### Summary
According to a report from SBI Research, the per capita income of Indians is expected to increase from Rs 2 lakh in FY23 to Rs 14.9 lakh in FY47, coinciding with India's 100 years of Independence. The report also highlights the growth in the number of taxpayers and the increase in income levels for the middle class.
### Facts
- 💰 The per capita income of Indians is projected to increase from Rs 2 lakh in FY23 to Rs 14.9 lakh in FY47.
- 📈 37% of the total formal labor force in India currently pays taxes.
- 💸 64% of income tax returns in India are below Rs 5 lakh and are exempt from paying taxes.
- 📊 The number of taxpayers in India has risen from 30 million to close to 68 million, and could reach 85-90 million with pending late returns.
- 💵 13.6% of taxpayers have moved into higher-income brackets.
- 💼 The growth in income levels represents a significant progression for India, which has become the fifth-largest economy in terms of GDP.
- 💭 The income growth should not be criticized in terms of inflation, as even after adjusting for inflation, income has more than doubled in the last 10 years.
- 📉 The Gini Coefficient Index shows that the income gap between rich and poor states in India is narrowing, indicating improved economic benefits for all states.
### Source
- [CNN News18](https://www.news18.com/news/business/income-of-indian-middle-class-expected-to-increase-to-rs-15-lakh-by-2047-sbi-research-5522439.html)
### Summary
India's finance secretary, T.V. Somanathan, believes that the slowing Chinese economy will have limited impact on India's economy, and the government will continue with its capital expenditure push.
### Facts
- 📉 The Chinese economy is experiencing a slowdown, with retail sales, industrial output, and investment data coming in lower than expected.
- 📉 Five major brokerages have reduced their growth forecasts for China this year.
- 🇮🇳 The finance secretary of India, T.V. Somanathan, stated that China's slowdown would have little negative effect on India due to the large trade deficit between the two countries.
- 🇮🇳 Somanathan assured that the government will not exceed the budget estimate of 5.9% of GDP for fiscal deficit.
- 🇮🇳 The government will continue its capital expenditure push as part of its growth strategy, with capital expenditure being a priority.
- 🇮🇳 There are no plans to shift from capital expenditure to revenue expenditure despite the impending general elections in 2024.
- 🇮🇳 The government expects robust capital spending in the April-September period, with anticipated offtake in the 50-60% range.
- 🛠️ The government's move to impose import restrictions on laptops and tablets is due to limited policy instruments available under World Trade Organization rules.
- 🛠️ Starting November 1, imports of laptops and tablets will require a license, as they fall under the high-tech ITA-1 products category.
(Source: The Economic Times)
### Summary
Commerce Minister Piyush Goyal stated that despite short-term inflation hiccups, India has achieved nearly a decade of controlled inflation, offering the lowest rates in the country's history.
### Facts
- 💰 Headline retail inflation reached a 15-month high of 7.44% in July, surpassing economists' expectations of 6.6%.
- 🌽 Vegetable prices and sustained cost pressures in staples like cereals and pulses contributed to the high Consumer Price Index (CPI) for July.
- 🍅 The government implemented various measures to curb food price rise, including distribution of discounted tomatoes and conducting e-auctions for rice and wheat.
- 💼 Commerce Minister Goyal expressed confidence in India's economy, highlighting comfortable foreign exchange reserves and high growth.
- 🌍 With a young demographic dividend, India aims to become a $35-trillion economy and one of the world's top three economies in the next 30 years.
- 📈 India is currently the fastest-growing economy and is projected to achieve a GDP growth of 6.5% for the current financial year.
- 🇮🇳 The current government inherited challenges such as unpaid oil bond debt, high interest costs, and faltering exports from the previous government.
- 🌱 Goyal emphasized the importance of sustainable and inclusive growth alongside value creation for shareholders.
### Summary
India's retail inflation in July rose to 7.44%, higher than market expectations, and is expected to remain elevated in Q3. The global currency market is experiencing significant turbulence, with the USD appreciating despite economic weaknesses. Heightened inflation and volatility in the currency market pose risks to the Indian market.
### Facts
- India's retail inflation in July was 7.44%, exceeding market expectations.
- Elevated inflation is expected to continue in Q3.
- The global currency market is experiencing turmoil, with the USD appreciating despite economic frailty.
- FII outflows have increased, but India's equity market is performing better than other emerging markets.
- The RBI has revised its inflation forecast upward and expects inflation to decrease to 5.7% in Q3.
