Winning Bizness Economic Desk
India’s healthy economic expansion is having a positive impact on its credit metrics, according to S&P Global Ratings. This has prompted the US credit rating agency to revise its outlook on the country’s economy from stable to positive.
“We expect sound economic fundamentals to underpin the growth momentum over the next two-to-three years. Regardless of the election outcome, we expect broad continuity in economic reforms and fiscal policies,” S&P Global Ratings said in its latest report.
The internationally well-known agency has forecast India’s real GDP growth at 6.8 per cent this year, which it said compared favourably with emerging market peers amid a broad global slowdown.
“We expect policy continuity post-election which would support further economic reforms and fiscal consolidation,” it said.
According to the American agency, elevated fiscal deficits, a large debt stock and interest burden persist, but the government is prioritising on-going consolidation efforts.
“We, therefore, revised our outlook on India to positive from stable and affirmed our `BBB-/A-3’ sovereign credit ratings,” it said.
The positive outlook reflects its view that continued policy stability, deepening economic reforms and high infrastructure investment will sustain long-term growth prospects.
That, along with cautious fiscal and monetary policy which diminishes the government’s elevated debt and interest burden while bolstering economic resilience, could lead to a higher rating over the next 24-months, the agency added.
A point to note here is that it said it may raise the ratings if the country’s fiscal deficits narrow meaningfully such that the net change in general government debt falls below seven per cent of GDP on a structural basis.
IMF Upgrades China’s Growth Forecast to 5 pc
The International Monetary Fund (IMF) has upped its forecast for China’s growth this year to five per cent from its earlier 4.6 per cent, due to “strong” first-quarter figures and recent policy measures.
The raising of its forecast followed an IMF visit to China for a regular assessment.
The IMF now expects China’s economy to grow by 4.5 per cent in 2025, up from its previous forecast of 4.1 per cent.
But by 2029, it anticipates China’s growth will decelerate to 3.3 per cent due to an aging population and slower productivity growth. The point to note here is that this is down from the IMF’s earlier forecast of 3.5 per cent growth in the medium-term.
In the first-quarter (Q1), India’s northern neighbour’s economy expanded by a higher-than anticipated 5.3 per cent supported by strong exports.
Data from April showed consumer spending remained sluggish while industrial activity perked up.
About two weeks ago, Chinese authorities announced reforms to re-energise the struggling real estate sector, including removing the floor on mortgage rates.
The policy moves are `welcome’, but more comprehensive action is needed, Ms Gita Gopinath, the IMF’s first Deputy Managing Director (DMD), said in a statement.
“The priority should be to mobilise central government’s resources to protect buyers of pre-sold unfinished homes and accelerate the completion of unfinished pre-sold housing, paving the way for resolving insolvent developers,” Ms Gopinath said.
IMD Retains Above-Normal Rainfall Forecast
The Indian Meteorological Department (IMD) has retained its April forecast that the country is set to receive above-normal monsoon rains this year.
Above-normal rains will help the country, which depends heavily on the summer rains for its farm output to boost agriculture and overall economic growth.
“India’s monsoon core zone comprising most of the rain-fed agriculture areas are likely to receive above-normal rainfall (more than 106 per cent of the long period average),” the IMD Director-General Mr Mrutyunjay Mohapatra said recently.
The following states—Rajasthan, Madhya Pradesh, Odisha, Maharashtra, Chhattisgarh, West Bengal and Uttar Pradesh—form the country’s core monsoon zone where agriculture is primarily rain-fed.
An important point here is that the IMD said that below-normal monsoon rainfall is expected in the north-eastern parts of India. It, however, expects normal rainfall in the north-west and above-normal rainfall in the central and southern regions of the country.
In June, rainfall is likely to be normal over the country (92-to-108 per cent of the long period average), the IMD said, adding that below-normal showers are expected in many areas of northern and eastern parts of north-west India, among others.
Cyclone Remal has helped advance the progress of the monsoon in the Bay of Bengal region, Mr Mohapatra said, adding that there may not be any long-term impact on the monsoon.
Additionally, rainfall activity was likely to intensify in Kerala in the next few days, the country’s weather bureau said.
According to the Central Water Commission, water storage in 150 major reservoirs in India dropped to just 24 per cent of their live storage last week, exacerbating water shortages in many states and significantly affecting hydropower generation.
While El Nino conditions are prevailing presently, experts aver that La Nina could set in by August-September of this year.
Here, it must be pointed out that while El Nino—a periodic warming of surface waters in the central Pacific Ocean—is associated with weaker monsoon winds and drier conditions in India, La Nina—the antithesis of El Nino—leads to plentiful rainfall during the monsoon.
India’s GDP Achieves 8.2 pc Growth in FY 24
The country’s economy expanded 7.8 per cent in the March quarter (January-to-March of this year or Q4 FY 24), which propelled the annual growth rate northward to 8.2 per cent, according to official data released a few days ago.
In the January-March period, growth was lower than the 8.6 per cent expansion in the December quarter.
The Gross Domestic Product (GDP) had expanded 6.2 per cent in the January-to-March period of the 2022-23 fiscal year, according to data released by the National Statistical Office (NSO).
As per the data, the economy grew 8.2 per cent in 2023-24 as against a seven per cent growth in 2022-23.
The NSO in its second advance estimate of national accounts had pegged the country’s growth at 7.7 per cent for 2023-24.
India’s northern neighbour China has clocked an economic growth of 5.3 per cent in the first three-months of 2024.
In Q4 FY 24, the GDP grew by 7.8 per cent as against the 6.2 per cent of the year-ago period.
Eight key infrastructure sectors’ growth increased to 6.2 per cent in April on healthy expansion in the production of natural gas, refinery products and electricity, according to the data.
The production of eight sectors grew by six per cent in March.
India’s Maize Exports Drop to a 4-Year Low in FY 24 at 14.42-Lakh Tonnes
The country’s maize exports slid to a four-year low in the 2023-24 period with a 58 per cent southward movement in volume. This decline was due to higher domestic prices and a reduced crop, coupled with an increasing demand from ethanol, poultry and starch manufacturers.
The country’s maize exports slid to 14.42-lakh tonnes during 2023-24 from the previous year’s 34.53-lakh tonnes as per official data.
This was due to large buyers such as Bangladesh and Vietnam cutting their off-take and shifting to other cheaper origins.
In dollar value terms, Indian maize or corn exports reduced significantly by 60 per cent to USD 443-million during the period from the previous year’s USD 1,116-million.
In Rupee value terms, exports fell 59.2 per cent to Rs 3,660-crore from the previous year’s Rs 8,987-crore.
The south-east Asian nation of Vietnam was the largest buyer of Indian maize during 2023-24 with purchases at over 6.88-lakh tonnes. However, exports to Vietnam were down by about 23 per cent from the previous year’s 8.91-lakh tonnes.
Similarly, Nepal’s purchases from India were also lower—exports to the northern neighbour were down by 3.3 per cent from the previous year’s 3.91-lakh tonnes. A point to note here is that Nepal was the second largest buyer of Indian maize during the 2023-24 period with purchases of 3.78-lakh tonnes.
