CEA bats for advancing land, labour reforms
Chief Economic Adviser V. Anantha Nageswaran on Tuesday underscored the need for India to view the crisis in global economy as an opportunity to introduce more reforms, especially land and labour.
India's macroeconomic picture may be one of smooth sailing despite turbulent global waters. Yet the 'ongoing or brewing crisis' in global economy presents an opportunity to advance the cause of reforms in factor markets like land, labour and even intangible factor of production like knowledge, he told a Data User's Conference the NSO, Union Ministry of Statistics and Programme Implementation organised at the Indian School of Business here on Tuesday.
Countries use crises as opportunities to surge ahead in prosperity and standards of living, Mr.Nageswaran said, seeking to highlight the growth opportunities emerging amid the China +1 production strategy of global firms.
'Right now, India's macro numbers paint a very promising picture. As per the Second Advanced estimates published by the National Statistics Office, the GDP real and nominal growth rates have been pegged at 6.5% and 9.9% respectively in 2024-25. This is the highest amount the major economies of the world,' he said. The conference was on the results of Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2023-24 and the Forward-Looking Survey on Private Sector Capital Expenditure (CAPEX) Investment Intentions.
Noting granular data is crucial for building conviction for policy reform, Mr. Nageswaran said the findings of the two surveys provide insights into the state of the health of the private sector. Much remains to be done from that perspective, he said, adding how 'firms don't seem to be keen on opportunistic effects, which this survey defines as investment on new business activities expected to have more profitability or scope in the future.' An indication of this is meagre share of research and development in the provisional capex per enterprise. Large enterprises ought to pursue a medium to long term thinking beyond short term profitability, he said.
Secretary to MoSPI Saurabh Garg highlighted enhancements in data dissemination through an upgraded portal featuring API access, interactive visualisations and strategic collaborations with academic and global partners.
The conference was aimed to foster constructive dialogue between data producers and data users, facilitating knowledge exchange and showcasing India's rigorous data collection as a foundation for transformative policy reforms, the organisers said in a release.
ISB Dean Madan Pillutla said in an era of advanced analytics, integrity of data is critical for building robust predictive models and deriving actionable insights.
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Indian Express
a day ago
- Indian Express
GDP figures show India is back on the road to growth
The National Statistics Office's (NSO) provisional estimates peg India's gross domestic product (GDP) growth at 6.5 per cent for 2024-25, with the fourth quarter growing at a blistering 7.4 per cent. The first and second advance estimates, which were based on limited data, had projected 6.4 per cent and 6.5 per cent, respectively. The positive surprises in GDP revisions seen in the past three fiscals may end here, at least for now. The economy seems to be realigning with its long-term trend growth. The decadal average growth before the Covid-19 pandemic was 6.6 per cent. For 2023-24, the first advance estimates had pinned growth at 7.3 per cent, the provisional estimates revised that to 8.2 per cent and then to 9.2 per cent. In India's GDP reporting framework, provisional estimates are more reliable and enduring than the two preceding advance estimates. The next GDP estimate for fiscal 2025 will be released in early 2026. Until then, these estimates provide a more stable basis for forecasting GDP amid a wall of global uncertainty. India's nominal GDP, which factors in the inflation rate, grew 9.8 per cent in fiscal 2025. Put another way, the size of the absolute economy reached $3.91 trillion from $3.6 trillion in fiscal 2024. Private consumption grew a good 7.2 per cent on rural demand even as urban stayed subdued. That said, consumption growth did slow to 6 per cent in the fourth quarter. Government consumption expenditure, too, was restrained, growing 2.3 per cent for the full fiscal year and dropping to -1.8 per cent in the fourth quarter. Government investments picked up sharply in the fourth quarter, helping investment growth outpace GDP. Central government capex exceeded the revised estimates for the full fiscal. On the supply side, agriculture and services performed well, but manufacturing was a laggard, growing 4.5 per cent — slower than agriculture. Merchandise exports were nearly flat at $437.41 billion ($437.07 billion in fiscal 2024). Labour-intensive construction ratcheting up 9.4 per cent over the double-digit growth last fiscal augurs well for employment. The economic outlook for fiscal 2026 will be shaped by the interplay of global tariff shocks and the buffers and policy levers India has. While our economy is primarily driven by domestic factors, growing ties with developed nations through trade and capital flows means it cannot be fully insulated from adverse global events. The external environment has undergone a dramatic shift this year following the imposition of reciprocal tariffs by the US and ongoing escalation and de-escalation. This can impact India via both direct and indirect channels. The direct impact is felt through the effects on the US economy and the increased tariffs that hinder our competitiveness. With US growth expected to slow to 1.5 per cent in calendar 2025 from 2.8 per cent in 2024, demand