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Economic Times
21 hours ago
- Business
- Economic Times
A Tale of Yaay! and Hmm: Is India's growth story impressive, or disappointing — or a bit of both?
Purchasing power, stop running away! We're doing fine! India has become the world's 5th-largest economy, eclipsing former economic giants like Britain. In a matter of 1-2 years, it should be the 4th-largest, surpassing Japan. Post-pandemic economic growth is nothing to be scoffed at. India is the world's fastest-growing major economy. Over the past 3 years, a rather turbulent period for the world economy, India's GDP increased at nearly 8% definitely. Yet, is the rising euphoria on India's escalating economic ranking justified? Perhaps. But only after we acknowledge the statistical meaning of being among the world's top-ranked economies. India is the world most populous country. In per-capita terms, we are still ranked as low middle-income. In per-capita nominal GDP, India is 143rd in a ranking of 194 countries. Adjusting for purchasing power parity (PPP), it's at 125th - the rank going up a few notches, but not very much. Humbling, yes. But let's not minimise the importance of being among the top 5 economies in overall GDP. China is 69th in nominal per-capital GDP, and 72nd in PPP per-capita GDP. Yet, its influence on the world stage is not diminished by its per-capita income ranking. China's economic and strategic influence is next to none, other than the US', and sometimes even an example, while most nations have cowed into pleasing Donald Trump and accepted his trade deals, China has decided to fight - and appears to be winning. Many countries are weighing whether they should develop closer alliances with China or the US, and how the others will India's influence will also be measured by its overall ranking in GDP, and not just by its per-capita ranking. Yet, let's keep in view that gap between India and the top two world economies. The US economy is $30 tn in nominal GDP. The Chinese economy is $19 tn. India's is far, far below at $3.9 tn. Humbling, vs expectations: that's the other aspect of India's growth story. In 2018, GoI pledged that India would be a $5 tn economy by 2025. This was a target that many experts viewed with amused scepticism. Of course, progress was halted by the two years of the pandemic. But for those long waiting for the arrival of the $5 tn economy, it's still disappointing to see that we are just halfway towards the 2018-19, India's GDP was $2.8 tn. In 2024-25, it's still $1.1 tn short of the target. Now we hope to achieve that target by of leading sectors - where the world acknowledges India's influence - also brings a mixed tale of optimism and caution. India is the world's largest user of ChatGPT, and, according to a Microsoft, Bain & Company, and Internet and Mobile Association of India (IAMAI) report, home to 16% of the world's AI talent. Impressive, has the ambition to lead the world in AI and Narendra Modi says, 'AI will remain incomplete without India.' Yet, so far, India doesn't have an indigenous foundational language model, and it's 3-5 years away from developing domestic AI chips. It lags substantially behind other nations in attracting investment in by Stanford University researchers suggest that India received only $1.2 bn in private investment in AI. Of course, the US received the lion's share - $109 bn. But China received 7x than India. A recent article in The Economist asks whether India can be an AI winner. It cautiously concludes that it has a lot to do to lead the most-talked-about achievement on the manufacturing front is that Apple is now assembling 20% of its smartphones sold worldwide in India. By 2026, it is planning to assemble in India all smartphones it will sell in the US. Again, impressive. Yet, the humbling reality is that India is simply assembling the phones, with almost all of their parts being manufactured in China or Southeast Asia. Hopefully, this will change once Foxconn, Apple's top supplier, sets up production facilities in biggest propeller for future economic growth is investment in Rundefined the US 3.5% of its even-larger in sectors where India has emerged as a top global supplier, investment in R&D is pathetic. India often labels itself the 'pharmacy of the world'. Indian pharma supplies 20% of all generic drugs globally, and 40% of generic drugs used in the US. Generic drugs do not need R& the non-generic sector is substantially driven by R&D. According to the Journal of Medicinal Chemistry, in pharmaceuticals, China's R&D investment is 16x India's. India imports 70% of its drug ingredients from China. Clearly, in some sense, we are far behind China even in sectors where we have a major global presence. (Disclaimer: The opinions expressed in this column are that of the writer. 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Economic Times
2 days ago
- Health
- Economic Times
Step up to the global vaccine plate
Agencies Representational The Modi government is under pressure from the domestic vaccine industry to substantially increase its financial investment in Gavi (formerly, Global Alliance for Vaccines and Immunisation), the Vaccine Alliance, threatened by the prospect of its largest-by-far donor, the US, under Trump 2.0 pulling the plug on the PPP that helps vaccinate half the world's children against some of the deadliest diseases. Gavi is now desperately looking at large emerging economies like China and India, along with Gulf states, to make up the shortfall. For New Delhi, it's an opportunity to help local vaccine manufacturers heavily involved in Gavi, and also boost India's role as a major global current fiscal predicament is an outcome of Trump, ironically a champion of the alliance in his first term when he pledged a generous $1.1 bn for 2020-23. But in an extraordinary somersault, Trump 2.0 has suspended all external funding, including for global health, pulled out of WHO, and appears to be reneging on an earlier pledge to Gavi by the Biden administration one year ago of $1.58 bn over a period of five years. Significantly, the Trump regime's FY26 budget request to Congress and senate now being debated indicates drastic reductions in funding for global health. It does not even include funding for Gavi. To make matters worse, US secretary of health Robert F Kennedy Jr is a vaccine-sceptic who has questioned the efficacy and safety of vaccines. A vocal critic of Gavi, Kennedy has made numerous public statements and written articles expressing concerns about the organisation's transparency, accountability and impact on global health. India has had a special relationship with Gavi for long. In 2014, it was the first recipient country to become a donor to the alliance formed at the start of the new millennium with the help of core partners WHO, Unicef, World Bank, and the Bill and Melinda Gates Foundation, along with solemn pledges of support from a host of developed nations led by the US. As the Indian vaccine industry grew in leaps and bounds over the past decade, local manufacturers today represent over 50% of Gavi's vaccine procurement by volume. In terms of value, Gavi has procured 3 bn doses worth $3 bn from Indian manufacturers during 2016-24. Worried at the impact on India by Gavi's financial crisis, Indian Vaccine Manufacturers Association (IVMA) appealed to the PM, FM and health minister, among others, urging GoI to come to Gavi's aid. 