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India Today
02-08-2025
- Business
- India Today
Why only someone very ignorant can think that Indian economy is dead
India's economic ascent in recent years has positioned it as a global powerhouse, standing tall amidst a turbulent world economy. With a unique blend of robust GDP growth, stable macroeconomic fundamentals, and strategic sectoral advancements, India is not only the fastest-growing major economy but also one of the most resilient. There are several key drivers behind India's economic strength, supported by compelling data points and emerging opportunities that underscore its enduring momentum. An honest perusal of these key parameters will exorcise the farcical claim by India's Leader of Opposition (LoP) that the Indian economy is dead. What will emerge is a picture to the GDP Growth and Global StandingIndia's GDP growth has consistently outpaced that of other major economies, cementing its status as a global economic leader. In FY24, India's real GDP grew by an impressive 8.2%, surpassing the growth rates of major economies like the United States (2.5%), China (5.2%), Japan (1.9%), and Germany (0.3%). For FY25, the International Monetary Fund (IMF) projects India's growth at 6.5–7%, revised upward from 6.6% due to strong rural demand and government infrastructure spending. This makes India the fastest-growing major economy, with projections indicating it will maintain this position through FY26, with GDP growth expected between 6.3–6.8%.By 2027, India is forecasted to overtake Germany to become the world's third-largest economy, with a projected GDP of $5.2 trillion. By 2030, this figure is expected to reach $7.3 trillion, driven by robust domestic demand, a young demographic, and sustained economic reforms. India's contribution to global economic growth is projected to be 12.9% over the next five years, surpassing the United States' 11.3%. This trajectory highlights India's ability to thrive despite global headwinds, such as geopolitical tensions and trade PMI: A Beacon of Industrial Strength India's manufacturing sector is a cornerstone of its economic resilience, as evidenced by the S&P Global India Manufacturing Purchasing Managers' Index (PMI). In August 2023, the PMI stood at 58.6, reflecting robust expansion driven by strong demand, competitive pricing, and increased new orders—the fastest upturn since January 2021. For FY24, manufacturing growth reached 9.9%, significantly contributing to Gross Value Added (GVA) growth of 7.2%. Most recently, the PMI showed robust growth, with a high of 59.2 in July 2025, marking the highest reading in nearly 17.5 years, reflecting strong demand and performance underscores India's growing industrial capacity, bolstered by initiatives like the Production Linked Incentive (PLI) Scheme, which has attracted investment in pharmaceuticals, electronics, and global supply chain disruptions, India's manufacturing sector has shown remarkable adaptability. The sector's contribution to GDP, though currently at 13%, is poised for growth through policies like 'Make in India,' which aims to elevate it to 25%. Companies like Apple are shifting production to India, with iPhone manufacturing for the U.S. market increasingly moving from China. This trend signals India's emergence as a global manufacturing hub, enhancing its economic Inflation: A Pillar of Economic StabilityIndia's ability to maintain low inflation amidst global volatility is a testament to its prudent monetary policies. In March 2025, the Consumer Price Index (CPI) inflation rate was 3.34%, down from 4.85% the previous year. This decline, driven by stable food prices and lower crude oil costs (projected at $65/barrel in FY25), has bolstered purchasing power and economic stability []. The Reserve Bank of India's (RBI) steady interest rate policy and potential rate cuts of 25 basis points in FY25 further support growth by encouraging credit and to advanced economies grappling with high inflation—such as the U.S. (3.0% in mid-2023) and the Eurozone (5.3%)—India's low inflation rate provides a competitive edge, fostering consumer confidence and sustaining domestic demand []. This stability is crucial for long-term economic resilience, especially in a global environment marked by inflationary FDI Inflows: A Vote of Global ConfidenceForeign Direct Investment (FDI) inflows into India have surged, reflecting global confidence in its economic potential. Between April 2000 and December 2024, cumulative FDI equity inflows reached $1.05 trillion, with $71 billion recorded in FY24 alone. Key sectors like finance, banking, insurance, and R&D have been major recipients, with Maharashtra (31%) and Karnataka (21%) emerging as top destinations. Singapore, Mauritius, and the U.S. account for significant shares, with 25%, 24%, and 10% of inflows, liberalised FDI regime, allowing 100% foreign investment in sectors like construction and renewable energy, has been a game-changer. The