Hi there,
Both the events we’ve got coming up this month are now full - for the Political & Public Life Awards, we have a significant waiting list. Thank you to everyone that has registered.
We’re delighted that the London Chamber of Commerce and Industry will be hosting their Summer Reception at the Ideas for India conference on Friday 5 July. To book, visit their website here (£66 for LCCI Members, £150 for Non-Members).
India is ‘easily’ the fastest growing economy in the world, IMF executive director Krishnamurthy Subramanian said last week, as the country’s third-quarter GDP growth blew past analysts’ estimates.
At 8.4%, India’s economy expanded at its fastest pace in six quarters, data showed on strong private consumption and upbeat manufacturing and construction activity. Reuters estimates had pegged growth in the Oct-Dec period at 6.6%. Higher capital expenditure drove this growth, something we covered
According to a report from real estate consultancy Knight Frank, the number of ultra-rich Indians, those with a net worth of at least $30 million, will rise 50% over the five years to 2028, the biggest increase globally. The combined value of companies listed on India’s exchanges is now above $4 trillion.
The Finance Minister’s last budget estimated that fiscal deficit for the financial year 2025 will narrow to 5.1% from the revised 5.8% for 2024. The macro stats will reinforce the Reserve Bank of India’s bias to keep rates on hold at 6.5%, according to Commerzbank.
But the headline figures belie a mixed picture. The latest national expenditure survey (2022-23), shows real consumption grew at only 3% CAGR over the past 11 years, and the Periodic Labour Force Survey data indicates flat real incomes over the past four years.
This week, we deconstruct some of the factors driving these changes.
Upcoming events
Ragatip presents: Pratibha Singh Baghel - The Symphony of Love (7:30pm, 9 March, Southbank Centre) | Book here
Ragatip, a collection of creatives who seek to help a British audience to explore better understand some of India’s oldest musicial traditions, is presenting Hindi playback singer Pratibha Singh Baghel, in her UK debut live in concert with Chineke! Orchestra. She will perform with eight of India’s leading instrumentalists, featuring a curated collection of popular old film classics, current Bollywood hits and ghazals, rearranged for orchestra.
Colours of Holi: With Shakespeare Martineau LLP, Bridge India and EPG (6:30pm, 20 March, London) - Registrations closed
We will be celebrating the festival of Holi – an occasion of vibrant colours, joyous spirit and camaraderie – hosted by leading law firm Shakespeare Martineau LLP. Amidst the Holi magic, the law firm will be announcing its partnership with the upcoming India Week and Ideas for India conference.
Ideas for India conference, part of India Week 2024 (29 June - 6 July | Across the UK) | Book here
India Week 2024® is the place to engage in high level discussions on the New India. During the London events, we’ll have space for over 50 exhibition stands and are expecting nearly 100 business and policy delegates from India.
The Ideas for India® conference in London will consist of:
Fri 5 July: Ideas for India® conference, Fashion Show, Drinks Reception with LCCI and University of Westminster
Sat 6 July: Ideas for India® conference, Black-tie Celebration Dinner (London) with GEDU Global Education
To find out more and to get involved, please reply to this email.
Member news
With the highest predicted GDP growth of any major nation in 2023, India’s status as a global superpower is rising exponentially. In 2022 the country overtook the UK as the world’s fifth-largest economy. In 2023 its population overtook China’s. India is already a nascent global superpower. Dinesh Dhamija’s new book, The Indian Century, with a foreword by Sadhguru, describes how the country’s future development will affect the entire world. To reserve your copy, reply to this email.
Sharath Jeevan OBE’s new book Inflection: A roadmap for leaders at a crossroad is out now Inflection moments are those points at which we stand at a crossroads and ask ourselves: what’s the next mountain to climb? These are the critical moments when we have the chance to futureproof success for years to come. But it all comes down to how we navigate these moments. How we dare a new direction, ignite potential in ourselves and others, align motivations and learn to keep learning. That’s the complete roadmap that Inflection provides us with as leaders.
IMF: "Easily" the world's fastest growing economy
A decade ago, India’s economy underwent a rollercoaster ride when the US Federal Reserve first hinted at raising policy rates and oil prices breached the US$90/barrel threshold. The current account deficit (CAD) in fiscal year 2013 was 4.7% of GDP (and it reached 6.1% of GDP in one of the quarters), and the foreign exchange reserve stood at approximately $292 billion. Inflation stood at 10%, and the fiscal deficit was around 4.5%. The rupee depreciated significantly against the US dollar in 2013, losing over 20% of its value.
Fast forward to today, US Fed policy rates stand at 4.5% and oil prices are hovering around US$85/barrel—but that is where the similarities end. India’s CAD has narrowed to 1.9% of GDP in fiscal 2023 (and is expected to go down further), while forex have nearly doubled to US$568 billion. Inflation is 5%, and the fiscal deficit is targeted to be 5.9% of GDP this fiscal.
Analysts at Deloitte note that India reached here by negotiating exceptional macro and global factors: Trump’s ascendancy in 2016, demonetization in 2017, the shadow banking crisis of 2018, Covid-19 in 2020, the highest inflation in 40 years in the West, and two wars since early 2022.
Deloitte says India’s emphasis on using technology to accumulate and diffuse tacit knowledge, building high-end manufacturing capacity, and improving competitiveness through exports formed the three necessary catalysts that boosted its growth trajectory and improved its economic fundamentals over the years.
The introduction of the UPI, formalisation of credit (with account aggregator networks), plugging revenue leakages (using online tax platforms and FASTag), the introduction of online e-filing platforms and simplified income tax return forms like ITR-1 (leading to a surge in the number of income tax filers and increased tax compliance) and compliance with GST have all helped:
But the rise in indirect taxation has stifled consumption according to Dhananjay Sinha (co-head of Equities and head of Research of Strategy and Economics, Systematix Group), which has flattered aggregate demand by curtailing imports. Imports contracted by 22% in Q3 compared to the year before, whereas exports expanded modestly by 0.9%. Agriculture’s contribution to GDP remains poor: agriculture GVA contracted by 0.8% Q3 with a sequential average decline of 0.6% sustaining for three quarters.
Ten years ago, banking penetration stood at around 25%. It has now risen to 80% and even helped close the gender gap in many accounts.
Currently, manufacturing accounts for a mere 15% of GDP (it’s been falling consistently for decades), with manufacturers mostly suffering from a lack of competitiveness, driven by high logistics costs, rising inflation, inadequate scale of production and operations, poor collaboration networks and ecosystems, lack of ability to connect know-how with investment, weak branding, and poor productivity. But a focus on high value-add sectors like semiconductors have helped:
So India has been able to diversify its exports, in particular engineering and electronic goods:
Sources: Dr Rumki Majumdar, Deloitte Economic Outlook (Jan 2024), The Wire.
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The Bridge India Team
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