Top Economic News: Surprises and Shifts in India’s Financial Landscape

As 2024 nears its close, India’s economy is navigating through a landscape marked by unexpected challenges and promising opportunities. While economic growth projections have been revised down, there are crucial shifts in sectors ranging from finance to industry that could significantly impact the country’s future trajectory.

Key revelations from the Asian Development Bank, the Reserve Bank of India’s new priorities, and a surge in private equity investments are reshaping the financial environment. Plus, upcoming changes in sectors like defence, electric vehicles, and data centers are set to drive long-term growth. But will India’s economic engine rev up or slow down in the coming months? TICE brings you the latest updates shaping India’s economic pulse.

Top Economic News

ADB Lowers India's GDP Growth Forecast

The Asian Development Bank (ADB) has revised India’s GDP growth forecast for FY25 to 6.5%, down from its previous estimate of 7%. This downward revision comes as a result of weaker-than-expected growth in private investment and housing demand. The ADB also forecasted a 7% growth for FY26. Global factors, including changes in US trade, fiscal, and immigration policies, are expected to pose additional risks to growth and inflation in developing Asia.

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RBI Governor's Priorities

Sanjay Malhotra, the new Governor of the Reserve Bank of India (RBI), laid out his key priorities for the future in his first media interaction. Fostering economic growth, ensuring policy stability, and promoting financial inclusion were highlighted as his main goals. Malhotra also emphasized the importance of collaboration within the financial system to realize India’s vision of becoming a developed nation by 2047.

PM Modi to Meet Chief Secretaries for Socio-Economic Growth

Ahead of the Budget for 2025-26, Prime Minister Narendra Modi will meet with the chief secretaries of states to discuss and chart out a socio-economic development agenda. Topics such as entrepreneurship, the skilling and employment ecosystem, MSMEs, green economy, AI, and renewable energy will be discussed to enhance economic growth.

Credit Card Delinquencies Rise

Credit card delinquencies have seen an increase across all overdue categories in June 2024, despite a slowdown in the growth of new issuances and balances. The CRIF Highmark report indicated a rise in delinquencies in the 91-180 days overdue category to 7.6%, from 6.5% in the same period last year. The increase in overdue amounts points to a growing concern for the sector.

RBI Interest Rate Policy Outlook

Axis Bank's chief economist Neelkanth Mishra has stated that the RBI is unlikely to cut interest rates in its February policy review or anytime during FY26 due to ongoing inflationary pressures. According to Mishra, the inflation outlook will not provide the necessary space for rate cuts, with inflation expected to average 4.5% in FY26.

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Private Equity Inflows Surge

Private equity and venture capital investments in India have surged by 41% in 2024, reaching $13.86 billion. Despite a slight dip in the number of deals, the increase in inflows highlights growing investor confidence in the Indian market, bolstered by a robust IPO market that has seen record fundraising this year.

Addressing Inverted Duty Structure in Aluminium

The Indian government is considering addressing the issue of inverted duty structures for certain aluminium products in the upcoming Budget. This move aims to boost domestic manufacturing by reducing the cascading costs and credits associated with higher taxes on raw materials compared to finished products.

Electronics Manufacturers Shift to Contract Manufacturing

Major electronics companies like Samsung, LG, Oppo, and Vivo are increasingly shifting production of entry-level products to contract manufacturers. This move aims to free up capacity in their plants for mid-to-premium range products, which have seen steady demand. The strategy reflects the changing consumer behavior, with first-time buyers preferring mid-range products due to the availability of credit.

Massive Investment in EV Sector by 2030

India is set to see investments of Rs 3.4 trillion in the electric vehicle (EV) sector and its ancillary industries by 2030. Despite concerns over the slow progress toward achieving 30% electric mobility by 2030, the sector is seeing significant growth, with a projected 2 million EVs expected to be sold in 2024.

Data Center Investment Surges

India’s data center industry is poised for a massive investment surge, with commitments expected to cross $100 billion by 2027. The cumulative investment from 2019 to 2024 has already reached $60.3 billion. This growth is attributed to both domestic and international investments, with Maharashtra, Tamil Nadu, and Telangana leading in investment commitments.

Onion Procurement to Involve District Administration

The Union Agriculture Ministry has recommended that district administrations be involved in the procurement of onions to ensure transparency and prevent irregularities. This comes after allegations of discrepancies in the onion procurement process under the Price Stabilisation Fund (PSF).

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Wheat Stock Limits Imposed to Manage Prices

The Indian government has imposed tighter stock limits on wheat for traders and wholesalers to curb hoarding and speculating activities that could drive up prices. The Ministry of Food and Consumer Affairs aims to ensure food security and maintain control over the market prices of wheat.

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