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Dear Readers,

We celebrated the new year with joy, fun and prayers for a happy and prosperous year ahead. On 23rd January, we celebrated the birthday of a great leader Netaji Subhash Chandra Bose. “Bharatwasis” pay their homage to him. On 26th January, Republic Day was celebrated. All “Bharatwasis” took the pledge to work hard righteously, honestly, selflessly with devotion to have a “Viksit Bharat” to achieve the dream of becoming USD 35 trillion economy by 2047 despite facing multiple challenges on economic and external fronts.

On 3rd of February Mother Saraswati – Goddess of learning, knowledge, intellect, wisdom, music and art will be worshipped throughout the Nation to bestow on us Her blessings. The day is also known as “Vasant Panchami”. It is a significant festival that honours “overcoming darkness and ignorance” in life. The festival and season also commemorate the mustard crop’s yellow blossoms as they get ripened in the fields along with wheat and pulses. Every year, the festival of Maha Shivaratri is held to commemorate the wedding of Lord Shiva and Maa Parvati. In addition to chanting prayers, fasting and reflecting on morals and virtues like honesty, non-harming others, charity and forgiveness, the festival is celebrated by remembering Lord Shiva and Mother Parvati.

Cover Story: Except agriculture and service industry; growth in almost all the sectors has been negligible. Manufacturing growth also dropped. The core sector industries have an all-round impact on the economic activities of an economy. The linkage between GDP growth and core sector performance is obvious as the activities of the manufacturing industry, infrastructure sector and even service sector are directly linked to core sector performance. The core sector of India consists of eight industries including coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity. During recent years the steel industry has been affected due to heavy import from China. Having a low risk appetite, entrepreneurs have not been making capex investments or getting into new ventures.

As the economic activity picks up the core industries’ growth will resume further. Government’s focus on infrastructure will lead to growth. The demand for power has been increasing. There is a great scope for the coal industry in the country. It is expected that FM Nirmala Sitharaman will give incentives in the form of financial support for research and development for growth of the core industries during the upcoming budget. One hopes post-budget these sectors would gather growth momentum.

Indian Economy: Several multilateral agencies have revised growth rate estimates to downward for India. India GDP growth projections by the IMF for FY26 and FY27 are at 6.5 % for both years; 6.7% for both the years by World Bank; and 7% for FY26 by Asian Development Bank (ADB). India is projected to account for 16% of global consumption at Purchasing Power Parity (PPP) by 2050. This was at 9% in 2023.

India’s space economy, presently valued at USD 8bn, is expected to touch USD 44bn in the next decade according to Union Minister of Science and Technology Jitendra Singh. Outward foreign investment by Indian firms registered double digit growth at USD 37.7 bn in 2024, reflecting Indian companies’ growing global presence.

India is focusing on inclusive development and growth. According to recent reports, India’s share of world population which was 23% in FY23 will fall to 17% by 2050 and to 15% by 2100.

Union FM Nirmala Sitharaman presented the Union Budget for the FY26 for a “Viksit Bharat”. She has focused on agriculture, MSMEs, investment, export and consumption by increasing the personal income tax slab upto Rs.12 lakhs as tax free. More than 2 crore population mainly the middle income group of the Nation will benefit thereby giving a boost to savings and will promote capital investment.

Global Economy: According to IMF projections, global growth has been projected at 3.3% both for 2025 and 2026 at below the historical (2000–19) average of 3.7%. Donald Trump, in his second term as the president of the USA, wants to restore the greatness of the USA. He has threatened tariff rise to disrupt global trade balance and to make prices of products made in the USA competitive and thus create more local employment. While he has spoken of levying a 10% duty on imports from China and 25% on imports from Mexico and Canada, he has gone to the extent of saying that he intends to levy 100% import duty on imports from BRICS nations (which includes both China and India). These tariff hikes are supposed to fund his proposed tax cuts. He has also hinted at strong action with massive deportation of illegal immigrants.

China managed to achieve 5% GDP growth in 2024, but going forward things can become difficult in view of the threatened high tariffs by the USA on Chinese goods.

As per IMF projections, global headline inflation is to decline to 4.2% in 2025 and 3.5% in 2026.

IBC: Due to inordinate delays and recovery at low percentage (15-20%), banks are showing reluctance to tap the IBC channel for recoveries. The value of an enterprise has been found to erode. It is essential to restructure and settle debt by lenders taking into consideration the external factors on which borrowers have very little control. In the year 2023-24, the number of cases was 1,004 and that of the amount involved was Rs. 1,63,943 cr with the amount recovery of Rs. 46,340 cr which is only about 28%.

Conclusion: Entrepreneurs are facing complications in the process of setting up small, medium and large enterprises/businesses. Policy complications, stringent rules and regulations should not stand in the process of manufacturing and export. The upcoming union budget should aim to provide the much needed simplifications and incentives to help these enterprises take off. Entrepreneurs even having the animal spirit for risk taking are in the sphere of reducing their debts in view of fear psychosis of not getting adequate support to re- structure the debt and moratorium period in the event of any external circumstances. Even Tata Steel is not interested in expansion by taking over debts. All the entrepreneurs, even the big ones, are on the sphere of reducing debts by not making any capital investment or diluting the share capital. Slowdown of private consumption has also been noticed in the rural as well as urban areas due to inflation, not having commensurate income, less tax relief and GST charges. Tax benefit for home loans has remained unchanged for the last several years. The economy needs a stimulus with physical consolidation. Government needs to boost capex and cut down on unproductive expenses.