'India has long benefited from Gavi's programmes, both in terms of access to life-saving vaccines and through support for the export of vaccines manufactured by Indian companies. A reduction in Gavi's funding would, therefore, adversely impact our export ecosystem, restrict market access, and challenge our shared mission to advance global health equity,' their letter said. It urged GoI to consider a 'financial contribution of $260 mn annually for the next 5 years to bridge the impending funding gap and support Gavi's continued efforts'. Such a commitment, IVMA believes, would reinforce India's global leadership in health diplomacy, and its image as a champion of multilateral institutions and 'global south-south' cooperation. This, along with sustaining the global reach of Indian vaccines that is crucial for the domestic manufacturing ecosystem. Such an increase in financial commitment to Gavi from the current $15 mn - although quadrupled in less than a decade from India's contribution when it first became a donor - may be difficult for GoI. This is particularly so when it's dealing with financial challenges posed by the burden of importing expensive military hardware and Donald Trump's tariff demands. A more realistic financial commitment expected from India would be around $100 mn. Over the past decade, one area India has gained considerable respect in is the global health space, particularly during the pandemic when the country significantly contributed with its vaccine manufacturing abilities to the worldwide effort to cope with an unparalleled health crisis. India recently became the world's third-largest economy, surpassing Japan. But the latter gives as much as $1.54 bn in total contributions and pledges, while China's contribution is $120 China poised to fill the vacuum left in global health and other development initiatives by an increasingly isolationist US, India would do well to weigh the gains of protecting a vital domestic industry, as well as promoting strategic global outreach against the financial burden. Health minister J P Nadda, a former Gavi board member, will be India's representative at the organisation's pledging summit in Brussels next week. It could be an opportune moment for India to punch its weight on the global healthcare front. The writer is an independent journalist (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Why Infy's Parekh takes home more than TCS' CEO despite being smaller Central bankers print currency for all, but why do they chase gold? Worrying cracks hiding behind MG Motor's own 'house of Windsor' Why failed small businessmen die by suicide when those behind big blow-ups bounce back? 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Mint
3 days ago
- Business
- Mint
ICICI Lombard, Go Digit to New India Assurance: Why are general insurance stocks rising? EXPLAINED
Stock Market Today: ICICI Lombard, Go Digit to New India Assurance, the general insurance stocks, gained during the intraday trades on Wednesday despite weak markets. The gains in the general insurance stocks, such as ICICI Lombard General Insurance Company Ltd., Go Digit General Insurance Ltd , The New India Assurance Company Ltd., and others, are fueled by the fact that there are speculation about the Government of India (GoI) approving the Insurance Regulatory and Development Authority of India or IRDAI's proposal to raise term plan insurance premiums. Led by these expectations, the general insurance stocks are rising today. Avinash Gorakshkar, Head of Research at Profitmart Securities, attributed the rise in general insurance stocks to the buzz about the Government of India (GoI) considering approving IRDAI's suggestion for a hike in the term plan insurance premiums by around 18%. This has triggered buying buzz in general insurance stocks, as Dalal Street believes the GoI move would fuel revenue and profit of the general insurance companies by around 4% to 5%, said Gorakshkar. However, it is completely speculative, as the GoI has yet to make any announcement, added Gorakshkar. Those who have a high risk appetite can look at ICICI Lombard shares, as it has the highest market share and business volume, said Gorakshkar. The general insurance industry posted growth of 6.5% year-on-year in May '25, as per JM Financial Institutional Securities data. The segmental data continued to signal positive signs in May 2025—fire grew 17% year-on-year to ₹ 26000 crore, engineering grew 35% to ₹ 520 crore, and health grew 9% year-on-year to ₹ 9100 crore, as per JM Financial. Despite the general insurance sector's modest like-to-like growth of 8.6%, FY26 got off to a robust start in April and May, with YoY growth of 10% plus as per JM Financial. Their preferred insurer at the current market price is ICICI Lombard, which they value at 32 times FY27 estimated earnings per share of ₹ 67 with a target price of INR 2,150 for growth of 13% and 15% in FY26 and FY27, respectively, and an RoE that is continuously over 17%. General insurance stocks, such as ICICI Lombard General Insurance Company Ltd., Go Digit General Insurance, and The New India Assurance Company, among others, gained up to 1.5% during the intraday trades on Wednesday despite weakness in the Indian stock markets. Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Business Standard
4 days ago
- Business
- Business Standard
GoI announces the sale of two dated securities for a notified amount of ₹27,000 crore
The Government of India (GoI) has announced the sale (re-issue) of (i) 6.75% GS 2029 for a notified amount of ₹15,000 crore and (ii) 7.09% GS 2054 for a notified amount of ₹12,000 crore. The auction will be conducted using multiple price method. Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (e-Kuber system) on June 20, 2025 (Friday). GoI will have the option to retain additional subscription up to ₹2,000 crore against each security.
