Tag Archives: economic growth India

Nation, People

Government Extends Tenure of Chief Economic Adviser Anantha Nageswaran Until March 2027

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The Government of India has extended the tenure of Chief Economic Adviser (CEA) V. Anantha Nageswaran for an additional two years, ensuring his service until March 31, 2027. The decision was approved by the Appointments Committee of the Cabinet (ACC), which is chaired by Prime Minister Narendra Modi. According to an official order, Mr. Nageswaran’s tenure has been extended on a contract basis until the mentioned date or until further notice.

Continuity in Economic Advisory Leadership

Mr. Nageswaran initially assumed office as Chief Economic Adviser on January 28, 2022, for a three-year term. His extension comes at a crucial time when India’s economic landscape is being closely monitored amid global uncertainties and domestic economic shifts.

The CEA’s role is pivotal in formulating economic policies, providing recommendations to the government, and drafting the Economic Survey, which is presented in Parliament before the Union Budget. His continued tenure ensures policy continuity, especially at a time when India’s economy faces both growth prospects and structural challenges.

Economic Growth Outlook and Policy Implications

The extension of Mr. Nageswaran’s term follows the release of the Economic Survey 2024-25, which projected India’s GDP growth for the next financial year at 6.3-6.8%. This projection underscores a measured optimism regarding economic expansion despite global uncertainties and domestic economic moderation. The government’s advance estimates suggest the Indian economy is likely to grow at 6.4% in the current financial year.

With his expertise in macroeconomic policy and financial markets, Mr. Nageswaran is expected to continue playing a crucial role in shaping economic policies that bolster investment, employment, and fiscal management. His insights will be significant in guiding India’s economic trajectory as it navigates global inflationary pressures, trade realignments, and evolving financial regulations.

Academic and Professional Background

Before taking up the CEA role, Mr. Nageswaran had an illustrious career spanning academia, research, and financial markets. He has previously worked with Credit Suisse Group AG and Julius Baer Group and has been actively involved in policy advisory roles. Between 2019 and 2021, he served as a part-time member of the Economic Advisory Council to the Prime Minister.

Apart from his corporate experience, he has contributed significantly to academia, teaching at prestigious business schools and institutes of management in India and Singapore. He holds an MBA from the Indian Institute of Management, Ahmedabad, and earned a PhD in Finance from the University of Massachusetts in 1994, specializing in the empirical behavior of exchange rates.

Contributions to Economic Research and Policy Initiatives

Mr. Nageswaran has been instrumental in shaping research-driven policy initiatives. He co-founded the Takshashila Institution, an independent research center focusing on public policy. Additionally, he played a key role in launching India’s first impact investment fund with the Aavishkaar Group in 2001, aimed at fostering social entrepreneurship and sustainable development.

His leadership at the IFMR Graduate School of Business as Dean and his role as a Distinguished Visiting Professor of Economics at Krea University further highlight his academic contributions to economic policymaking.

Challenges and Opportunities Ahead

As CEA, Mr. Nageswaran is expected to address several economic challenges, including managing inflation, enhancing fiscal discipline, promoting digital and green economy initiatives, and strengthening India’s financial markets. His tenure extension aligns with the government’s commitment to ensuring stability in economic policymaking at a time when India is positioning itself as a global economic powerhouse.

With significant economic policy measures anticipated in the coming years, Mr. Nageswaran’s extended tenure will allow him to oversee critical economic reforms, structural adjustments, and fiscal strategies aimed at sustaining India’s growth momentum.

The decision to extend his tenure underscores the government’s confidence in his ability to navigate complex economic landscapes and provide strategic guidance that aligns with India’s long-term economic vision.

Economy

India’s GDP Growth Expected to Reach 6.6% in Q3 FY25: Steady Growth Amid Challenges

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India, one of the world’s fastest-growing major economies, continues to exhibit a strong economic trajectory, even as global factors and domestic challenges cast a shadow over its growth. According to the latest report from Bank of Baroda, India’s Gross Domestic Product (GDP) is expected to grow by 6.6% in the third quarter (Q3) of the 2024-25 fiscal year (FY25). This growth rate is lower than the 8.6% recorded in the same period of the previous fiscal year but still reflects the resilience and stability of the Indian economy. The decrease in growth rate is primarily due to high comparison base effects from the previous year, but the factors supporting the country’s economy remain strong.

Key Drivers of India’s Economic Growth in Q3 FY25

India’s economy has witnessed remarkable resilience despite the global slowdown, with growth driven by a combination of government spending, a robust services sector, and a healthy agriculture output. The government’s proactive policy measures, especially in terms of capital expenditure, continue to bolster key sectors, making sure that the economic engine keeps running even as growth moderates.

