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Indian Express
2 days ago
- Business
- Indian Express
Fiscal and investment credibility, not headline numbers, will drive India's economic growth
Written by Deepanshu Mohan & Ankur Singh Two critical trends have occurred with little discussion or critical reflection. One is the recent data showing inward FDI (Foreign Direct Investment) capital flows reducing, as against the rise observed in outward FDI (capital moving out of the country), which indicates weakening investor confidence and/or low growth in capacity utilisation of existing (or already invested) private capital in key sectors. According to the RBI, India performs well in terms of greenfield FDI (new projects) investments announced during 2024–25, following the US, UK, and France, as the fourth destination most preferred by investors. But what's important is to distinguish 'gross flows' of investment from 'net flows'. As reported and explained, 'Gross flows account only for the FDI that flows into the country. It doesn't take into account the funds that flow out due to foreign companies repatriating funds to their head offices overseas, or foreign investors selling off investments in Indian companies, or Indian companies investing in ventures overseas. Net flows, after accounting for the outward movement of funds, collapsed to just around $400 million in 2024–25, down from over $10 billion the year before.' This is worrying and signals a structural shift in India's FDI-led investment ecosystem. Beyond this trend, Moody's cut the United States' sovereign credit rating on May 16 from AAA to Aa1. The downgrade wasn't in reaction to a crash, a pandemic, or a war. This was also not a sudden moment of fiscal slippage. It was something slower and far more dangerous: the normalisation of fiscal recklessness at the heart of the global monetary order. The timing of this also matters. Unlike the S&P downgrade in 2011, which followed the debt-ceiling standoff, or Fitch's move in 2023 amid post-COVID distortions, Moody's decision came in a year of relative economic calm, at least on the surface. Inflation is easing, unemployment is low, and global markets are more stable than they've been in years. That's what makes the downgrade quietly radical. Under Trump's presidency, the US has doubled down on a mix of tax cuts, tariff wars, and populist spending — all without credible offsets. The so-called One Big Beautiful Bill, heavy on headline-friendly promises like tax exemptions on tips and overtime pay, masks an extraordinary fiscal burden. Independent estimates peg its ten-year cost at over $5 trillion. That's on top of a debt-to-GDP ratio already exceeding 120 per cent. That shift matters for every other country trying to navigate a world built on dollar stability. It matters most for emerging markets like India, which borrow trust before they borrow money. If even the US can lose its fiscal halo, no country is immune from scrutiny. In India, elections have long served as budget announcements. Whether in the corridors of the Centre or on the campaign trail in the states, fiscal responsibility is often the first casualty of political ambition. Loan waivers, free electricity, subsidised gas cylinders, unemployment stipends, direct cash transfers — the list of election-time giveaways has grown longer with each cycle. In recent years, nearly every state election — from Haryana to Jharkhand, Delhi to Maharashtra — has witnessed a scramble among parties to outdo each other in promises of material entitlements: free rides, free water, free laptops. India's general government gross debt stands close to 80 per cent of GDP. Its combined fiscal deficit continues to hover above prudential norms. Yet our politicians treat the budget as an open-ended ledger for electoral engineering, diverting scarce public funds toward short-term voter appeasement rather than long-term nation-building. This erosion becomes all the more dangerous in the context of a shifting global climate — one in which financial markets may no longer be willing to turn a blind eye to fiscal indiscipline, however well-wrapped in democratic legitimacy it may be. Moody's downgrade of the United States marks a turning point. When the world's largest economy, issuer of the global reserve currency and anchor of financial markets, sees its sovereign creditworthiness questioned, it signals a recalibration in how markets view risk. This is not a one-off judgement. It is part of a broader repricing of fiscal credibility — one that should worry emerging economies more than most. With the US downgrade, the club of AAA-rated sovereigns has grown even more exclusive. Germany and Canada, which were long considered models of stability, too are now grappling with their own budget imbalances, prompting speculation that they, too, may soon fall off the list. For India, the implications of this are twofold and urgent. First, it is a reminder that the global financial order no longer offers blanket indulgence to profligacy. Its capital markets remain vulnerable to swings in foreign sentiment, and its monetary policy is constrained by external balances. In such a landscape, credibility must be consistently earned. Second, India's vulnerabilities are institutional. Beneath the headline numbers, what is often ignored is inconsistent tax enforcement, erratic regulatory actions, and delays in judicial and insolvency mechanisms. These are not peripheral issues; they shape how investors price long-term risk. On FDI, behind the headline numbers shared earlier — often denominated in billions of dollars — India has been affected as well. As a share of GDP, net FDI into India peaked at 2.65 per cent in 2009. According to a recent study, other preferred destinations for FDI, such as China or Vietnam, have also seen net FDI as a share of GDP fall in recent years. I have argued earlier that India needs productivism — to borrow from Dani Rodrik's reasoning — and must prioritise the dissemination of productive economic opportunities and investment capital across all sectors and segments of the workforce. This will help utilise effective capital mobility for job creation as well. All this requires a critical shift from fiscal management as a crisis-response to fiscal credibility as the default posture. Markets don't send warnings like this twice. Deepanshu Mohan is Professor of Economics and Dean, IDEAS, Office of InterDisciplinary Studies, Director, Centre for New Economics Studies, Jindal School of Liberal Arts and Humanities. Ankur Singh works at CNES
Time of India
30-04-2025
- Politics
- Time of India
J-K: Ceasefire violated after "7-8 years", we are on "high alert", says villagers as Pakistan fires along LoC
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Amid ceasefire violations by Pakistan Army in multiple sectors, including Naushera, Sunderbani, and Akhnoor in Jammu and Kashmir villagers are on "high alert" and said that they are witnessing ceasefire violations nearly after 7-8 the Akhnoor region's Pargwal sector, villagers reported hearing several rounds of gunfire late at night."About 10 to 12 rounds were fired last night. The Indian Army also retaliated. This kind of ceasefire violation is happening after 7-8 years," said Ankur Singh, a resident of Pargwal, speaking to added, "We are used to all of this, but we are on high alert right now."Another local Raju Singh, a local says "3-4 rounds were fired last night at around 8:30-9 PM. We were working in our farms when we got a call to stop everything and return back to our homes. After that nothing happened...".He further added that 50 per cent of the crop is yet to be Pakistan Army initiated unprovoked small-arms firing during the intervening night of April 29 and 30 from its posts across the Line of Control ( LoC ) in multiple sectors of Jammu and Kashmir, prompting a swift and proportionate response from the Indian Army, according to lndian a statement issued on Tuesday, the Indian Army reported that Pakistforces targeted Indian positions in the Naushera, Sunderbani, and Akhnoor sectors in the Jammu region. Later updates confirmed that similar ceasefire violations were also recorded further north in Baramulla and Kupwara districts, as well as across the International Border (IB) in the Pargwal sector."During the night of 29-30 April, Pakistan Army posts initiated unprovoked small-arms fire across the Line of Control opposite the Naushera, Sunderbani, and Akhnoor sectors. Indian Army troops responded swiftly and proportionately," the Army Pakistan extended the firing to additional locations across the LoC in Baramulla and Kupwara, in north Kashmir, along with the Pargwal sector along the IB. The Indian Army maintained that its troops retaliated appropriately to all such violations.
