Winning Bizness Economic Desk

India’s GDP will grow at 6.6 per cent this fiscal (FY 25), Deloitte said. This growth will be on the back of rebounding exports, capital flows and a boost in consumption expenditure.

In its India economic outlook report, the internationally-reputed firm said that the rapid growth of the middle-income class has led to rising purchasing power and even created a demand for premium luxury products and services.

The Deloitte note said that with the expectation that the number of middle-to-high income segments will be in one in two households by 2030-31, up from one in four currently, it believes this trend will likely become further amplified driving overall private consumer expenditure growth.

Here, it is important to highlight the fact that Deloitte has upwardly revised the country’s economic growth projection for the last fiscal to a range of 7.6 per cent to 7.8 per cent.

In January of this year, Deloitte had projected a growth for FY 24 in the range of 6.9 per cent to 7.2 per cent.

The country’s GDP growth is estimated to reach around 6.6 per cent in FY 25 and 6.75 per cent in the year after, as markets learn to factor in geo-political uncertainties in their investment and consumption decisions, the firm said.

“The global economy is expected to witness a synchronous rebound in 2025 as major election uncertainties get sorted out and the central banks of the West may announce a couple of rate cuts later in 2024,” Deloitte India’s economist Ms Rumki Majumdar said.

“India will likely see improved capital flows and a rebound in exports,” Ms Majumdar added

Strong growth numbers over the past two-years have helped the country to catch up with the pre-Covid trends.

According to Ms Majumdar, investment backed by strong government spending on infrastructure, has helped the country to maintain a steady recovery momentum.

Inflation is, however, expected to remain above the Reserve Bank of India (RBI)’s target level of four per cent over the forecast period due to strong economic activity, Ms Majumdar said.

India’s Foreign Exchange Reserves Decline for Second Consecutive Week

The country’s foreign exchange reserves slid southward steeply by USD 2.282-billion to USD 640.334-billion during the week ended April 19 of this year, the Reserve Bank of India (RBI) said.

The point that requires highlighting here is that this is the second consecutive week of decline in the reserves.

It may be recalled that in the previous week, the country’s foreign exchange reserves had slid by USD 5.40-billion to USD 643.162-billion which snapped a multi-week trend of an increase.

A point to keep in mind here is that India’s overall foreign exchange reserves touched an all-time high of USD 648.562-billion for the week ended April 5.

In September 2021, the forex reserves had reached a high of USD 642.453-billion which was breached in March of this year.

The reserves took a hit as India’s apex bank deployed the reserves to defend the Rupee amid pressures caused by global events to a large extent. However, over the past few months, there had been a steady accretion in the reserves.

For the week ended April 19, the foreign currency assets (FCA), a major component of the reserves slid southward by USD 3.793-billion to USD 560.86-billion, according to the latest Reserve Bank data.

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

What requires highlighting here is that gold reserves continued to climb and increased by USD 1.01-billion to USD 56.808-billion during the seven days ended April 19.

The Special Drawing Rights (SDRs) were down USD 43-million to USD 18.034-billion, the Reserve Bank said.

The country’s reserve position with the International Monetary Fund (IMF) was also down USD 2-million to USD 4.631-billion in the reporting week, the data from India’s central bank showed.

India’s Direct Tax Collections Climb 17.7 Per Cent in FY 24 to Rs 19.58-trillion

India’s government has collected Rs 19.58-trillion in direct tax revenue in FY 24 after adjusting for refunds, showing a 17.7 per cent growth annually, the Central Board of Direct Taxes (CBDT) said.

For the last fiscal (year ended March 31, 2024), the government had originally estimated net direct tax revenue of Rs 18.23-trillion but revised it northward to Rs 19.45-trillion in the FY 25 interim budget presented on February 1 of this year. It scaled up the estimate of personal income tax receipts by more than Rs 1.2-trillion.

The Centre’s direct tax revenue receipts after refunds has crossed even the revised estimate by Rs 13,000-crore.

An important point that requires highlighting here is the growth in personal income tax collection. After adjusting for refunds, personal income tax receipt stood at Rs 10.44-trillion last fiscal (FY 24), reflecting an annual growth of 25.23 per cent, the CBDT said.

Another highlight here is that tax collections from corporates expanded over ten per cent annually in FY 24 to Rs 9.11-trillion.

As per the Statistics Ministry estimates, the country’s economy is likely to have grown by 9.1 per cent in nominal terms.

Direct taxes are increasingly accounting for a larger share of the centre’s overall tax receipts. In FY 25, it is expected to be 57.4 per cent as compared to 54.4 per cent projected in the FY 24 budget.

For this fiscal (FY 25), the Indian government has assumed only a 13 per cent growth for both corporate and personal income tax collection in the interim budget.

It remains to be seen whether the Finance Ministry will scale up this target when it presents the full year budget in July, given the 17.7 per cent growth, with personal income tax receipts staging a stellar performance.

Govt Allows Export of Onions to Six Countries

The Government of India has allowed the export of 99,150-metric tonnes (MT) of onions to six countries. These countries are Bangladesh, the United Arab Emirates (UAE), Bhutan, Bahrain, Mauritius and Sri Lanka.

The government had earlier imposed an export prohibition in order to ensure adequate domestic availability of onions in the country. This was done due to the expected lower kharif and rabi crops this year.

The National Co-operative Exports Limited (NCEL) is the agency responsible for exporting onions to these countries.

The government has allowed export of 2,000-tonnes of white onions which are only produced in Maharashtra.

An important point to note here is that these onions, due to their high seed cost, adoption of good agricultural practices and compliance with stringent maximum residue limits (MRL) requirements, their production cost is higher than that of other onions.

Tamil Nadu’s Electronics Export Climbs to a Record USD 9.6-bn in FY 24

The southern state of Tamil Nadu (TN) has achieved a record in electronics exports at USD 9.56-billion last fiscal (FY 24). This is nearly 33 per cent of the total national share of electronics exports.

Tamil Nadu’s industry minister Mr T R B Rajaa said that “the electronics sector in the state is just beginning to flex its capabilities and Tamil Nadu is racing towards another all-time next year.”

An interesting point to be noted here is that Tamil Nadu’s share of electronics exports is more than double that of its neighbouring state Karnataka which at USD 4.6-billion and just under 16 per cent national share occupies the number two position on the list of top electronics exporting states in the country.

Karnataka is almost neck and neck with Uttar Pradesh (UP) which clocked USD 4.46-billion and captured a 15.32 per cent of the country’s electronics export share.

The next three slots are occupied by Maharashtra, Gujarat and Delhi with just over USD 3-billion, USD 2.75-billion and USD 1.51-billion, respectively, with their share of the electronics export pie being 10.62 per cent, 9.43 per cent and 5.18 per cent.

The two states of Haryana and Telangana with 2.4 per cent and 2.1 per cent share at USD 698-million and USD 610.62-million, respectively, come next in order.

Here it must be pointed out that electronics is Tamil Nadu’s second biggest exporting category after engineering goods which occupies the first position clocking nearly a USD 17-billion in exports in FY 24.

The other three categories which help make up the top five for the state are readymade garments at USD 4.7-billion, cotton yarn and fabrics at USD 2-billion and leather and leather goods at USD 1.66-billion.

Tamil Nadu’s total exports were worth USD 43.55-billion in FY 24 of which electronics and engineering goods comprised nearly 62 per cent.

The point to be highlighted here is that Tamil Nadu is the country’s third biggest exporter state after Gujarat at USD 134.4-billion and Maharashtra at USD 67.2-billion.