- High interest rates and inflation are expected to impact corporate earnings growth and valuation.
- India's one-year forward P/E valuation has decreased from 20x to 18.5x.
- Bond yields have increased, leading to a divestment of equities and acquisition of bonds.
- The domestic market is supported by restrained FII divestment, robust purchasing by DIIs and retail participants, and outperformance compared to other emerging markets.
- Selling in global equities has increased due to concerns of deflation and defaults in China's realty and finance sectors.
- The author expects the selling from FIIs to continue in the short-term due to elevated global bond yields, US credit downgrade, and slowdown in emerging markets, but India will continue to outperform.
- In the last month, the MSCI World index was down 4.2% compared to MSCI India's 1.85% decrease.
### Summary
The Indian government is unlikely to divest its stake in IDBI Bank this fiscal year, causing a delay in meeting its divestment target of ₹51,000 crore. However, the government expects higher non-tax revenues to offset any revenue shortfall and maintain the fiscal deficit target of 5.9% of GDP.
### Facts
- 🏛️ The Indian government is unlikely to divest its 60.72% stake in IDBI Bank this fiscal year, and it is expected to be pushed to the next fiscal year.
- 📉 The delay in proposed divestments means that the government is unlikely to meet its divestment target of ₹51,000 crore for the ongoing fiscal year.
- 💰 The government expects higher non-tax revenues, including higher dividends from the Reserve Bank of India (RBI) and public sector banks, to offset any revenue shortfall and maintain the fiscal deficit target of 5.9% of GDP.
- 💸 The RBI had transferred ₹87,416 crore as dividends to the government for FY23, and the government received an equity dividend of about ₹13,800 crore from listed public-sector banks.
- 🎯 The government's divestment target of ₹51,000 crore for FY24 is lower than the previous financial year's target of ₹65,000 crore.
- 📅 The government had aimed to issue financial bids for IDBI Bank by December 2023 and close the transaction in the fourth quarter of the current fiscal year.
- 🛢️ During FY23, the government shelved the strategic disinvestment of Bharat Petroleum Corp. Ltd due to a cooling down of oil prices, and the disinvestment of Central Electronics Ltd was scrapped after the selected bidder failed to disclose ongoing litigation.
- 📝 The government's goal of strategically divesting its stake in various public sector companies is an ongoing process that requires consideration of regulatory and due diligence processes.
### Summary
Commerce and Industry Minister Piyush Goyal believes that India will become the engine of global growth, with its economy projected to reach $35 trillion by 2047. India's young population and vibrant democracy are key factors contributing to its sustainable and inclusive growth.
### Facts
- India is expected to become the growth engine of the world, according to Commerce and Industry Minister Piyush Goyal.
- The country's GDP is projected to reach $35 trillion by 2047, offering significant business opportunities.
- With a population of 1.4 billion people, India recently surpassed China as the world's most populous country.
- India's young population, with over 600 million people aged between 18 and 35, is expected to continue for at least the next few decades.
- India is estimated to provide 24.3% of the incremental global workforce over the next decade.
- The country's digital economy has grown rapidly, with initiatives like the Aadhaar program and the Skill India program promoting digital literacy and skills development.
- India aims to create sustainable and inclusive growth, focusing on value creation and becoming a matter of pride and envy.
🇮🇳💼🌍📈🌱
### Summary
Corporate India's June quarter earnings season showed robust profit growth despite lacklustre revenue expansion, with banking and non-banking financial companies leading the way. However, sectors such as information technology and chemicals experienced a slowdown in revenue growth. The overall demand remains an issue, but the upcoming general elections and a good start to the monsoon season are expected to boost demand.
### Facts
- Corporate India's June quarter earnings season had strong profit growth despite weak revenue expansion.
- Banking and non-banking financial companies led the profit growth, while export-oriented sectors like information technology suffered from weak sentiment overseas.
- The topline growth for BSE500 companies slowed down to 6 percent, with a significant number of them experiencing topline contraction.
- Sectors such as information technology and chemicals saw a slowdown in revenue growth, despite the "China + 1" benefits for the chemicals sector.
- Lower crude prices and rising competitive intensity affected the revenue growth for India Inc in the first quarter of this fiscal.
- Capital expenditure by companies increased, indicating a positive medium-term economic outlook for India.
- FMCG firms had double-digit profit growth but weak volumes expansion due to subdued rural demand caused by inflationary headwinds.