rise of Indian unicorns—108 by mid-2023, with 44 achieving unicorn status in 2021—has further attracted global investors. However, a dip in net FDI to $0.35 billion in FY24 due to increased outward investments highlights the need for sustained policy efforts to maintain inflow momentum. Nonetheless, India's ability to attract substantial FDI underscores its appeal as a stable and lucrative investment Opportunities in Tier 2 and Tier 3 CitiesIndia's economic growth is not confined to metropolitan hubs; Tier 2 and Tier 3 cities are emerging as vibrant centers of opportunity. Cities like Jaipur, Indore, Surat, and Coimbatore are witnessing rapid infrastructure development, driven by initiatives like the UDAN regional airport scheme, which plans to build 20 new airports, and the Ganga Expressway, enhancing connectivity in Uttar Pradesh. These projects are unlocking economic potential by improving logistics, boosting tourism, and attracting Smart City Mission and Atal Mission for Rejuvenation and Urban Transformation are fostering sustainable urban development in these cities, creating jobs and stimulating local economies. For instance, Hyderabad's tier-4 data center, with 1,600 racks and 18MW capacity, highlights the growing digital infrastructure in Tier 2 cities. The public cloud services market in India is projected to reach $13 billion by 2026, with a CAGR of 23.1%, driven by demand in these regions. This decentralization of economic activity reduces regional disparities and enhances India's overall economic Shoots: Renewable Energy and Space TechnologyIndia's focus on green shoot sectors like renewable energy and space technology is propelling its economic transformation. In renewable energy, India is targeting 100 GW of solar capacity by 2025, alongside investments in wind, hydropower, and green hydrogen. The India Green Energy Corridor and Green Hydrogen Mission align with the goal of net-zero emissions by 2070, positioning India as a global leader in clean energy. Two-thirds of new energy consumption is expected to come from renewables, reducing reliance on imported fossil fuels and creating jobs in manufacturing and space technology, India's achievements, such as the Chandrayaan-3 lunar mission and the upcoming Gaganyaan human spaceflight program, have elevated its global standing. The Indian space sector is projected to grow from $8 billion in 2023 to $44 billion by 2033, driven by private-sector participation and government support []. Initiatives like the Indian Space Research Organisation's (ISRO) partnerships with startups are fostering innovation and economic diversification, further strengthening India's growth Pillars of ResilienceBeyond these key drivers, India's economic strength is bolstered by several other factors, such as India's Demographic Dividend. With 17.8% of the global population and a growing working-age cohort, India is set to overtake China's working-age population share by 2030. This demographic advantage fuels consumption and the Digital Transformation front, initiatives like IndiaStack and Aadhaar have digitised financial transactions, with the credit-to-GDP ratio expected to rise from 57% to 100% by 2031. This enhances financial inclusion and economic it comes to infrastructure push, the Modi government's record-breaking Rs. 11 lac crore capital expenditure in the last two successive financial years has driven projects like the Bharat Expressway and Sagarmala 2.0, improving connectivity and banking sector has shown remarkable stability, driven by reforms. Gross non-performing assets (NPAs) fell to a 12-year low of 2.6% in FY24, reflecting a robust financial and the Path ForwardDespite its strengths, India faces challenges, including a skills gap and a manufacturing sector that needs to further scale up. Structural reforms, such as those in agriculture and labour, are critical to sustaining high growth. The government's National Manufacturing Mission and focus on skill development aim to address these gaps, but consistent implementation is economy today is stronger and more resilient than ever, driven by robust GDP growth, a thriving manufacturing sector, low inflation, high FDI inflows, and burgeoning opportunities in Tier 2 and Tier 3 cities. Emerging sectors like renewable energy and space technology, combined with a favourable demographic and digital transformation, position India as a global economic leader. As it navigates challenges with strategic reforms, India's trajectory toward becoming the world's third-largest economy by 2027 is not just a possibility but an inevitability. With visionary governance and sustained momentum, India is poised to shape the global economic landscape for decades to come.(Tuhin A Sinha is a national spokesperson of the BJP, and an author)- Ends(Views expressed in this opinion piece are those of the author)Must Watch
The Herald Scotland
18-06-2025
- Business
- The Herald Scotland
How do inheritance tax changes impact farms and businesses?