for Indian exports to the US will decrease. The full impact will only become clear once the India-US trade deal is concluded. The indirect or collateral impact will play out via slowing growth in other export markets for India, such as the European Union and Asia. S&P Global expects global growth to slip to 2.7 per cent in 2025 from 3.3 per cent in 2024. The elevated tariffs on Chinese goods will exacerbate China's overcapacity and deflationary pressures, prompting it to divert excess supply to other markets, including India. The recent thaw in US-China trade tensions saw both countries agreeing to reduce tariffs by 115 per cent for a 90-day period. However, this provides only a temporary relief, and uncertainty looms over what will follow the 90-day window. The persistent uncertainty is delaying private investment decisions and remains a concern for volatility in capital flows, financial markets and currency exchange rates. India has some buffers, and positive developments will support economic activity this fiscal. The composition of India's exports provides some resilience, as services exports, which now account for nearly half of the country's exports, are less vulnerable to global trade cycles than goods exports. According to the World Trade Organisation, global goods trade will contract 0.2 per cent in calendar 2025, while services trade will grow at 4 per cent. Although services exports will slow, it will do so at a slower pace than goods exports, providing some buffer on the trade front. A low current account deficit, moderate government external debt and healthy forex reserves (at $686 billion currently) reduce India's vulnerability to global shocks, but do not provide complete insulation. 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Unlike the previous fiscal year, the central government seems to be prioritising capital expenditure at the outset this year. In April, capex reached Rs 1.59 lakh crores, accounting for 14.3 per cent of the budget target. Despite tepid domestic private investment prospects and the government's limited ability to fuel public investment due to fiscal considerations, India is benefiting from global supply-chain shifts. Apple plans to manufacture most iPhones for the US market in India, and a Vietnamese electric vehicle manufacturer is set to open an Indian plant in June, with product launches expected this year. More such investment opportunities are likely as companies diversify away from China. The strong financials of Indian corporates, especially large and mid-sized, has led to resilience and flexibility to capitalise on opportunities. But reforms that address structural bottlenecks remain crucial to raise India's attractiveness as an investment destination and unlock its growth potential. Given the overall landscape, we expect India's GDP to grow 6.5 per cent this year, with risks tilted to the downside. The writer is Chief Economist, CRISIL
The Hindu
a day ago
- The Hindu
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The data on India's economic performance in 2024-25, released on Friday, have something for everybody. Those with an optimistic outlook can rejoice at the seemingly robust growth in the fourth quarter. Pessimists can despair over the four-year low annual growth figure. The realist's assessment, however, is that there is cause for some restrained celebration, and more than a healthy dose of disappointment. The Q4 growth of 7.4% was considerably higher than what was expected for the quarter, and the fastest seen in an otherwise dismal financial year. The main drivers were the construction sector returning to double-digit growth, and the agriculture sector posting a strong showing. These are also two major employment drivers. Services, too, continued their steady and strong growth. The manufacturing sector, on the other hand, grew at just 4.8%, down from 11.3% in Q4 of the previous year. There is a reality check hiding in the aggregate numbers, as well. The GDP growth rate of 7.4% was achieved in large part due to a 12.7% growth in net taxes. This bump in tax collections provided a statistical boost without which growth in actual economic activity would have come in at around 6.8%. The much-hyped 'Maha Kumbh effect' on consumption expenditure also does not seem to have materialised. Growth in Private Final Consumption Expenditure in Q4 — the Kumbh quarter — came in at 6%, the slowest in five quarters. Capital formation, however, grew a robust 9.4% as the government finally sped up its sluggish capital investments. Government officials and Union Ministers have expressed their satisfaction at the 6.5% growth in 2024-25, the slowest since the pandemic, saying it is still the fastest among major economies, and not bad in the context of a 'growth-scarce' global environment. All of this is true. Yet, 'not bad' is not nearly good enough for India. The race is not with the rest of the world, but is an effort to keep pace with the country's growing requirements. The Modi government, with its sights set on a 'Viksit Bharat' by 2047, must be held to a higher standard in line with its aspirations. If, as the Economic Survey points out, Viksit Bharat by 2047 requires 'sustained economic growth of close to 8% every year for at least a decade', then India is decidedly moving very slowly, even if in the right direction. In his press conference, Chief Economic Adviser V. Anantha Nageswaran said India was entering a phase of low inflation and stable growth. Stability can be good, since it implies lower chances of growth slowing. Yet, it also implies growth is unlikely to accelerate significantly either. The government needs to consider whether this is truly a satisfactory situation for a transitioning economy.
