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Time of India
26-07-2025
- Business
- Time of India
Cross-border platforms and development finance to power BRICS+ growth: EY Report
As BRICS+ economies deepen collaboration to reshape the global financial system, three key institutional initiatives: the cross-border payments platform , the New Development Bank (NDB), and the BRICS Contingent Reserve Arrangement (CRA) are gaining strategic momentum, according to the EY Economy Watch July 2025 edition. These efforts come at a time when global trade is navigating uncertainty from geopolitical developments, evolving supply chains, and shifting trade dynamics - encouraging emerging economies to strengthen resilience and diversify their financial and trade frameworks. Explore courses from Top Institutes in Please select course: Select a Course Category Artificial Intelligence Digital Marketing Data Analytics Others PGDM Public Policy MBA Design Thinking Project Management Cybersecurity others CXO Finance Technology Healthcare Data Science healthcare Product Management Management Leadership Degree Data Science Operations Management MCA Skills you'll gain: Duration: 7 Months S P Jain Institute of Management and Research CERT-SPJIMR Exec Cert Prog in AI for Biz India Starts on undefined Get Details As of 2024, BRICS+ countries accounted for 42.5 per cent of global GDP (in purchasing power parity terms), 54.0 per cent of the global population, and 27.3 per cent of global merchandise exports. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Is it legal? How to get Internet without paying a subscription? Techno Mag Learn More Undo These milestones reflect not only the BRICS+ growing economic power but also a deepening commitment to reforming international financial and trade systems. Given current trends, the EY report stated that it expects that the BRICS+ group would account for more than 50 per cent of global GDP in PPP terms by 2030, both due to growth prospects the current members and partners and induction of additional countries into the group. Live Events DK Srivastava, Chief Policy Advisor, EY India, said, "The BRICS+ institutional initiatives are gaining traction at a time when the global economic order is undergoing realignment. These mechanisms especially the payments platform and the CRA are designed to improve financial autonomy and macroeconomic stability among BRICS+ participating nations. The New Development Bank, with its potential to deliver scale and speed in development financing, is equally critical for infrastructure-led growth." The BRICS+ payments platform, built on blockchain technology, is designed to enable cross-border transactions in local currencies. This system is expected to enhance flexibility in currency use for trade among member nations. The EY report notes that this development could foster greater financial stability, facilitate smoother trade flows, and strengthen economic resilience across participating countries. The NDB is also evolving as a major financing institution for emerging markets, particularly within the BRICS+ bloc. With a focus on competitive interest rates and development-oriented lending, the bank is well-positioned to support infrastructure growth and long-term investment flows across member nations. Another pillar of this new financial framework is the BRICS Contingent Reserve Arrangement, which offers a safety net to participating countries through currency swaps during balance of payments challenges. The CRA enhances collective financial security and provides an added layer of support to help manage external economic pressures. Once these initiatives gain momentum, they may go a long way in fostering a multilateral system of global trade, global investment and global financial flows that are comparatively lower in cost and offer complementary options to existing global arrangements. The report highlights the BRICS+ group's focus on facilitating trade in local currencies and expanding access to development financing, supporting efforts toward a more inclusive and balanced global financial architecture. While the group is not seeking to replace the US dollar's role in the global economy, these initiatives aim to broaden financial options and promote a more balanced international monetary system. As the BRICS+ grouping expands its reach, these financial innovations are expected to strengthen intra-group economic ties and support more inclusive global development. With sustained efforts to operationalise and expand these platforms, BRICS+ could emerge as a key driver of more inclusive, resilient, and sovereign-oriented global economic growth.