Indian Express
5 days ago
- Business
- Indian Express
For the Indian economy, a season of mixed tidings
The fiscal health of the Centre and states is a key cog of the macro picture. This article analyses the Government of India's (GoI's) fiscal trends for FY2025 and what they augur for the current fiscal and the medium term. In absolute terms, the GoI's fiscal deficit in FY25 marginally exceeded its Revised Estimate (RE) of Rs 15.7 trillion by Rs 77 billion, as per provisional data from the CGA. This was led by a welcome overshooting in capex, with a back-ended surge seen in Q4. A less palatable miss on the receipts side was, however, largely offset by considerable savings of Rs 0.9 trillion in revenue expenditure in the fiscal. The provisional estimate of the nominal GDP for FY25 printed at around 2 per cent higher than the First Advance Estimate (FAE) for the fiscal that was used at the time of the Union budget. This meant that the fiscal deficit was contained at 4.8 per cent of GDP, in line with the target. Interestingly, the revenue deficit was curtailed at Rs 5.7 trillion lower than RE of Rs 6.1 trillion. As a proportion of GDP, this amounted to a 17-year low of 1.7 per cent vs 1.9 per cent included in the FY25 RE, a welcome development. The hits and misses under various heads in FY25 may have some bearing on the assessment of the FY26 targets. For instance, the Rs 0.6 trillion shortfall in gross tax revenues in the FY25 provisionals vis-à-vis the RE has pushed up the required growth rate for this head in FY26 to 12.5 per cent from an already optimistic 10.8 per cent earlier. However, there is an additional cushion on the receipts side of around Rs 0.4 trillion on account of the higher-than-budgeted RBI dividend transfer. Additionally, as per CGA data for April, miscellaneous capital receipts amounted to as much as 46 per cent of the FY26 BE of Rs 470 billion, as against nil in the year-ago month. This is an unusually high proportion to be recorded in the first month of the fiscal and gives us confidence that its target is unlikely to be missed. On the expenditure side, the required growth to meet the FY26 BE for revex is now higher than assumed in the budget; for capex, it is lower. For this year, both the composition and the timing of expenditure will be key. An early kick-off to spending will provide a buffer against the uncertainties wrought by the tariff issues. The upward revision in the FY25 nominal GDP number also augurs well for meeting the deficit- and debt-to-GDP targets for FY26. Despite a relatively lower projected nominal growth of 9 per cent in FY26 (ICRA's forecast) vis-à-vis the budgeted levels of 10.1 per cent, the fiscal deficit can be contained at 4.4 per cent in FY26, while accommodating a marginal fiscal slippage, given the larger base. The fiscal buffer in FY26 could be used to push up the capex, which has begun on a strong note, surging by as much as 61 per cent to Rs 1.6 trillion in April 2025, well above the average monthly required run-rate of Rs 0.9 trillion for the fiscal. Capex needs to grow by 0.9 per cent in the remaining 11 months to meet the FY2026 budget target. Given these buffers, the GoI could push up capex by at least Rs 0.8 trillion in FY2026 relative to the BE, which would take the headline figure to nearly Rs 12.0 trillion, implying a higher growth. Some major policy issues are looming on the horizon, which would affect the Centre's and states' finances, and their fiscal relations. First, the Sixteenth Finance Commission is due to submit its report later this year, and its recommendations will impact both central and state finances over the next five years. Will the recent conflict and need for geopolitical readiness lead to higher pre-emptive defence spending? If so, this may leave less money for other priorities. The Pay Commission award and its timing will affect the Centre's finances directly and some states may follow suit. Lastly, the GST compensation cess is shortly due to cease in its current avatar and how it is reimagined will impact Centre and state revenues. The writer is chief economist and head, Research & Outreach, ICRA
