Top Economic News: India’s GDP Grows 7%, RBI Rate Decision, and More

In today’s economic landscape, India’s GDP growth has soared to an impressive 7%, signaling resilience despite global headwinds. The government’s latest push for green technologies promises to reshape the future of sustainable industries, while the Reserve Bank of India’s key interest rate decision is set to influence borrowing trends across the country.

At TICE, we bring you a daily news roundup with key highlights on the economy, offering insights into the developments that matter most for businesses, entrepreneurs, and policymakers. Stay updated with the top stories shaping India’s economic future.

1. Formal Job Creation Under ESIC Sees 9% Growth in September

Recent data from the Ministry of Labour and Employment indicates that formal job creation under the Employees’ State Insurance Corporation (ESIC) increased by 9.04% in September 2024. Approximately 2.05 million new registrations were recorded, a significant jump compared to the 1.88 million new jobs registered in September 2023. However, on a month-on-month basis, there was a slight decline of 0.9%, with 2.07 million registrations in August 2024. Moreover, the number of new establishments brought under the ESI scheme stood at 23,043 in September, down from 28,917 in August 2024. This shift underscores the evolving landscape of India’s formal employment sector and the growing importance of social security mechanisms.

2. Government Launches Creditworthiness Index for MSMEs

To address the funding challenges faced by micro, small, and medium enterprises (MSMEs), the Indian government has initiated discussions to develop a Creditworthiness Index. This new tool will assess the creditworthiness of MSMEs across various industries using standardized parameters. The aim is to provide a more reliable evaluation mechanism for lenders, especially when dealing with businesses that have weak financials, limited documentation, or little transaction history. This initiative is expected to improve access to credit for MSMEs, which form the backbone of India’s economy, and stimulate further growth in this critical sector.

3. India to Contribute 20% of Global Workforce Growth by 2050

According to a report by Angel One Wealth, India is poised to become a central player in the global workforce, contributing 20% of the workforce growth between 2023 and 2050. This is a significant shift as China’s workforce is expected to decline during this period. The report also highlights India’s growing affluence, projecting that the number of high-income households will triple by 2030. With the rise of middle-income households, India is on track to become one of the fastest-growing nations in terms of per capita income, making its labor force even more crucial to global economic dynamics.

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4. RBI Deputy Governor Urges Banks to Adhere to KYC Guidelines

In a recent address, RBI Deputy Governor Swaminathan J emphasized the importance of banks strictly following Know Your Customer (KYC) guidelines. He stressed the need for both precision and empathy in implementing KYC norms to avoid any potential regulatory action. Swaminathan also expressed concerns about customer grievance mechanisms, noting that many internal ombudsman structures were being treated as formalities rather than as effective resources for resolving customer complaints. These remarks underline the RBI's commitment to ensuring robust customer protection and regulatory compliance within India’s banking sector.

5. Corporate Taxpayers Demand Real-Time Compliance Monitoring

A new survey by Deloitte India has revealed that 74% of top corporate taxpayers in India are in favor of real-time reporting and compliance monitoring by the Income Tax department. The survey, which focused on 250 of India’s highest corporate taxpayers, highlighted a growing trend towards the digitalization of India’s tax system. The adoption of emerging technologies such as AI, blockchain, and APIs is expected to streamline tax compliance processes, ensuring better accuracy and transparency. The push for near-real-time monitoring reflects the increasing need for timely and data-driven solutions in the corporate tax landscape.

6. Migration of Low-Ticket Payments to UPI Lite

In response to growing transaction volumes and server load, the Unified Payments Interface (UPI) ecosystem is adopting UPI Lite to handle low-ticket transactions more efficiently. This move is part of the strategy to ease pressure on the UPI platform, which has been experiencing a rise in user activity. According to Dilip Asbe, MD and CEO of the National Payments Corporation of India (NPCI), technical declines in UPI transactions have fallen dramatically from 8-10% in 2016 to less than 0.7% in 2024. The shift to UPI Lite for smaller transactions will help improve overall platform efficiency, reduce transaction failures, and enhance user experience.