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Business Standard
30-06-2025
- Business
- Business Standard
India should benchmark military spending at 3% of GDP, says EY report
India should consider setting defence expenditure at 3 per cent of gross domestic product (GDP), establishing a non-lapsable defence modernisation fund, and promoting domestic manufacturing, according to a report released by EY on Monday. The June edition of EY's Economy Watch stressed the importance of a forward-looking approach to defence budgeting. Such a strategy, it argued, would help India develop a more resilient and responsive defence infrastructure, better positioning the country to respond to changing geopolitical and technological challenges. Recommendations to strengthen defence readiness The report specifically recommended "benchmarking defence allocations at 3 per cent of GDP", supplemented by the creation of a "non-lapsable defence modernisation fund, and incentivising domestic manufacturing to unlock long-term economic growth multipliers". It also called for improving the efficiency of procurement processes and placing greater focus on defence-related research and development. Decline in defence spending share over time EY noted that India's defence spending as a proportion of GDP has steadily declined from nearly 3 per cent in the early 2000s to just over 2 per cent today. In contrast, the United States and Russia continue to allocate substantially higher shares of their GDP to military expenditure. Modernisation fund could offer fiscal predictability DK Srivastava, chief policy advisor at EY India, said that benchmarking defence spending at 3 per cent of GDP and establishing a dedicated non-lapsable modernisation fund could offer the fiscal predictability needed to invest in advanced technology and bolster domestic defence manufacturing ecosystems. The report referenced the 15th Finance Commission's proposal to create a Modernisation Fund for Defence and Internal Security (MFDIS) — a non-lapsable corpus under the Public Account of India. The fund was intended to be financed through disinvestment proceeds, monetisation of surplus defence land, and voluntary contributions. Although the Indian government had accepted this idea "in principle", the fund has not yet been implemented. The EY report stated that reviving the proposal could provide consistent capital support and insulate critical defence investments from year-to-year fluctuations. According to data released by the Stockholm International Peace Research Institute (SIPRI), India is on course to spend $86 billion in 2025–26. Just around 22 per cent of the annual defence budget for 2025–26 is earmarked for capital procurements of new weapon systems. India's defence spending as a percentage of GDP has decreased from 2.25 per cent in 2014–15 to 1.91 per cent in 2024–25.
Time of India
30-06-2025
- Business
- Time of India
India's defence budget outlook: EY report calls for 3% GDP benchmark; permanent fund, R&D push recommended
AI-generated image India may consider setting a military expenditure benchmark at 3 per cent of GDP, creating a permanent defence modernisation fund, and boosting domestic manufacturing, according to the June edition of EY's Economy Watch report released on Monday. The report, quoted by news agency PTI, highlights the need for forward-looking defence budget planning to build a more resilient and agile defence framework that can respond effectively to evolving geopolitical and technological challenges. 'Over the years, India's military expenditure as a share of GDP has gradually declined — from close to 3 per cent in the early 2000s to just over 2 per cent today, whereas countries like the US and Russia continue to allocate significantly higher proportions,' the report noted. To address this gap, EY suggested "benchmarking defence allocations at 3 per cent of GDP, supplemented by the creation of a non-lapsable defence modernisation fund, and incentivising domestic manufacturing to unlock long-term economic growth multipliers." The report also underlined the importance of increasing the capital component of the defence budget, streamlining procurement processes, and giving greater priority to research and development in the defence sector. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like BLI TANI NE +355683329609 | Përjeto luksin në çdo rreze dielli. Reklame nga | Enzo Attini Undo EY India Chief Policy Advisor DK Srivastava said, "Benchmarking defence spending at 3 per cent of GDP and operationalising a dedicated non-lapsable modernisation fund can provide the fiscal predictability required for investing in advanced technology, strengthening domestic defence manufacturing ecosystems, and driving innovation-led procurement." The proposal aligns with an earlier recommendation by the 15th Finance Commission, which called for the creation of a Modernisation Fund for Defence and Internal Security (MFDIS) — a permanent corpus within the Public Account of India. This fund was envisioned to be financed through disinvestment receipts, defence land monetisation, and voluntary contributions. Although the government has accepted the MFDIS proposal in principle, the EY report noted that the fund has yet to be operationalised. Reactivating this proposal, it said, could ensure stable capital support and shield critical defence investments from fluctuations in annual budget allocations. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
30-06-2025
- Business
- Time of India
Benchmark military spending at 3% of GDP, create non-lapsable modernisation fund: EY report
India should consider benchmarking military spending at 3 per cent of GDP, creating a non-lapsable defence modernisation fund , besides incentivising domestic manufacturing , an EY report said on Monday. The June edition of EY Economy Watch highlighted the need for a forward-looking defence budgeting strategy, saying this would build a more resilient and responsive defence infrastructure, and make India better equipped to address evolving geopolitical and technological challenges. "Over the years, India's military expenditure as a share of GDP has gradually declined - from close to 3 per cent in the early 2000s to just over 2 per cent today, whereas countries like the US and Russia continue to allocate significantly higher proportions," it said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Remember Him? Sit Down Before You See What He Looks Like Now 33 Bridges Undo The EY report recommended "benchmarking defence allocations at 3 per cent of GDP, supplemented by the creation of a non-lapsable defence modernisation fund, and incentivising domestic manufacturing to unlock long-term economic growth multipliers". Going forward, there is a need to enhance the capital component of the defence budget , streamline procurement processes, and emphasise defence-related research and development. Live Events EY India Chief Policy Advisor, D K Srivastava , said, "Benchmarking defence spending at 3 per cent of GDP and operationalising a dedicated non-lapsable modernisation fund can provide the fiscal predictability required for investing in advanced technology, strengthening domestic defence manufacturing ecosystems, and driving innovation-led procurement." The 15th Finance Commission had proposed the creation of a Modernisation Fund for Defence and Internal Security (MFDIS), a non-lapsable corpus under the Public Account of India, to be financed through disinvestment proceeds, monetisation of surplus defence land, and voluntary contributions. "Although accepted in principle by the government, this fund is yet to be implemented. Reviving the proposal could provide consistent capital support, insulating critical defence investments from year-to-year fluctuations," the EY Economy Watch report said.
