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Dear Readers
Indian Economy: While speaking for the 3rd term for his government, PM
Modiji said, India will be having faster economic growth and will be the third
largest economy in the world in the coming time. We have the target of
developing India as one of the biggest developed Nation in the next 25 years. In
1897, Swami Vivekananda Ji had said, “India is a sleeping Dragon. When it
starts to rise; no power can stop”. Indian economy during the year 2014 was at
the 10th position and has now assumed the 5th position in the world. There is a
revolution being witnessed in India as in the last 9 years around ` 34 trillion has
been invested on infrastructure. This year CAPEX will be around ` 10 trillion.
Indian government is trying to make the Indian Rupee into a global currency.
Global investment banking company Goldman Sachs reported in its research
paper that India will become the 2nd largest economy by 2075. India has taken
a giant leap in terms of digitalization of economy. According to this paper, after
China, India will be the 2nd largest economy on the back of booming services
exports, progress in innovation technology, labour force participation force, etc.
Indian population living under poverty line has declined in 15 years, as reported
by United Nations Development Programme (UNDP). 415 million people
moved out of multidimensional poverty from 2005-06 to 2019-21.
Asian Development Bank (ADB) retained economic growth forecast for the
country at 6.4% in FY24. It has lowered its projection of India’s inflation at
4.9%. Fitch forecasts growth at 6.3% while RBI at 6.5%.IMF’s India growth
forecast is at 6.1%. Most professional forecasting expects the country’s growth
between 6 – 6.5%.
The existing capacity utilization is around 70% reflecting suspended economic
activities. Hiring outlook looks positive. However, increased cost of finance,
cumbersome rules, high fuel price and electricity cost, high volume of cheap
imports, low global demand, shortage of skilled labour, high volatile passage of

certain metals and supply chain disruptions are holding back production and
expansion plans.
Corporate and MSME: India Inc. suffers severely due to economic challenges.
Investment has to pick up in a broad-based manner. Transport sector has
invested enormously post their gestation period. External factors like
disruptions in global supply chains and muted demand in developed nations
have adversely impacted the growth of merchandise exports. These, coupled
with high cost of borrowing at home, have restrained growth of MSMEs.
Banks: Indian banking sector has been stable and resilient with credit growth,
low Non-Performing Assets (NPAs) and adequate capital and liquidity buffers.
NPAs have fell down to a decade-low of 3.9%. Net NPAs are touching 1%,
lowest in 15 years.
Banks have been focusing more on retail loans with higher rates of interest.
Retail loans grew at a CAGR of 24.8% from March 2021 to March 2023 which
is nearly double the CAGR of 13.8% for gross advances during the same period.
Deposits have also increased yielding more profits to the bank. The deposit
rates are 4 – 7.20% for the various time spans, whereas interest charges to many
sectors vary between 11 – 18%.
The Net Interest Margin has increased. Lending rates increased. Private Banks
net profit rose by 37% to ` 37,683 crore y-o-y in the 1st quarter of FY24. On a
strong credit uptake, the impact is increase in lending rates while repo rate
remains the same. Deposit grew as also income encompassing application and
sanction fees, commission and revenue from treasury. Separate fund to
respective credit loss is being proposed.
Unsecured retail loans have also grown sharply. RBI nodded for new Vostro
Accounts. So far, 6 Russian Banks have opened special Vostro Accounts with
UCO Bank for special transactions in Rupee currency. Indian banking system’s
deposit aggregate stood at ` 164.7 lakh crore in FY22 and `180.44 lakh crore in
FY23. Authorities should advise the banks to reconsider extension of
moratorium to enterprises affected by the external factors like global factors,
delay in payments from government, delay in multiple approvals, etc.

Covid-19 has led to significant structural changes in the industry further leading
to portfolio rebalancing and crowding out channels at play and policies aimed at
strengthening asset quality and capital position of the banks.
Global Economy: The world’s major central banks’ meet to set monetary
policy suggests need for more caution. US inflation sharply cooled offering
fresh hope. Although US Federal Reserve increased its policy rate by another 25
basis points taking the key interest rate to as much as 5.5%, the highest level in
22 years, further Fed rate hikes will take into account readings on producer
prices, inflation expectations and retail sales.
The People’s Bank of China hinted at more policy support for the economy and
urged for patience.
IMF Chief Kristalina Georgieva said, “To protect the most vulnerable countries
and their people, we need to strengthen the global financial safety net”.
Acknowledging that support for low income countries has quadrupled in recent
years with the demand still being high, she called for the replenishment of
subsidy resources in the Poverty Reduction and Growth Trust on an urgent
basis.
BCG Global Wealth Report 2023 says that the value of global financial wealth
shrank, for the first time in 15 years in 2022, by 4% to USD 255 trillion.
India’s relation with rest of Europe is largely based on trade, but with France
the linkage is more in terms of defence cooperation, with bilateral trade
reaching a new peak at USD 13.4 billion in 2022-23. Currently, France is
India’s second largest defence supplier providing 29% of its defence imports.
India and France are trusted partners and can work together towards creating a
multi polar world.
Conclusion: India’s economic growth is certain as forecasted by Swami
Vivekananda. Some 415 million have been elevated from Below Poverty Line,
yet millions continue to live without two square meals, without proper housing
and are very impoverished. More and more of the better-off, high net worth
Indians are renouncing their citizenship in FY22 than ever before. In the year
2015 about 1,31,489 have renounced their citizenship. This figure kept steadily
increasing over the years, except for 2020 when pandemic struck, and the figure

for 2022 stood at 2,25,620. Children of wealth and job creators are also moving
and settling overseas. Apart from the rich even many middleclass families are
sending their children abroad for higher education who do not return and get
better job overseas. In the year 2015 about 1,31,489 and in the year 2022 about
2,25,620 persons have renounced their citizenship.
Cumbersome rules and regulations and approvals, more so for green projects
and enterprises are deterrents. There is no survivor when a wounded enterprise
is down with external factors.
Flow of foreign fund is fuelling equity prices. FPIs have pumped in ` 43,838
crore in May 2023 and followed it up with another ` 47,148 crore in June. Many
of the wealth and job creators are selling their stakes overseas to reduce debts.
India’s economic growth must include growth of the rural India as well in order
to make the growth more inclusive.