The Guardian
24-04-2025
- Health
- The Guardian
Labor and the Coalition brush over ‘scary' decline in young Australians' dental visits
Young Australians will remain victims of an oral health 'blindspot' because of the 'stubbornly agnostic' attitudes of major political parties to include dental in Medicare, experts fear. The section of Australian society most likely to drop off from visiting the dentist is young adults. Many never return, according to a recent study that found the demographic accessed regular oral healthcare the least. The University of Melbourne study urged policy reform to address a vulnerability gap, where the child dental benefits schedule ends at 17 without robust financial support for youth transitioning into adulthood. Sign up for the Afternoon Update: Election 2025 email newsletter Labor and the Coalition were 'stubbornly agnostic' on this issue said Assoc Prof Ankur Singh, a senior author of the study and the chair of Lifespan Oral Health at the University of Sydney. Anthony Albanese and Peter Dutton both made historic multibillion-dollar Medicare pledges on the campaign trail but 'somehow oral healthcare has been completely missed out – there's no mention, no roadmap what [oral health is] going to look like in this [government] cycle or the next cycle,' Singh said. Like housing, dental care was a policy area where young adults were disadvantaged, Singh said, and the 'data clearly highlights that there's a blind spot'. The study, recently published in the Journal of Dental Research, tracked the dental attendance of 11,189 participants, aged 15 to 64, from three time points: 2009, 2013 and 2017. Researchers found that almost all participants who were 15 years old at baseline had a high probability of going to the dentist at least once every two years, but there was a 'sharp decline' between the ages of 15 and 20, and for a quarter of the population, this did not improve. 'There's a sudden drop in terms of their dental attendance, and [many] never come back,' Singh said. 'That's really scary.' Poor oral health impairs basic functions like chewing, speaking and sleeping and can have flow-on effects for a person's nutrition, general health – it is associated with higher rates of heart attack and stroke – and mental health. Dental diseases are the leading cause of preventable hospitalisations, according to government data. Singh said financial insecurity was a leading factor in young people's lack of access to dental care. More than 900 young Australians, between 18 and 39, responded to a Guardian callout asking voters how they felt in the lead-up to the federal election. They listed the cost of living, housing and healthcare among socio-economic stressors. Unaffordable dental care was 'clearly a spillover effect' from there being no Medicare rebate, Singh said. The Australian Dental Association has proposed expanding public dental services through a senior dental scheme. Singh said while the brunt of dental problems was experienced in old age, targeted policies for young people would be complementary because oral health care had cumulative benefits over time. The study also examined time-based trajectories for dental attendance. It found 33% of working-aged Australians were persistently not attending the dentist, and were more likely to face educational, employment and income disadvantages. Sign up to Afternoon Update: Election 2025 Our Australian afternoon update breaks down the key election campaign stories of the day, telling you what's happening and why it matters after newsletter promotion A Guardian Australia series in January explored inequality in the nation's dental system. While patients fork out for dental fees, of the $1.3bn the federal government spends on the nation's teeth, more than half goes to subsidising the uptake of private health insurance. Assoc Prof Matt Hopcraft, from the Melbourne Dental School, said research highlighting young Australians' poor dental attendance 'clearly points to the need for reform of public dental funding, such as expanding Medicare to include more essential dental services'. Peter Breadon, the health program director at the Grattan Institute, said: 'These studies show yet again that Australia's dental care system is not fit for purpose — and that everyone knows it. 'But cost isn't just a barrier for the most disadvantaged; many middle-income Australians, and even some on higher incomes, are skipping the dentist because they simply can't afford it. And it's happening across all age groups. That's why we need a clear pathway to universal dental coverage, just like we expect for every other part of the body.' During a debate on Wednesday between the health minister, Mark Butler, and the shadow health minister, Anne Ruston, both said their focus was on primary care when asked about adding dental to Medicare. This week, Butler told Guardian Australia he knew 'many people are ambitious for dental to be covered by Medicare'. 'I've tried to be honest with people that the government's focus right now is strengthening Medicare and rebuilding general practice after a decade of cuts and neglect from the Liberals,' Butler said. 'I can't say to people that in the short term there's going to be any change to dental, but I do recognise in the longer term there's a lot of ambition for dental to be covered by Medicare.'
