Winning Bizness Economic Desk

Moody’s Analytics has projected the country’s economy to grow 6.1 per cent in 2024. This is a healthy growth rate given the prevailing global circumstances, but it is lower than the 7.7 per cent growth clocked in 2023.

Output in the country remains four per cent lower that it would have been without the Covid 19 pandemic and its after-shocks, the well-known global organisation said.

The after-shocks refer to supply snags to military conflicts abroad. The war between Russia and Ukraine continues unabated in Europe while the Israeli offensive against Hamas terrorists shows no signs of stopping. And just a few days ago, Iran and Israel have locked horns in the sensitive Middle-East area.

“Economies in south and south-east Asia will see some of the strongest output gains this year, but their performance is flattered by a delayed post-pandemic rebound. We expect India’s GDP to grow 6.1 per cent in 2024 after 7.7 per cent last year,” Moody’s Analytics said.

In its report titled APAC Outlook: Listening Through the Noise, Moody’s Analytics said the region is doing better overall than other parts of the world. The Asia-Pacific (APAC) economy will grow 3.8 per cent this year, which compares with a growth of 2.5 per cent for the world economy, it said.

Looking at GDP relative to its trajectory prior to the pandemic shows that India and south-east Asia have been witness to some of the largest output losses world-wide and are only now beginning to recover.

With regard to inflation, Moody’s Analytics said that the outlook for both India and China were more uncertain.

“Inflation in India is at the opposite extreme, with recent consumer price inflation rates hovering around five per cent, close to the upper-end of the Reserve Bank of India (RBI)’s target range of 2-to-6 per cent and without clear evidence of a trend towards slowing price pressures,” said the report authored by Stefan Angrick, Senior Economist, and Jeemin Bang, Associate Economist at Moody’s Analytics.

India’s Forex Reserves Up By USD 2.9-bn

The country’s foreign exchange reserves climbed a steep USD 2.9-billion to USD 648.562-billion for the week-ended April 5, data from India’s central bank, the Reserve Bank of India (RBI) showed.

An important point to be highlighted here is that this is the seventh straight week of increase in the country’s overall reserves. This, incidentally, is also an all-time high.

In the previous reporting week, the forex kitty had moved northward by USD 2.951-billion to USD 645.583-billion.

In September 2021, the forex kitty had touched an all-time high of USD 642.453-billion, a mark that was crossed in March this year.

The reserves took a hit as the Reserve Bank deployed the reserves to defend the Rupee as global developments cast a shadow; however, since then, there has been a steady northward movement, especially in the last few months.

For the week ended April 5, the Foreign Currency Assets (FCA), a major component of the reserves, increased by USD 549-million to USD 571.166-billion.

Expressed in dollar terms, the FCA include the effect of appreciation or depreciation of non-US units such as the Euro, Pound and Yen held in the foreign exchange reserves.

Here, it must be pointed out that changes in the FCA are caused by the Reserve Bank’s intervention as well the appreciation or depreciation of foreign assets held in the reserves.

The Reserve Bank intervenes in the forex market to curb excess volatility in the country’s currency—the Rupee.

Gold reserves also vaulted by a steep USD 2.398-billion to USD 54.558-billion during the week, the country’s apex bank said.

Special Drawing Rights (SDRs) were up by USD 24-million to USD 18.17-billion, said RBI.

Jaishankar Says India’s UPI Transactions More Than US Digital Payments

The country’s Unified Payments Interface (UPI) is very successful, in fact, much more successful than any other country, its External Affairs Minister Mr S Jaishankar said.

While the country was making UPI transactions worth Rs 120-crore a month, the United States (US) was making digital transactions worth Rs 40-crore in a year, Mr Jaishankar said.

“Today, we do cashless payments through UPI. We have transactions worth Rs 120-crore in a month while the US makes digital transactions worth Rs 40-crore in a year. You should see how we have progressed in some areas and the world commends that,” India’s External Affairs Minister said.

Launched in April 2016, UPI combines various banking services for easy money transfers and merchant transactions. It is overseen by the National Payments Corporation of India (NPCI).