Announced in October 2024, the Chancellor has been told the changes will lead to a reduction in tax receipts to the UK of almost £1.9 billion. Meanwhile, a Gross Value Added (GVA) - an economic indicator measuring the contribution of industry to the economy - could reduce by £15bn across the UK. Inheritance tax Inheritance tax is currently charged at 40% on the property, possessions and money of someone who has died, where assets are above the £325,000. The tax only impacts additional assets, so if a firm was worth £330,000 - only the additional £5,000 would be subject to inheritance tax. Read more: The Chancellor has said the threshold will remain in place until at least 2030. It raises around £7bn for the Treasury each year. Changes to exemptions are coming The UK Government announced in the autumn budget in October last year that it would restrict inheritance tax relief for agricultural and business property relief - often abbreviated to APR and BPR. Since the policy changes were announced, it has caused significant uncertainty and drawn criticism from across the industries. There have been protests across the country, at the UK and Scottish Parliaments, with particular warnings against what is described as the 'Family Farm Tax'. Farmers have warned of a 'food crisis' if family-owned farms are impacted by the changes. Tractors lined the streets of central London earlier this year, leaving police to step in and place restrictions on the number of tractors allowed at the demonstrations. The inheritance tax changes Farmland and many construction firms are exempt from inheritance tax under APR and BPR. But the Chancellor confirmed the 100% exemption will be lifted and halved from the next financial year. Read more: That means that from April 2026, a tax of 20% will be imposed on assets over £1 million Assets under this will remain exempt. The concern is that while some of the businesses impacted have assets of several million when they are passed down as inheritance, the physical cash that would pay for the tax is low. Businesses therefore warn assets would have to be sold, or staff would be let go from their jobs, unless the Chancellor reverses the plans. The UK Government, however, has said the changes are proportionate and fair and can be paid over 10 years, interest free, to ease the pressure. What are the cost implications? The Chancellor has said the changes to both agricultural and business property relief will bring in around £520m per year, combined. However, it is thought that the economic impact on businesses will be around £15bn GVA. In Scotland, it could be around 15,000 job losses, at a cost of £1.2bn GVA.
New Indian Express
25-05-2025
- Business
- New Indian Express
Wage share dips as profit share rises in India's GVA: NAS data
NEW DELHI: New estimates from the National Accounts of Statistics (NAS) show a slight increase in workers' compensation as a share of Gross Value Added (GVA), but a sharper and more sustained rise in profits over the past five years. GVA is calculated by adding compensation to employees, consumption of fixed capital, and operating surplus/mixed income, and then subtracting production taxes and adding subsidies. Among these, the operating surplus—essentially business profits—has grown significantly across most key sectors, including agriculture, mining, electricity, transport, and financial services. This rise in profits, however, has not translated into a consistent rise in wages. Nationally, the share of employee compensation in GVA dropped from 53.5% in 2019–20 to 51.85% in 2023–24. While compensation remained around one-third of GVA overall, it actually fell between 2022–23 and 2023–24. The biggest drop in wage share was seen in the electricity, gas, and water supply sector, followed by mining and quarrying. On the other hand, the real estate sector saw a small rise in compensation share, but the construction sector experienced a notable decline. This trend points to a shrinking wage bill alongside rising profits—raising concerns over growing inequality and weakening consumer demand. Economists often caution that such patterns, while possibly beneficial for short-term investment and inflation control, can reduce job creation and hurt overall employment growth. Adding to these concerns, the Centre for Monitoring Indian Economy (CMIE), an independent data agency, recently reported a dip in consumer sentiment, suggesting a potential slowdown in demand.
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Business Standard
22-05-2025
- Business
- Business Standard
Foreign tourist arrivals strongly correlated with travel search: RBI report
There is a strong association between foreign tourist arrivals (FTAs) and their travel search volume index to India as inbound tourism is emerging as one of the key economic growth drivers, according to a report in the Reserve Bank of India' s (RBI's) monthly bulletin for May. Visits by foreign tourists, which dropped due to Covid-19 restrictions in March 2020, saw a revival in November 2021. There has been a significant increase in foreign tourists coming to India in 2023 due to the G20 Summit, meetings, incentives, conferences, and exhibitions (MICE) events, leisure trips, and the return of business travellers. The ICC Cricket World Cup also boosted India's tourism. There was also a surge in tourism in the first half of 2024. According to the research paper, travel and tourism created 76.17 million jobs in 2022-23, which is 12.57 per cent of total jobs created during the same period. Also, the foreign exchange earnings from the tourism industry for 2023 reached ₹2.32 trillion, marking an increase of over 66 per cent compared to 2022. 'There is a significant correlation between FTA and GVA-THTCB (GVA - Trade, Hotels, Transport, Communication and Services related to Broadcasting) for Q4FY21 to Q4FY24 (0.71), which supports the earlier argument that FTAs contribute directly and indirectly to GVA (Gross Value Added),' the research paper said. The views in the report are that of the authors and not of the central bank. 'Empirical results show a strong correlation between FTA for the current month and travel search volume index for preceding five months,' the paper added.
