Winning Bizness Economic Desk

Even as the global economy remains slow-paced, the Indian economy has displayed an exemplary resilience and growth in the third-quarter (Q3) of this fiscal (FY 24). This comprises the period October-to-December of last year (2023).

There was a feeling that the economy may not grow as fast as expected but the manufacturing, electricity and construction sectors clocked a healthy growth. The third-quarter number has come in as a pleasant surprise indeed.

The country’s economy surprisingly registered a steep northward climb at 8.4 per cent and this entirely unexpected growth figure will certainly be a big booster to the Mr Narendra Modi-led central government at this present juncture with the national elections just about a month-and-a-half away.

The 8.4 per cent growth in Q3 of this fiscal also means that India has retained its position as one of the world’s fastest-growing major economies.

Here, a point that needs highlighting is that the International Monetary Fund (IMF) has said that the Indian economy would outperform other major economies such as China (4.6 per cent), the United States (2.1 per cent), Japan (0.9 per cent), France (1 per cent), the United Kingdom (0.6 per cent) and Germany at minus 0.5 per cent in FY 24.

Another important point to be mentioned here is that the Q3 FY 24 growth number of 8.4 per cent is higher than the 7.6 per cent clocked by the country’s economy in the previous quarter (Q2 FY 24). This was later revised to 8.1 per cent.

In the first-quarter (April-June 2023), the GDP growth was reported at 7.8 per cent, again a very healthy figure given the then prevailing situation globally.

The National Statistical Office (NSO) has revised its GDP growth estimate for this fiscal (FY 24) from the 7.3 per cent in its first advance estimate to a higher 7.6 per cent in its second revised estimate.

Interestingly, the country’s apex bank, the Reserve Bank of India (RBI), estimates GDP growth for this fiscal at seven per cent while the International Monetary Fund pegs it lower than both the RBI and NSO’s estimate at 6.7 per cent.

Barclays Raises India’s GDP Growth Forecast for FY 24 to 7.8 Per Cent

After the country’s economy registered a surprisingly high 8.4 per cent growth in the third-quarter of this fiscal (FY 24), the internationally-renowned organisation, Barclays, has upped its GDP growth forecast for this fiscal to 7.8 per cent.

This is a big increase of 110 basis points (bps); the bank’s economists have also raised their forecast for the next fiscal (FY 25) by 50 bps to seven per cent.

One basis point is a hundredth of a percentage point.

The big increase in Barclays’ growth outlook for the country comes on the back of the unexpectedly robust GDP growth of 8.4 per cent in the third-quarter of this fiscal.

Here, a point to be highlighted is that the statistics ministry has made northward revisions to the first and second quarter growth numbers to 8.2 per cent and 8.1 per cent, respectively.

Consequently, the GDP growth figure for this fiscal has been revised to 7.6 per cent in the second advance estimates which is higher than the first advance estimate of 7.3 per cent.

Barclays’ growth forecast for the next fiscal (FY 25) is now in line with that of the Reserve Bank of India.

Flipkart Launches UPI Service to Reduce Dependence on Third Party Apps

Leading e-commerce player Flipkart has rolled-out its Unified Payments Interface (UPI) for on-line and off-line payments within and outside its app.

This initiative by Flipkart will enable the company to reduce its dependence on third party apps such as Paytm, PhonePe, Google Pay and Amazon Pay.

Now customers can create an UPI ID on the Flipkart app to make payments to both merchants and individuals and also pay bills without switching apps. This service has been launched in collaboration with private sector Axis Bank.

This will initially be available to Android users, the company said in a statement.

Here it must be pointed out that Flipkart claims to have more than 50-crore registered users and 14-lakh sellers on its market place.

What requires highlighting here is that this service will be spread across Flipkart group companies including Myntra, Flipkart Wholesale, Flipkart Health+ and Cleartrip.

Axis Bank’s President and Head, Cards and Payments, Mr Sanjeev Moghe, said that “Axis Bank has always been at the forefront of extending multiple payments flows of UPI to its customers. We continue to scale our growth in UPI with partnerships and innovations.”

Home-grown food delivery company Zomato recently launched its UPI services while two other majors Amazon and Tata Neu are also now offering the same. Two other well-known companies—WhatsApp and MakeMyTrip—also have their own handles.

In February of this year, transactions on the UPI stood at Rs 1,210-crore for a total value of Rs 18.3-lakh-crore. This, it must be pointed out, is a six per cent increase from the year-ago period.

India Witnesses 160 Per Cent Increase in Net Direct Tax Collection in Ten Years

There has been a very healthy increase in net direct tax collections over the last ten-year period, the Central Board of Direct Taxes (CBDT) said.

In a report released in end-January, the CBDT said that the net direct collections have moved sharply northward by 160.52 per cent from Rs 6,38,596-crore in 2013-14 to Rs 16,63,686-crore in 2022-23.

The Income Tax (IT) Department is allocating increased resources to the collection of direct taxes, despite a substantial rise in the number of tax-payers.

This trend suggests a rising reliance on advanced technology and enhanced compliance measures.

The cost of collection has slid from 0.57 per cent of the total collection in the fiscal year 2013-14 to 0.51 per cent in FY 23. A point worth noting is that in 2000-01, the cost was much higher at 1.36 per cent of the total collections but has consistently lessened over the years.

In FY 23, gross direct tax collections amounted to Rs 19,72,248-crore marking a noteworthy surge of 173.31 per cent as compared to the corresponding figure of Rs 7,21,604-crore registered in FY 14.

Direct taxes encompass both personal IT and corporate tax.

The direct tax to GDP ratio witnessed a climb from 5.62 per cent in 2013-14 to 6.11 per cent in 2022-23.

The total number of Income Tax Returns (ITRs) filed in FY 23 stands at 7.78-crore which is as clear a sign as any that there has been a substantial increase of 104.91 per cent as compared to the total number of ITRs filed in FY 14 which was much lower at 3.80-crore.

Country’s Top Exports Slide in Apr-Jan Period

Four out of India’s top five merchandise exports fell or were flat (in value terms) during the first ten-months (April 2023-to-January 2024) of the current fiscal (FY 24).

These include engineering goods, petroleum products, gems and jewellery and chemicals. Engineering goods comprise 25 per cent of all exports in value terms, petroleum products 19 per cent, gems and jewellery 8 per cent and chemicals six per cent, respectively.

A point that needs highlighting here is that electronic goods which account for six per cent of India’s total export value clocked a significant growth in the April-to-June period to USD 22.64-billion from USD 18.78-billion a year ago.

The total export value of engineering goods remained flat at USD 88-billion during the April-to-January period as compared to the year-ago period.

Similarly, the total export value of petroleum products slid to USD 67.11-billion during the first 10-months of this fiscal, down from the USD 75.65-billion in the year-ago period.

Earnings from petroleum shipments witnessed a sharp decrease due to the global economic slowdown, an increase in domestic consumption and shrinking discounts on Russian oil.

Gems and jewellery exports fell to USD 26.89-billion during the first ten-months from USD 31.61-billion in the year-ago period.

Also registering a fall was export of chemicals, both organic and inorganic, in value terms to USD 22.64-billion, down 11.7 per cent from the year-ago period.

Overall, India’s export values across all commodities fell to USD 351-billion during the April-to-January period from USD 366-billion a year-ago, underlining the impact of global economic slowdown, and tightening of interest rates in Western countries.

Important points that need highlighting here are the challenges such as geo-political tensions in Ukraine and West Asia combined with trade route disruptions in the Red Sea region which have exacerbated the situation by increasing oil prices and transport costs, thus hurting India’s exports.