Here, a point to be noted is that UPI is compatible with BHIM and various third-party apps like Google Pay, Amazon Pay, Phone Pe and Bharat Pe.

Many Indian banks support UPI payments without any additional fees, unlike any credit or debit card transactions.

What requires highlighting here is that UPI transactions in India posted a record 57 per cent rise in volume and a 44 per cent increase in value in FY 24, as compared to the previous financial year (FY 23).

In March 2024 as well, transactions registered a 55 per cent northward movement in volume to 13.44-billion and 40 per cent in value to Rs 19.78-trillion as compared to March 2023.

A highlight here is that this was the first time that UPI transactions crossed 100-billion and closed at 131-billion in a financial year, as compared to 84-billion in 2022-23.

In February of this year, transactions stood at 12.10-billion and Rs 18.28-trillion, respectively.

In January, it was 12.20-billion and Rs 18.41-trillion, in terms of volume and value.

India’s March Retail Inflation Slides to 4.85 pc

India’s headline retail inflation rate slid to a 10-month low of 4.85 per cent in March of this year, data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed.

The Consumer Price Index (CPI) inflation print stood at 5.09 per cent in February.

At 4.85 per cent, the latest headline retail inflation figure is the lowest since May of last year (2023) when it stood at 4.31 per cent.

The March figure was also lower than expectations, with economists having predicted prices likely to have eased to 4.91 per cent as compared to a month ago.

The latest inflation number has come in a week after the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) announced on April 5 its decision to keep the policy repo rate unchanged at 6.5 per cent for the seventh consecutive time.

According to the Reserve Bank’s latest forecast, CPI inflation is seen at 4.5 per cent for the current financial year.

While CPI inflation has remained within the RBI’s tolerance range of 2-to-6 per cent for a seventh consecutive month, it has now spent 54-months in a row above the medium-term target of four per cent.

Here, a point to be highlighted is that food inflation softened marginally with the index coming in at 8.52 per cent as compared to 8.66 per cent in the previous month.

Vegetables and pulses exhibited a marginal declining trend while on the up were prices of cereals at 8.37 per cent versus 7.60 per cent a month ago and meat and fish at 6.36 per cent as compared to 5.21 per cent in February.

In total, food and beverages inflation came in at 7.68 per cent in March, lower than 7.76 per cent in February. Beyond food, fuel and light inflation slipped further from -0.77 per cent in February to -3.24 per cent in March, while housing inflation dropped to 2.77 per cent from 2.88 per cent sequentially.

WTO Report Says India Ahead of China in Digital Services Exports in 2023

The latest Global Trade Outlook and Statistics report from the World Trade Organisation (WTO) stated that India’s exports of digitally delivered services stood at USD 257-billion in 2023, registering a 17 per cent northward movement from the previous year.

A point to be highlighted here is that the country’s performance was much better than Germany and China, which registered a growth of four per cent each.

According to WTO estimates, global exports of digitally delivered services reached USD 4.25-trillion in 2023, up nine per cent Year-on-Year (YoY), accounting for 13.8 per cent of world exports of goods and services.

Unlike trade in goods, which declined in 2023 globally and in all regions, exports of digitally delivered services continued to flourish.

In Europe and Asia (which hold a global share of 52.4 per cent and 23.8 per cent, respectively) exports increased by 11 per cent and nine per cent, the report stated.

Last year (2023), business, professional and technical services accounted for 41.2 per cent of world exports of digitally delivered services, followed by computer services (20.5 per cent), financial services (16 per cent), intellectual property related services (10.9 per cent), insurance and pension services (5.2 per cent), telecom services (2.1 per cent) and information services (1.5 per cent).

Overall, the World Trade Organisation expects the global economy and trade to improve.

A point to be noted here is that after a 1.2 per cent slide in goods trade volume, the WTO has forecast a 2.6 per cent rise this year (2024).

In volume terms, world goods trade measured by the average of exports and imports declined five per cent in 2023 to USD 24-trillion, while commercial services expanded nine per cent to USD 7.5-trillion.