The U.S. was the largest partner in 2021-22 and 2022-23.

Prime Minister Narendra Modi on Monday said the Economic Survey highlights the prevailing strengths of the economy and identifies areas for further growth and progress as “we move towards building a Viksit Bharat”.

Finance Minister Nirmala Sitharaman on Monday presented the Economic Survey 2023-24, along with the statistical appendix in the Lok Sabha.

The Economic Survey is an annual document presented by the government ahead of the Union Budget to review the state of the economy. The document also provides an overview of the short-to-medium-term prospects of the economy.

In a post on X, Prime Minister Modi said, “The Economic Survey highlights the prevailing strengths of our economy and also showcases the outcomes of the various reforms our Government has brought.”

“It also identifies areas for further growth and progress as we move towards building a Viksit Bharat,” the prime minister said.

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

Economic Survey 2023-24 states that India’s workforce is nearly 56.5%, construction accounted for 13% in construction industry.
| Photo Credit: Getty Images/iStockphoto

India’s workforce is nearly 56.5 crore, with more than 45% employed in agriculture, 11.4% in manufacturing, 28.9% in services, and 13.0% in construction, highlights the Economic Survey 2023-24 released by the finance ministry on July 22.

Click here to download Economic Survey 2023-24

The survey also added that female labour force participation has been rising over the last six years, and the unemployment rate is on the decline, the survey highlighted improvements in Indian labour market indicators over the past six years, with the unemployment rate dropping to 3.2% in 2022-23.

Also Read: Economic Survey 2023-24 LIVE updates

The survey noted that employment has recovered from pandemic shocks in both urban and rural areas. It stated, “The female labour force participation rate has been rising for six years, from 23.3% in 2017-18 to 37% in 2022-23, driven mainly by the rising participation of rural women.”

Amid the government’s push for the infrastructure sector, the survey stated that while the services sector remains a major job creator, the construction sector has been rising in prominence lately.

To meet the demands of the employment sector amid a growing population the survey pointed out that the Indian economy needs to generate nearly 78.51 lakh jobs annually in the non-farm sector. The net payroll additions under EPFO have more than doubled in the past five years, signalling healthy growth in formal employment.

Economic Survey 2023-24: India’s growth back to pre-COVID trends, 7%-plus growth possible in medium term 

On AI the survey added as artificial intelligence becomes more prevalent in various economic activities, steering technological choices towards collective welfare is crucial. Employers must balance deploying technology and labour. It suggests that agro-processing and the care economy are promising sectors for generating and sustaining quality employment.

The increase in candidates undergoing skill development through the Government’s flagship programs has highlighted the emphasis on ‘Skill India.’ However, regulatory obstacles such as land use restrictions, building codes, and limits on sectors and hours for women’s employment hinder job creation. Removing these barriers is essential to boost employment and raise women’s labour force participation rate.

The survey states that the key areas of policy focus in the short to medium term include job and skill creation, tapping the full potential of the agriculture sector, addressing MSME bottlenecks, managing India’s green transition, deftly dealing with the Chinese conundrum, deepening the corporate bond market, tackling inequality and improving our young population’s quality of health.

“The growth strategy for Amrit Kaal is predicated on six key areas. Firstly, there must be a deliberate focus on boosting private investment. Secondly, the growth and expansion of India’s Mittelstand (MSMEs) is a strategic priority. Thirdly, the potential of agriculture as an engine of future growth must be recognised and policy impediments removed. Fourthly, there is a need to secure the financing of green transition in India. Fifthly, the education-employment gap must be bridged. And finally, focused building of state capacity and capability is required for sustaining and accelerating India’s progress.” the document reads. According to the survey, in the medium term, the Indian economy can grow at a rate of 7 per cent plus on a sustained basis if we build on the structural reforms undertaken over the last decade. This requires a tripartite compact between the Union Government, State Governments and the private sector.