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7. IBBI Proposes Changes to Liquidation and Voluntary Liquidation Regulations

The Insolvency and Bankruptcy Board of India (IBBI) has proposed several amendments to streamline the liquidation process under the Insolvency and Bankruptcy Code (IBC). Key changes include a review of the auction process and a more efficient timeline for appointing liquidators. Additionally, the proposal aims to expedite the voluntary liquidation process, making it easier for businesses to wind up operations in an orderly manner. These reforms are expected to provide greater clarity and efficiency in managing insolvency and bankruptcy cases, fostering a more conducive environment for business operations in India.

8. Stress in Microfinance Sector Becomes Apparent

The microfinance sector in India is showing signs of distress, with the asset quality deteriorating sharply in the September quarter. The proportion of doubtful loans surged to 11.6%, the highest in 18 months. This uptick in stress among microfinance institutions (MFIs) reflects growing concerns about overleveraging in the sector. Leading banks, including IDFC First, Bandhan, AU Small Finance, and RBL, as well as NBFCs, are witnessing increasing loan slippages. This emerging risk is in line with regulatory warnings regarding the sector's exposure, signaling a need for greater caution in microfinance lending practices.

9. Kirana Stores Losing Market Share to Quick Commerce

The traditional Kirana store model in India is gradually losing market share to the rising popularity of quick commerce platforms. According to a report by Datum, Kirana stores’ market share has dropped from 95% in 2018 to 92.6% in 2023, and it is expected to fall further to 88.9% by 2028. This shift indicates a growing preference among consumers for the convenience and speed of online grocery shopping, which is reshaping the retail landscape in India. Quick commerce platforms are capitalizing on this trend by offering faster delivery and better customer experiences.

10. India Faces Potential Shortage of ACs and Refrigerators Due to BIS Restrictions

India is facing the possibility of a significant shortage of air conditioners and refrigerators in the summer of 2025, as the Bureau of Indian Standards (BIS) has refused to recertify over 50 factories in China and Vietnam, which supply components for these appliances. This decision is part of an effort to curb the import of Chinese products through third-party nations. The refusal to renew certifications could have a substantial impact on the availability of these essential household products, just ahead of peak demand seasons.

11. Retail Demand Expected to Surge as Wedding Season Approaches

India’s retail sector is set to experience a boost in demand, with retailers expecting a 40% increase in spending during the upcoming wedding season. The period from October to December, with 47 auspicious wedding days, is projected to see around 4.8 million weddings, generating an estimated Rs 6 lakh crore in business. This represents a 35% increase compared to the same period last year, indicating strong consumer spending in categories such as apparel, jewelry, and home goods.

12. Government Extends Subsidies for Electric Cargo Three-Wheelers

The Indian government has announced an extension of subsidies for electric cargo three-wheelers under the Prime Minister Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE). This move aims to accelerate the adoption of electric vehicles in the cargo transport sector, promoting cleaner and more sustainable transportation options while supporting the government’s goal of reducing carbon emissions.

13. Bio-Plastics Gain Traction as Green Alternative for Sugar Producers

As part of a diversification strategy, sugar companies in India are increasingly turning to bio-plastics, particularly Polylactic Acid (PLA)-based plastics, as an alternative revenue stream. The higher price of PLA-based bio-plastics compared to conventional plastics presents a lucrative opportunity for companies looking to reduce their dependence on sugar sales. Balrampur Chini Mills, a leading sugar producer, has already announced a Rs 2,000 crore investment in India’s first-ever industrial bio-plastic plant.

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14. Tea Firms Report Profits as Climate Change Affects Production

Tea producers in India have reported a significant profit boost in the September quarter, driven by higher prices. A combination of erratic rainfall and a dry spell led to a production loss of 76.73 million kilograms of tea, with North India bearing the brunt of the decline. Despite the production loss, bulk tea prices have surged, with average auction prices rising by 23.98% in North India. The impact of climate change on tea production is becoming more pronounced, but higher prices have helped cushion the financial blow for producers.

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