The Hindu
3 days ago
- The Hindu
Editors pick newsletter GDP growth at 6.5% in 2024-25, slowest since the pandemic
While a significant uptick in economic activity in the fourth quarter (Q4) of financial year 2024-25 pushed Gross Domestic Product (GDP) growth for the full year to 6.5%, as per the provisional estimates for 2024-25 released by the government on Friday, this is the slowest since the pandemic year 2020-21. As per data released by the Ministry of Statistics and Programme Implementation, real GDP growth in Q4 of 2024-25 accelerated to 7.4%, the fastest quarterly growth in the year. It was still slower than 8.4% growth seen in Q4 of the previous financial year. Quarterly GDP growth in Q3 stood at 6.4%. Chief Economic Adviser V. Anantha Nageswaran, in a press briefing following the release of the data, sought to downplay the post-COVID slowdown of the economy, saying that India has held its own in a 'growth-scarce' global environment. 'If you look in real terms, India's growth rate differential in comparison to the average growth rate of advanced economies was on the lower side during the 'boom era' between 2003 and 2010,' Mr. Nageswaran explained. 'The growth differential post COVID is higher than the growth differential in the 'boom era'.' 'In other words, in a growth-scarce environment post COVID and despite the rising uncertainties due to political conflicts and trade tensions, India is holding up its growth numbers better than many advanced economies,' he added. The agriculture sector continued its strong performance in Q4, leading to a relatively strong showing for the full year. The 'Agriculture, Livestock, Forestry & Fishing' sector grew 5.4% in Q4 of the year, up from 0.9% in Q4 of 2023-24. This helped propel the full year's growth for the sector to 4.6% in 2024-25, up from 2.7% in 2023-24. The manufacturing sector's growth stood at 4.8% in Q4 of FY25, the second fastest quarterly growth in the year, on a high base of 11.3% in Q4 of the previous year. The sector grew 4.5% in the full financial year 2024-25, down from 12.3% in 2023-24. The construction sector returned to double-digit growth of 10.8% in the fourth quarter, the fastest in the year, and faster than the 8.7% seen in Q4 of 2023-24. The sector's full-year growth stood at 9.4% in 2024-25, down from 10.4% in 2023-24. Growth in the tertiary sector — a composite of all the services sectors — stood at 7.3% in Q4, in line with the growth in Q2 (7.2%) and Q3 (7.4%). Growth in Q4, however, was slower than the 7.8% seen in the fourth quarter of 2023-24. In the full year 2024-25, the tertiary sector grew at 7.2%, lower than the 9% in the previous year. The data released on Friday also showed that growth in household consumption quickened to 7.2% in 2024-25 from 5.6% in the previous year. Gross Fixed Capital Formation, a measure of asset creation by the public and private sector, saw growth slowing to 7.1% in 2024-25 from 8.8% in 2023-24. This is despite growth in this spending quickening to a six-quarter high of 9.4% in Q4. For FY26, the Reserve Bank of India has cut India's growth forecast to 6.5% from 6.7% estimated earlier for the current financial year on account of impact of global trade and policy uncertainties. In another set of numbers, the Government has met its fiscal deficit target of 4.8% of GDP in 2024-25 though total receipts came in slightly lower than expected, as per data released by the Controller General of Accounts. The Centre's total revenue — counting tax, non-tax and capital receipts — came in at ₹30.78 lakh crore in 2024-25 or 97.8% of its revised estimates for the year. Total expenditure stood at ₹46.55 lakh crore, also 97.8% of the estimates. The fiscal deficit, the difference between total expenditure and total revenue, at ₹15.77 lakh crore, stood at 4.8% of GDP based on the latest provisional estimates for the year. As part of the Centre's fiscal consolidation glide path, Finance Minister Nirmala Sitharaman had, in Budget speech in February, targeted fiscal deficit of 4.4% of GDP for FY26. Closer examination of the data show total revenue fell short of the revised estimates due in large part to a shortfall in miscellaneous capital receipts, that includes disinvestment proceeds. There was also a minor shortfall in tax revenue. The Centre earned ₹17,202 crore as miscellaneous capital receipts or just 52.1% of revised estimates for FY25. Department of Investment and Public Asset Management data show the government earned ₹10,131.32 crore via disinvestments in 2024-25. Corporate tax collection at ₹9.87 lakh crore in FY25 was 0.7% higher than revised estimates. Income tax collections, on the other hand, at ₹11.83 lakh crore were almost 6% lower than revised estimate. The Hindu's Editorials The Hindu's Daily Quiz Which of the following States has been under President's rule since February 13? Assam Meghalaya Manipur Nagaland To know the answer and to play the full quiz, click here.