- The urban-focused consumer discretionary segment also had a weak quarter, affected by unseasonal rains and inflation.
- Auto companies had strong results due to robust demand and price hikes, with the passenger vehicles segment showing strong demand.
- The start of the monsoon season holds hope for a strong demand recovery, especially in the festival season.
### Summary
India's total exports and imports of goods and services surpassed $800 billion in the first half of 2023, with a healthy growth in the services sector offsetting a slowdown in global demand.
### Facts
- 📈 Exports of goods and services rose by 1.5% to $385.4 billion in January-June 2023 compared to the same period in 2022.
- 📉 Imports declined by 5.9% to $415.5 billion during the first half of 2023, compared to January-June 2022.
- 💵 Standalone goods exports dropped by 8.1% to $218.7 billion, while imports contracted by 8.3% to $325.7 billion.
- 💼 Services exports grew by 17.7% to $166.7 billion, while imports rose by 3.7% to $89.8 billion during the six-month period.
- 💰 The depreciation of the Indian Rupee didn't prevent the decline in merchandise exports, and weak global demand and loss of competitiveness in labor-intensive sectors contributed to the modest decline.
- 🌍 Several factors, including conflicts, inflation, monetary policies, and financial uncertainty, are expected to weaken world trade in 2023.
- 🛡️ India should focus on increasing product quality and supply chain competitiveness, retain policy space in free trade agreements and Indo-Pacific Economic Framework for Prosperity (IPEF), and be prepared to respond to unilateral policy decisions.
- 📊 Among the product categories contributing to India's exports, 11 out of 29 registered positive export growth, while 18 declined during January-June 2023.
- 📱 Smartphone exports surged to $7.5 billion in the first half of 2023, up from $2.5 billion in the same period in 2022.
- 🌐 India's exports declined in 134 of the 240 countries it exports goods to, with major declines observed in the USA, UAE, China, Bangladesh, and Germany.
- 🌐 India's export promotion should focus on the 41 countries where its exports exceed $1 billion, accounting for 87% of its exports.
- 👥 The top 15 countries with which India has the highest trade deficit include China, Russia, Saudi Arabia, Iraq, and Switzerland.
- 📉 The share of free trade agreement partners in India's merchandise exports decreased from 30.1% in the first half of 2022 to 26.8% in 2023.
- ⛽ Import of crude petroleum declined by 7.6% to $73.2 billion in January-June 2023, with Russia's share in India's import of petroleum crude increasing significantly.
- 🌍 Import growth from major suppliers like Iraq, Saudi Arabia, and the UAE declined during this period.
India's economy is experiencing consistent growth, and is predicted to become the fourth-largest economy within 18 months and the third-largest by 2028, driven by strong fundamentals and infrastructure development, while successfully reducing poverty; however, further reforms in areas such as patents, judicial, administrative, and process reforms are needed to boost economic growth.
India has seen an increase in its tariffs and trade policy measures in recent years, reversing the trend towards liberalization and increasing trade restrictions, which is a global phenomenon as many countries are adopting industrial policies to promote domestic production and exports; however, the effectiveness of these policies and their impact on economic growth and job creation remain to be seen.
Economists at Nomura and Morgan Stanley raise their growth forecast for India's fiscal 2024 after the economy grew at its fastest pace in a year in the April-June quarter, while BofA Global Research cuts their estimates as quarterly growth falls below their forecast.
India's industrial output rose 5.7% in July, its fastest pace in five months, driven by strong mining and electricity activity, but high inflation and slowing pent-up demand may hinder future growth.
India's economic growth is estimated to be closer to 7.5%, with the country's first quarter growth at 7.8%, reflecting India's increasing stature in the world.
China's economy has entered deflation territory and the debt crisis has worsened, while India's economy is thriving with GDP growth expected to exceed 7% and unemployment rates at a 12-year low; it is predicted that India will surpass China in per capita income by 2044 due to factors such as female education expansion, labor force growth, and higher total factor productivity growth.
With the right reforms, India has the potential to become the next engine of global growth, benefiting from major economic re-alignments caused by China's slowdown and the US diversifying its supply chains. Major corporations are already investing in India, recognizing its potential. However, India needs to overcome challenges such as high tariffs, infrastructure improvements, and regional cooperation to fully realize its manufacturing potential and attract foreign investment.
India's goal of becoming a $5 trillion economy may be challenged as economists predict that nominal GDP growth may fall below the budgeted estimate of 10.5% for the current fiscal year, primarily due to subdued wholesale inflation.