Capital Expenditure Drives Construction and Employment

One of the key highlights from the report is the surge in capital expenditure by the government, a strategic move aimed at driving infrastructure development and job creation. In Q3FY25, the capital expenditure has risen to 47.7%, up from 24.4% in the corresponding quarter of FY24. The sharp increase in government investment has resulted in an uptick in construction activities, especially in critical sectors such as highways, ports, and railways.

These infrastructure projects have played a crucial role in generating employment opportunities and improving incomes, both in urban and rural areas. This increase in infrastructure spending aligns with India’s long-term plans to boost its connectivity, logistics, and overall economic competitiveness.

Services Sector Continues to Shine

India’s services sector has always been a major contributor to GDP, and it is projected to grow at 6.9% in Q3FY25, only slightly lower than the 7.1% growth recorded in the same period of the previous fiscal year. Among the services driving this growth are trade and hospitality, which are benefiting from the surge in demand, particularly in the “experience economy.” With the pandemic-induced restrictions lifted, people are returning to travel, entertainment, and leisure activities, boosting this segment.

The financial services sector is also showing strong growth, with an expected increase of 6.5% in Q3FY25. The recovery of financial institutions and their increased lending to both businesses and individuals will likely contribute to the sector’s sustained growth. The financial sector’s continued expansion suggests that India’s economic base remains strong, despite the challenges it faces.

Agriculture Sector Shows Resilience

A standout performer in Q3FY25 is the agriculture sector, which is expected to grow by 4.5% in the third quarter, a sharp rebound from just 0.4% in Q3FY24. This growth is being supported by better foodgrain production and a strong rabi (winter) crop season. Additionally, the increase in rural demand is being reflected in the rising sales of tractors and two-wheelers, key indicators of rural prosperity.

The government’s agricultural policies, as well as favorable monsoon conditions, have played a role in enhancing agricultural output. As the country continues to focus on improving food security and enhancing rural incomes, the agriculture sector remains a vital part of India’s economic story.

Moderation in Industrial and Manufacturing Growth

While the overall economic growth remains steady, the industrial and manufacturing sectors are showing signs of moderation. This slowdown is primarily attributed to the high base effect from the previous year, which saw a significant surge in production and business activity. The industrial growth in Q3FY25 is expected to slow to 5.9%, compared to 10.2% in the previous year. Similarly, manufacturing growth is expected to decelerate to 6% from 11.5% in Q3FY24.

The slower pace of growth in these sectors can also be attributed to challenges within specific industries. Sectors such as crude oil, steel, and automobiles have faced lower corporate earnings, which have affected their overall performance. Mining growth is also expected to slow to 3%, down from 7.5% in the previous year.

Despite these setbacks, the moderation in industrial and manufacturing growth can be seen as a natural phase after a period of rapid recovery following the pandemic. With the global economy showing signs of fragility and some industries in India grappling with supply chain disruptions, these challenges are to be expected.

Risks to India’s Growth Outlook: Global Uncertainties and Geopolitical Pressures

Despite India’s economic resilience, there are several external risks that could weigh on the country’s growth outlook. The global economic environment remains uncertain, with risks arising from geopolitical tensions, trade disputes, and economic fragmentation. These global factors could potentially affect India’s growth trajectory, particularly in the trade and currency sectors.

India’s currency and trade balance are likely to feel the pressure of external global factors, and any unforeseen international disruptions could have a ripple effect on the Indian economy. For instance, shifts in global commodity prices, particularly crude oil, can affect inflation and the country’s import costs. Additionally, global supply chain disruptions have the potential to exacerbate inflationary pressures, hampering growth in key sectors.

The Road Ahead for India’s Economic Growth

India’s economic fundamentals remain strong, with a diversified economy and a growing middle class that is driving domestic consumption. As the third quarter of FY25 progresses, the Indian economy will continue to rely on government expenditure, agriculture growth, and a vibrant services sector to maintain its positive growth trajectory.

The positive outlook for rural demand, combined with government-led infrastructure development, will likely offset some of the challenges faced by manufacturing and industrial sectors. Additionally, India’s strong fiscal measures and focus on financial stability provide a buffer against external shocks.

In conclusion, India’s projected GDP growth of 6.6% in Q3 FY25 reflects a steady but moderate economic performance. The country’s growth is supported by strong domestic demand, particularly in agriculture and services, along with increased government spending on infrastructure. However, the moderation in industrial and manufacturing growth points to the challenges India faces as it navigates a post-pandemic recovery phase.

While global uncertainties, including geopolitical risks and trade disputes, may pose threats to India’s growth outlook, the country’s economic fundamentals remain robust. With the right mix of domestic policy support, infrastructure investment, and favorable global conditions, India is well-positioned to maintain its growth momentum. However, it is important to monitor both domestic and external factors closely to ensure that the economy can continue to thrive in the coming years.