Time of India
16-06-2025
- Business
- Time of India
Significant dent? How an escalating Iran-Israel conflict can threaten India's growth story
India's economy ay grow by 6.3–6.5% in 2025-26, despite these global pressures. (AI image) As the world's fastest growing major economy, India has a lot of things going right for it - demand is picking up, inflation is down to a 6-year low, and the RBI has reduced repo rate by 1%, which means lower borrowing costs for businesses. This environment supports higher demand, improved capacity utilisation, and a potential pickup in private investment. Yet this economic strength is threatened by trade tensions and possibility of spiking crude oil prices if the Iran-Israel conflict spirals out of control. Escalating tensions in West Asia, particularly between Israel and Iran, pose a significant risk. A major conflict could spike oil prices, triggering inflation and weakening demand, thereby threatening growth. Oil price outcomes depend on the conflict's severity, ranging from $65 to over $120 per barrel. For India Inc, surging oil prices would inflate production costs, shrink consumer spending, and disrupt exports—especially if Red Sea routes are compromised, forcing longer and costlier shipping alternatives. DK Srivastava, Chief Policy Advisor, EY India tells TOI, 'The global economy is facing tough times due to ongoing conflicts like Russia-Ukraine and Israel-Hamas. Israel-Hamas now risks turning into a wider Israel-Iran war. On top of that, the US has hinted at raising tariffs, adding more uncertainty. These global issues are slowing down the world economy. In fact, the World Bank has lowered its global growth forecast for 2025-26 to just 2.3%, down from 2.7%. ' 'India could feel the impact of these global developments, through the contribution of net exports which has been, on average, negative in recent years. From 2022-23 to 2024-25, net exports marginally pulled down our real GDP growth by (-)0.1% points of GDP. If trade-related tensions continue, this could worsen,' he says. Oil Price Spike & India's Energy Security JP Morgan has cautioned that oil prices could rise to $120 per barrel should the situation in the Middle East deteriorate further. According to the bank's analysis, present prices already incorporate a 7% probability of a severe geopolitical scenario, where Iranian oil production faces significant disruption, leading to a dramatic increase in prices rather than a gradual rise. However, despite ongoing regional tensions, JP Morgan maintains a conservative outlook, keeping its primary forecast for Brent crude at the lower to middle $60s range through 2025, followed by $60 in 2026. The bank's projection of $60 per barrel for 2026 is based on the assumption that regional authorities will take necessary steps to avoid an all-encompassing conflict. Also Read | Big win! China companies now exporting 'Made in India' smartphones & electronics to US, West Asia; notable shift for Chinese brands The cost of benchmark US oil per barrel declined by 3.3% to $70.59 on Monday, reflecting optimism that the conflict might stay limited in scope. This followed Friday's surge of slightly above 7% after the initial strikes. The downward price movement gained momentum after The Wall Street Journal reported that Iran had indicated its desire to cease hostilities and return to discussions regarding its nuclear programmes. DK Srivastava notes that crude oil is cheaper now — averaging $64.3 per barrel during April-May 2025-26, down from a high of $85.3 per barrel in 2Q of 2023-24, its recent peak. But if tensions in the Middle East grow, crude prices could rise again, which would hurt both growth and inflation in India, he says. 'A past RBI study showed that a US$10 per barrel rise in the price of India's crude basket could reduce India's real GDP growth by 0.3% points and increase its CPI inflation by 0.4% points,' he adds. According to the Global Trade Research Initiative (GTRI), India needs to assess energy security risks, expand its crude oil sources and maintain adequate strategic petroleum reserves. GTRI is of the view that the escalating situation in West Asia poses significant risks to India's energy security, maritime trade routes and business relationships. Its analysis indicates that the growing conflict between Israel and Iran could significantly impact India's economic interests. Also Read | Magnet mayhem! Number of Indian companies awaiting licences from China for rare earths doubles; industry supplies hit hard The nation's heavy reliance on the Strait of Hormuz for importing approximately two-thirds of its crude oil and half of its LNG has become critical