Winning Bizness Economic Desk
Fitch Ratings has upped India’s economic growth forecast for this fiscal (FY 25) to a healthy 7.2 per cent from its earlier forecast of seven per cent.
The well-known international organisation said that recovery in consumer spending and increased investment are the primary reasons for its raising India’s economic growth projection.
For the following two fiscal years (FY 26 and FY 27), Fitch Ratings has projected a growth rate of 6.5 per cent and 6.2 per cent, respectively.
Fitch said in its global economic outlook report that “we expect the Indian economy to expand by a strong 7.2 per cent in FY 25.”
It also predicted investment to continue to increase but more slowly than in recent quarters. On consumer spending, it said that it would recover with heightened consumer confidence.
While stating that the monsoon, being normal, should support growth and make inflation less volatile, Fitch, however, expressed concerns about the recent heatwave that gripped the country and which could pose a risk to both economic growth and inflation.
“We expect growth in later years to slow and approach our medium-term trend estimate,” Fitch said, adding that growth would be propelled by both consumer spending and investment.
Here, it must be pointed out that Fitch’s projection is in line with the Reserve Bank of India (RBI)’s estimated GDP growth for 2024-25 at 7.2 per cent.
In the last fiscal (FY 24), the country’s economy expanded at 8.2 per cent with a growth of 7.8 per cent in the March quarter.
ADB Sanctions Loan to India’s Health Sector
The Asian Development Bank (ADB) has sanctioned an USD 170-million policy-based loan to enhance India’s readiness and capability in the health sector to tackle pandemics in the future, it said in a press release.
This funding is under the Strengthened and Measurable Action for Resilient and Transformation Health Systems (sub-programme 1).
It will aid in the implementation of the government’s National Health Policy 2017 which aims to ensure universal access to high-quality healthcare services across the country.
ADB’s special health specialist Sonalini Khetrapal said: “The Covid-19 pandemic has taught us valuable lessons and adoption of several innovative practices that would significantly strengthen pandemic preparedness and response capacities, if consolidated, sustained and institutionalised.”
This loan would help to address deficiencies in governance, legislation and institutional structures, advancing India’s objective of achieving universal access to quality and affordable healthcare services.
The programme aims to enhance disease surveillance systems to promptly address public health threats.
Additionally, it will also help establish laboratory networks for monitoring infectious diseases across states, Union Territories and metropolitan areas.
“This programme will improve the governance and co-ordination of India’s ONE Health approach, its multi-sector response to emerging infectious diseases,” the ADB press release said.
Likely Slide in 3-Wheeler Exports This Fiscal
There have been no signs of recovery in three-wheeler exports in FY 25 so far because of demand being comatose in key markets such as Sri Lanka, Bangladesh, Nigeria and Egypt.
In May, exports slid southward 11.3 per cent Year-on-Year (YoY).
In the first two-months of this fiscal, auto majors Piaggio and TVS Motor Co have registered a 16 per cent and 19.9 per cent dip in exports.
In FY 23, there was a slide of 26 per cent in exports followed by a 17 per cent decline in FY 24, according to the Society of Indian Automobile Manufacturers (SIAM).
“Sri Lanka’s economy is struggling, Nigeria is facing high inflation and political risks and Bangladesh is experiencing increased political uncertainty. These factors contribute to a bleak outlook for three-wheeler exports,” said Mr Anurag Singh, Managing Director at Primus Partners.
An important point to highlight here is that both Egypt and Somalia have banned three-wheeler imports due to congestion and safety concerns and this too has adversely affected Indian exports.
Another important point that requires mention here is that some African countries are prioritising import of essential goods and restricting vehicle imports—this too has adversely affected India’s exports of three-wheelers.
Andhra Pradesh Fares Well in Seafood Exports
The Marine Products Export Development Authority (MPEDA) has exported 17,81,602-metric tonnes of seafood worth Rs 60,523-crore during the last fiscal (FY 24).
The point to be highlighted here is that the southern coastal state of Andhra Pradesh has contributed significantly (about 32 per cent) of this export.
“Despite facing challenges in the global market, India’s seafood exports touched an all-time high with marine products worth USD 7.38-billion shipped in the previous year (FY 24),” said the chairman of MPEDA, Mr D V Swamy.
In 2022-23, the country’s seafood exports stood at Rs 63,969.14-crore, Mr Swamy said.
Export of frozen shrimp during 2023-24 stood at 7,16,004-million tonnes with Andhra Pradesh contributing the majority share of the exports to countries such as the USA, China, the European Union (EU), south-east Asia and the Middle-East.
Besides, shrimp, other items such as frozen fish, lobster and dried fish were exported to Japan, Canada, Thailand, Belgium, Spain and other countries, the MPEDA chairman said.
“The US continues to be a major importer of Indian seafood with a share of 34.53 per cent (worth USD 2,549.15-million) followed by the two Asian nations of China with 25.33 per cent (USD 1,384.89-million) and Japan which has a share of 6.06 per cent.
According to Mr Swamy, frozen shrimp was the major item (33.26 per cent) of exports shipped to Japan.
India’s Forex Reserves Skid by USD 2.922-bn
The country’s foreign exchange reserves registered a southward movement of USD 2.922-billion to USD 652.895-billion for the week ended June 14, 2024, the Reserve Bank of India (RBI)’s data showed.
The reserves had climbed up USD 4.307-billion to USD 655.817-billion in the previous reporting week, a new all-time high. The reserves had registered consecutive weeks of increase before dipping in the week ended June 14.
Foreign Currency Assets (FCAs) which comprise a major component of the reserves slid by USD 2.097-billion to USD 574.24-billion, the Reserve Bank’s data showed.
Expressed in dollar terms, the Foreign Currency Assets (FCAs) include the effect of appreciation or depreciation of non-US units such as the Euro, Pound and Yen held in the foreign exchange reserves.
Gold reserves registered a decline of USD 1.015-billion to USD 55.967-billion during the week, data from India’s central bank showed.
The Special Drawing Rights (SDRs) were down by USD 54-million to USD 18.107-billion, the Reserve Bank said.
The country’s reserve position with the International Monetary Fund (IMF) increased by USD 245-million to USD 4.581-billion in the reporting week.
HRAWI Seeks Infrastructure Status for Hospitality Industry
Top priority should be accorded to granting infrastructure status to the hospitality sector, the Hotel and Restaurant Association—Western India (HRAWI), said.
“Infrastructure status is crucial for achieving the ambitious target of welcoming 100-million international tourists by 2047 and contributing to a USD 3-trillion hospitality tourism economy. Also, the industry needs to have uniform GST rates for all restaurants, whether inside hotels or stand-alone,” HRAWI’s President Mr Pradeep Shetty said.
According to him, granting infrastructure status to the hospitality sector would facilitate access to long-term loans at competitive interest rates, accelerating growth and development within the industry.
The association has also urged the tourism minister (Mr Gajendra Singh Shekhawat) to revisit the existing GST structure for F&B served in restaurants within hotels.
Presently linked to room charges exceeding Rs 7,500, the association proposes de-linking GST rates from room charges to promote fair competition and ensure sustainability.
“Investing in the development of tourist circuits, heritage sites and transportation networks is essential. Robust infrastructure not only attracts tourists but also creates employment opportunities and stimulates local economies,” Mr Shetty said.
