Winning Bizness Economic Desk

The International Monetary Fund (IMF)’s First Deputy Managing Director Dr Gita Gopinath said recently that India was expected to become the third-largest economy in the world by 2027.

Dr Gopinath told a leading business publication that India’s economic growth has been better than expected. According to her, the IMF expected private consumption to recover and a favourable monsoon to up harvests.

“India’s growth did much better than we expected the last fiscal year and those carry-over effects are affecting our forecast for this year. The other factor is we see private consumption recovering,” the senior IMF official said.

The revival of consumption in the country was a good sign for the country’s economic growth, Dr Gopinath said.

Here, it must be pointed out that the International Monetary Fund had recently upped India’s growth projection for FY 25 to seven per cent.

India’s IIP in June Stands at 4.2 Per Cent

The country’s Index of Industrial Production (IIP) registered a growth of 4.2 per cent in June 2024, up from the four per cent growth clocked in June of the previous year, data from the Ministry of Statistics and Programme Implementation (MoSPI) revealed.

Strong performances in key segments were largely responsible for propelling this growth. The three key segments of mining, manufacturing and electricity all put in heartening performances.

While the manufacturing sector clocked a Year-on-Year (YoY) growth of 2.6 per cent, the electricity sector achieved a growth rate of 8.6 per cent over the same period last year.

Another critical segment, the mining sector, also displayed robustness and registered a very healthy Year-on-Year growth rate of 10.3 per cent.

Here, a point to note is that the manufacturing sector’s growth in June of this year was influenced by three key industries.

The first is the manufacture of electrical equipment which posted a very robust growth of 28.4 per cent. Basic metals manufacture also continued to maintain its steady growth trajectory with a 4.9 per cent increase, while the third industry—manufacture of motor vehicles, trailers and semi-trailers—also contributed vigorously, clocking a 4.1 per cent growth rate.

Net Direct Tax Collection Up 22.5 pc till Aug 11

The country’s net direct tax collection between April to August 11 of this fiscal year (FY 25) stood at Rs 6.93-trillion. With refunds adjusted, this was a growth of 22.5 per cent.

The tax collection, in the same period last year was Rs 5.65-trillion, according to data released recently by the Income Tax (IT) department.

With relation to the tax collection, personal income tax was more than corporation tax. The former stood at Rs 4.47-trillion (net) as against Rs 3.44-trillion in the same period a year-ago.

This financial year (FY 25), corporation tax stood at Rs 2.2-trillion registering a northward movement of 5.7 per cent which is lower than the growth rate of 12 per cent set for this financial year.

Here, it must be pointed out that direct taxes comprise personal income tax and corporation tax.

An important highlight here is that securities transaction tax has vaulted to Rs 21,599-crore from the Rs 10,234-crore in the same period last year. This can be attributed to changes in tax rates as well as an increase in stock-market trading.

Gross collection (before refunds) stood at Rs 8.13-trillion, a 23.99 per cent upward movement from the previous financial year, according to the country’s Income Tax department.

Till August 11, the government has issued direct tax refunds of Rs 1.20-trillion which is an increase of 33.49 per cent over the Rs 90,028-crore in the corresponding period of the previous financial year (FY 24).

The government collected Rs 19.58-trillion as net direct tax in FY 24 which is 17.1 per cent more than in the previous financial year.

The collection exceeds the estimates by Rs 13,000-crore. In FY 23, the direct tax collection was Rs 16.64-trillion and Rs 14.08-trillion in FY 22.

RBI Pegs GDP Growth At 7.2 pc In Q2 FY 25

Economic activity in the country, based on a range of high frequency indicators projects a GDP growth of 7.2 per cent in Q2 FY 25, the Reserve Bank of India (RBI) said in its monthly bulletin for August 2024.

Aggregate demand comes on the back of a growing momentum with a revival in rural consumption driven by growing incomes, the Reserve Bank said.

This stimulus to demand is expected to reinvigorate the hitherto subdued participation of the private sector in total investment, it observed.

Real savings were also moving northward as evident in the rising number and outstanding amounts of savings bank accounts, the Reserve Bank said.

The receding inflation pressures appear to be the most important metric in the rural spending resurgence, propelling a catch-up with urban consumption volumes.

Reflecting these forces of turnaround, FMCG companies are starting to see green shoots of revival, portending a seismic shift in their markets as price stability sets in and expectations of a better monsoon as well as higher budgetary allocations for the rural economy push-up volume growth.

These factors, which act as stimuli to demand are expected to reinvigorate the hitherto subdued participation of the private sector in total investment, a key propellant of overall economic growth, in view of the higher levels of productivity and innovation, explained the RBI.

India’s Merchandise Exports to Hit USD 111.7-bn in Q2 FY 25: Exim Bank

The Export Import Bank of India (Exim Bank) has said that the country’s total merchandise exports to amount to USD 111.7-billion, clocking a Year-on-Year (YoY) growth of 4.2 per cent while non-oil exports are forecast to amount to USD 89.8-billion, with a YoY growth of 6.26 per cent during Q2 (July-September) of this financial year (FY 25).

According to the Exim Bank, the positive growth in India’s exports could be as a result of India’s continued strong economic activity backed by sustained momentum in the manufacturing and services sectors, the expected global monetary easing and improving demand prospects in trading partners.

The bank, however, observed that the outlook was subject to risks of uncertain prospects for advanced economies, geo-political shocks, the Middle-East crisis, global supply-chain disruptions and deepening geo-political fragmentation among other factors.

The positive growth rate in total merchandise exports and non-oil exports as witnessed in the previous three quarters was likely to continue, the Exim Bank said.

A forecast of growth in the country’s total merchandise exports and non-oil exports is released by the Exim Bank every quarter during the first fortnight of May, August, November and February for the corresponding quarters based on its Export Leading Index (ELI).

The Bank has developed an in-house model to generate an ELI for India to track and forecast the movement in India’s exports to every quarter.

The next growth forecast for the country’s exports for the third-quarter of FY 25 (October-December 2024) would be released during the first fortnight of November 2024.

MP Attracts Rs 3,200-cr Worth Investment Proposals from Leading Intl Cos

The Madhya Pradesh chief minister Mr Mohan Yadav said recently that the state has received investment proposals worth Rs 3,200-crore, including from international companies such as Nvidia and Google, which could help generate over 7,000 employment opportunities.

Mr Yadav said that Nvidia talked about preparing a blueprint to develop Madhya Pradesh as the intelligence capital of India. Google Cloud, he said, proposed to establish a start-up hub and Centre of Excellence in the state.

Four MoUs were also signed in the Information Technology (IT) sector.

In an interactive session held in Bangalore, one-to-one meetings were held with more than 30 prominent companies including Lap India Private Limited, Reliance Consumer Products Limited, Nvidia, Google, DHL Global, Tech Mahindra, Microsoft, Kenes Technology and Kirloskar Systems.

During the session, Mr Yadav told industrialists that the state has a lot of potential for industries in the IT, energy, tourism, MSME, food processing, horticulture and agriculture sectors.

A point to highlight here is that during the interactive session, MoUs were also signed between Madhya Pradesh Industrial Development Corporation Limited and India Electronics Semiconductor Association (IESA), TIE Global, Electronic Industries Association of India (ELCINA) and Association of Geospatial Industries (AGI).