due to Iranian threats. This crucial maritime passage, spanning merely 21 miles at its most constricted point, facilitates roughly one-fifth of the world's oil trade. With India's dependence on foreign sources exceeding 80% of its energy requirements, any interference in this route would trigger increased oil prices, elevated shipping expenses and higher insurance costs. According to GTRI, these disruptions could potentially drive up inflation rates, cause rupee depreciation and pose significant obstacles to governmental fiscal planning. However, Oil Minister Hardeep Singh Puri has said that India, being the third-largest oil importer and fourth-largest gas purchaser globally, maintains sufficient energy reserves for the coming months. "India's energy strategy is shaped by successfully navigating the trilemma of energy availability, affordability and sustainability," he said. "We have adequate energy supplies for the coming months." Adverse Impact on Trade India maintains substantial trade relationships with both Israel and Iran. During FY2025, India's exports to Iran reached $1.24 billion, whilst imports stood at $441.9 million. The trade volume with Israel is higher, with $2.15 billion in exports and $1.61 billion in imports. The ongoing conflict is expected to have adverse effects on trade. While there were signs of recovery, trade activities will now face renewed disruptions. According to Federation of Indian Export Organisations (FIEO) President S C Ralhan, exports to European nations and Russia could be affected, with anticipated increases in freight charges and insurance costs. Although Indian export shipments had resumed their transit through the Red Sea corridor, these operations are likely to face fresh disruptions, as noted by Ralhan. Also Read | 'No basis to seek…': US disagrees to India asking for WTO consultations on auto tariffs; calls it 'essential security exception' The immediate consequences of the conflict include elevated freight and insurance rates, following a period of stability when Red Sea routes were returning to regular operations, according to Mumbai-based exporter and Technocraft Industries Ltd Founder Chairman S K Saraf. GTRI says that approximately 30% of India's exports heading west towards Europe, North Africa, and America's Eastern seaboard use the Bab el-Mandeb Strait. The current situation poses risks to this vital maritime route. Should vessels need to navigate around the Cape of Good Hope, journey durations would increase by a fortnight, which would cause substantial hikes in shipping expenses. Such disruptions would impact Indian export sectors, including engineering products, textile goods, and chemical shipments, whilst simultaneously increasing import expenditure. Should India be worried? Officials from the government are planning to conduct discussions with export sector representatives in the upcoming days to address recent developments. The current tensions between Israel and Iran are not expected to significantly affect India's economy, unless the situation expands into a wider and sustained regional conflict, according to a senior official who said that authorities are monitoring developments closely. The situation could lead to temporary fluctuations in international oil prices, affect capital movements, cause currency variations and increase shipping expenses in the near term, the official acknowledged. The official told ET that whilst it remains premature to determine the exact consequences for India, the finance ministry and regulatory bodies will maintain enhanced surveillance due to market instability. India's robust macroeconomic indicators position it well to weather any such international crisis with minimal adverse effects, the official stated. The official also indicated that the situation is unlikely to cause any significant or lasting effect on global non-energy commodity prices in the medium-term perspective. EY's DK Srivastava also strikes an optimistic note about India's strong economic fundamentals. 'On the positive side, India's central bank has started cutting the policy interest rate, which has been reduced by 1% points since January 2025, to 5.5% in June 2025. This should continue, ideally bringing the rate to 5% or below.' 'The government is also spending more on infrastructure, with capital spending growing strongly in March and April 2025. These two steps—lower interest rates and larger public investment—should help mitigate the negative effects of global challenges. We expect India's economy to grow by 6.3–6.5% in 2025-26, despite these global pressures,' he concludes. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
