Dear Readers

Wishing you all Merry Christmas and a prosperous New Year. On 25th December Christmas will be celebrated honoring the birthday of Lord Jesus Christ. The festival is celebrated globally. Lord Jesus Christ preached the world to seek first the kingdom of God and all His righteousness.

Last month during November, Guru Parab, Guru Nanak’s Birthday, was celebrated singing the virtue of God. By doing good deeds and selfless service to the society; one can realize God. Guru Nanak had preached to serve God by serving people as God pervades in all. His songs are songs of love saying about truthful service for the welfare of all with total surrender to God. His Gurbani is sung by all following Sikhism and by others as well.

Remember the Supreme Lord in prosperity and adversity. God is one. Call Him Rama, Krishna, Khudah / Allah, in whatever name.

Indian Economy: There is a GDP forecast of 6.8% from Morgan Stanley, 6.5 - 7% from Economic Survey, 6.7% from Goldman Sachs and Nomura, 7.0% from the World Bank, IMF, Deloitte India and ADB, 6.8% from S&P, 7.2% from RBI and Moody’s, and 6.5% from ICRA.

However, those predictions may undergo revision after the Q2FY25 GDP figure came at 5.4% after the 6.7% growth registered in Q1FY25. But several agencies had predicted a worsening in Q2FY25 with growth ranging between 5 – 5.8%. Reasons cited were geopolitical conditions, domestic inflation, elevated asset price, regulatory environments, disruption in supply chains and capital flows.

Chief Economic Advisor V. Anantha Nageswaran has also cited his concern with a downtrend in the economic growth. He however added that even though the Q2 GDP growth rate is disappointing, it is not alarming. Private capex has remained subdued for long. Lenders are required to restructure loans given to enterprises which are being adversely affected by external factors like global competition, supply-chain disruptions due to geopolitical conflicts, changes in regulatory policy, changes in banking regulation and global trade threats.

India’s April to October 2024 fiscal deficit alsonarrows to Rs.7.51 trillion. With over USD 650 billion in foreign exchange reserves, India’s forex reserve is one of the biggest in the world. Additionally, he stated that the expansion of the Indian economy paints a picture of strength and stability. However, the retail or CPI inflation figure for October came at 6.21%, higher than RBI’s tolerance level. Also, core inflation has slightly increased.

The dramatic 63% increase in vegetable costs was the main reason for the 13.5% and 11.6% increase respectively in primary food articles and overall food prices in October. This price rise is there every year because of unpredictable weather disrupting crop cycles reducing supply.

Bank lending slowed to 14.4% in September 2024 due to a weak deposit flow into banks, while the pace of bank lending to NBFCs slowed to 9.5%.

The trade deficit widened to USD 27.14 billion for October. The government has set for itself a fiscal deficit target of 4.9% of GDP for FY25 against 5.6% during FY24. India’s fiscal deficit for the April-October period stood at Rs. 7.51 trillion, 46.5% of the estimate for 2024-25. Government capex during the April-October period stood at Rs. 4.67 trillion compared to the Rs. 5.47 trillion in the corresponding period in FY24. Imports increased by 3.9%, while merchandise exports in October rose by an impressive 17.25%.

Cover Story: Bharat’s textile industry is renowned globally dating back to several centuries. The industry was having extremely varied hand spun and hand woven textile at one end of the spectrum and capital intensive sophisticated mills sector at the other end.

The Indian textile and apparel industry is highly diversified with products from traditional handloom and natural silk production as well. The sector is highly capital intensive giving employment to 45 million people directly and to another 60 million people indirectly through allied activities and is an important source of employment for women.

The textiles and apparel industry contributes 2.3% to the country’s GDP, 13% to industrial production and 12% to exports. Jobs in the garment sector are crucial in developing nations like Bangladesh, Vietnam, Pakistan and India. Cotton, synthetic yarn, silk, wool and natural eco-friendly products like fiber from banana leaves, water hyacinth plants, etc. are used as raw materials for the garment industry. The Indian textile and apparel industry is expected to grow at 12% CAGR to reach US$ 250 bn by 2030. India has a 4% share of the global trade in textiles.

Bangladesh, Vietnam, Taiwan and China are our biggest competitors. Many garment and textile manufacturing houses have been in deep financial crisis due to delay in payment and rejection in merchandise exported. The sector needs government and lenders’ support when affected by external factors mentioned above.

Global Economy: China and India, the world's first and third-largest economies by purchasing power parity, jointly account for 35% of global population and are projected to contribute 50% of global economic growth in 2024. The World Bank projects global GDP growth rate at 2.6% during 2024 and expects the figure to be 2.7% in 2025. Chinese economy has been in despair due to the slowdown of its property sector, low consumer confidence, global trade tension, etc. Chinese government has provided a stimulus to revive growth.

In 2025, Barclays Bank projects a muted 3% global economic growth rate, which could result in lower investment returns. The US economy is still doing well, but the Euro zone is recovering slowly, and China’s growth is predicted to decelerate. The trade policy uncertainty is likely to reduce GDP by 0.3% in the US, and in the euro region GDP by up to 0.9%.

IBC: The Insolvency and Bankruptcy Board of India, or IBBI, has suggested giving the Committee of Creditors (CoC) the authority to make final decisions regarding the panel's makeup, structure, and operating time.The panel is required to provide the board and the adjudicating body with quarterly progress reports in order to guarantee accountability and openness.

Additional new rules for company liquidations include eliminating the need for a Corporate Law Advisor (CLA) in the Public Accounts of India (PAI), requiring that all proceeds be disbursed to stakeholders upon completion of the liquidation process, and permanently establishing a CLA in the Public Accounts of India. 

During IBC proceedings, assets of the corporates have been sold to the point of 15 – 20% of the value. Lenders usually take up to 85% of haircut. It is far better to save the enterprise keeping the animal spirit of the entrepreneurs intact while giving opportunity to the promoters to get their debt re-structured affected by various external factors.

Conclusion: The Indian society today is marked by unprecedented aspirations, and the government has made these goals the cornerstone of its various programmes. It will be difficult for India to become a developed nation by 2047 because of a number of  obstacles, such as geopolitical unrest and AI-related concerns. India would need to grow at a nominal rate of 10% or a real rate of 6% to 7% in order to boost its per capita income by about seven times.

According to former RBI Governor Dr. C Rangarajan, India’s per capita income is USD 2,500, while the same for industrialised nations averages at USD 14,000. By concentrating on skill-building programmes, the government hopes to reap our demographic dividend by increasing the employability of our youth. In order to expose our huge population of youth (job seekers in service and manufacturing sectors as well as budding entrepreneurs)to the real -life business environment and to get familiarized with the skill sets expected of them in the industry, PM Modi will launch the ambitious PM Internship Scheme by which India’s top 500 companies will provide 12-month internship opportunities to 10 million young Indians over the next five years.

Dr. H.P. Kanoria

Editor