India's goal of achieving 6.5% real GDP growth in FY24 may be complicated by lower-than-anticipated nominal growth, potentially delaying the country's aim of becoming a $5 trillion economy by another year.
The Asian Development Bank (ADB) has lowered its growth forecast for developing Asia due to weakness in China's property sector and risks associated with El Niño, but still expects resilient growth driven by domestic consumption and investment.
The Organisation for Economic Cooperation and Development (OECD) has lowered its forecast for global economic growth in 2024 to 2.7%, while predicting inflation to remain above central bank targets despite interest rate hikes; fears of a slowdown in China and reduced growth in the US contribute to the pessimistic outlook.
S&P Global Ratings retains India's FY24 growth forecast at 6% due to the slowing world economy, subnormal monsoons, and delayed rate hikes, while also revising up the full fiscal retail inflation forecast to 5.5% on higher global oil prices.
India is expected to be the fastest-growing major economy this fiscal year, but the forecasted growth is still below potential and risks are skewed to the downside, with a drier than normal monsoon season and sluggish private consumption acting as restraints; however, economists predict that the Reserve Bank of India will cut rates in the second quarter of next year.
India's GDP growth is expected to moderate over the next few quarters, with a projected growth rate of around 7% in the second quarter and a slowdown to around 4.5-5% in the second half of the year. Factors such as the fluctuating monsoon, lower reservoir levels, cautious rural demand, and the impact of monetary tightening are likely to contribute to this moderation in growth. The writer predicts a full-year GDP expansion of 6%, with future growth depending on factors such as the outcome of the next election.
The World Bank has lowered its growth forecast for China's economy in 2024 to 4.4% due to the ongoing property crisis, which is expected to have a negative impact on regional countries as well.
India's inclusion in JPMorgan's emerging market bond index signals major changes in the global capital markets, boosting capital inflows by $20-25 billion and improving liquidity for Indian assets and the rupee, ultimately attracting more investment. India's rise in the global economy will have significant consequences, positioning it as a nonaligned player and surpassing China in certain measures, while ongoing disputes with Pakistan and China continue to shape its geopolitical landscape.
China's economic growth this year may be as low as 2 percent, half of what the International Monetary Fund predicts, due to problems in the property sector, weak foreign direct investment, and other structural issues, according to Daniel Rosen of the Rhodium Group. The IMF has forecasted 5.2 percent growth for China, but Rosen believes growth above 3 percent is unlikely in the medium term. Additionally, concerns are rising that China's economic challenges could hinder global growth.
The US economy is predicted to slow down by mid next year, which will have a negative impact on global GDP, according to Neelkanth Mishra, Chief Economist for Axis Bank. Mishra also mentioned that China will grow slowly but not collapse, while India will be affected through various pathways such as a decline in services growth, goods demand, dumping of products, and financial market volatility. However, he believes that India's trajectory looks good in the next 5-7 years.
The Indian central government is likely to reduce its investment spending in the future to curb the budget deficit, creating an opportunity for the private sector to step in and drive investment growth, according to Goldman Sachs.
India's economy needs to grow at a rate of 8% per year and focus on investment in traditional sectors in order to surpass China as the largest contributor to the global economy, according to Barclays.
Large established businesses in India experienced strong double-digit growth in their gross corporate income in FY21, more than compensating for the income drop faced by smaller companies, attributed to their well-established supply chains and logistic facilities as well as a quick recovery from the first wave of the pandemic.
The International Monetary Fund has upgraded India's GDP growth forecast to 6.3% for 2023-24, citing positive factors such as monsoon rainfall, capital expenditure, new company registrations, and robust credit growth, leading to the possibility of growth surpassing 6.5% in Q2 FY24.
JPMorgan predicts that India will become the world's third-largest economy by 2027 and reach a GDP of $7 trillion by 2030, with manufacturing and exports playing a significant role in its growth. The managing director also expresses optimism about China's economic trajectory and suggests potential opportunities in specific sectors. China is considering implementing a stimulus initiative and exploring the creation of a stock stabilization fund to boost investor confidence.
Foreign fund outflows from Indian equities, driven by a rise in U.S. bond yields and Middle East geopolitical tensions, have impacted commodities and caused uncertainty, with the possibility of a rebound in the market dependent on various factors such as the evolution of GDP growth and inflation, according to HSBC Global Research.