Delhi, Politics, State

Budget 2025: A Strategic Move to Woo Delhi’s Middle Class Ahead of Assembly Elections

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In a significant development poised to influence the political landscape of Delhi, the Union Budget 2025-26 has introduced substantial income tax reliefs aimed at the middle class. With the Delhi Assembly elections scheduled for February 5, this fiscal maneuver by the BJP-led Central government is being viewed by many as a calculated effort to garner support from a crucial voter base.

Wooing Middle Class in Delhi Elections

On February 1, 2025, Finance Minister Nirmala Sitharaman presented the Union Budget, unveiling a series of measures designed to stimulate economic growth and provide relief to various sectors. Among the most notable announcements was the increase in the income tax exemption limit. Under the new regime, individuals earning up to ₹12 lakh annually (approximately ₹1 lakh per month) will be exempt from paying income tax. This move is anticipated to significantly boost the disposable income of middle-class families, thereby enhancing their purchasing power.

“I am now happy to announce that there will be no income tax payable up to an income of ₹12 lakh under the new regime,” stated Sitharaman during her budget speech.

Delhi, the nation’s capital, is home to approximately 40 lakh income tax payers. The enhanced tax exemption is expected to directly benefit a substantial portion of this demographic. The BJP views this fiscal relief as a strategic advantage in the upcoming Assembly elections, aiming to strengthen its appeal among middle-class voters—a segment that has historically played a pivotal role in Delhi’s electoral outcomes.

Delhi BJP president Virendra Sachdeva emphasized the significance of this announcement, stating, “This is an important announcement that will deepen the confidence of the middle class in the BJP. The income tax relief for those with an annual income of ₹12 lakh will have a significant impact on the upcoming Delhi Assembly polls.”

BJP Eyeing Middle class Votes

The BJP, which has been out of power in Delhi since 1998, is making concerted efforts to unseat the incumbent Aam Aadmi Party (AAP), led by Arvind Kejriwal. The party believes that the tax relief measures will resonate with the middle class, bolstering its electoral prospects.

Vijender Gupta, a BJP leader contesting from the Rohini constituency, remarked, “A large number of middle-class people in Delhi will directly benefit from the move, boosting their purchasing power and driving market growth. It shows the BJP cares for the needs of the middle class and is going to be supported in a big way in the elections.”

On the other hand, the AAP has been vocal about its commitment to the middle class. Prior to the budget announcement, Arvind Kejriwal released a seven-point manifesto targeting the middle class, highlighting issues such as tax burdens and the need for better public services. He has previously pointed out that while Delhiites contribute over ₹1.78 lakh crore in income tax, they receive a disproportionately small share in central allocations.

The budget’s tax relief measures have elicited mixed reactions from Delhi residents. Subham Gupta from Burari expressed optimism, stating that the announcement would benefit many middle-class families. Conversely, Surendra Arora felt that the government should have extended relief to those earning up to ₹15 lakh, noting that individuals earning slightly above ₹12 lakh might end up paying higher taxes.

Election Commission’s Directive

It’s noteworthy that the Election Commission had earlier directed the Central government to refrain from announcing any Delhi-specific schemes or initiatives in the Union Budget, citing the enforcement of the Model Code of Conduct ahead of the Assembly polls. While the income tax relief is a nationwide measure, its timing and potential impact on Delhi’s electorate have become points of discussion.

Beyond the political implications, the budget’s focus on tax relief for the middle class is part of a broader strategy to stimulate economic growth. By increasing disposable incomes, the government aims to boost consumption, which constitutes a significant portion of India’s GDP. This approach is expected to have ripple effects across various sectors, including consumer goods, real estate, and automobiles.

As Delhi approaches its Assembly elections, the Union Budget 2025-26’s provisions, particularly the income tax relief for the middle class, have added a new dimension to the political discourse. While the BJP views this move as a catalyst to regain power in the capital, the AAP continues to emphasize its track record and commitment to public welfare. The electorate’s response to these developments will be revealed when the polls open on February 5.

Business, Policy

Budget 2025: Centre Unveils New Rs 10,000 Crore Fund of Funds for Startups

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In a significant boost to India’s startup ecosystem, Finance Minister Nirmala Sitharaman announced another round of the Fund of Funds for Startups (FFS) scheme with a corpus of Rs 10,000 crore to support and accelerate the growth of emerging businesses. This initiative underscores the Indian government’s commitment to fostering innovation, entrepreneurship, and self-reliance in the country’s economy.

Government’s Renewed Push for Startups

The announcement comes at a crucial time as India continues to cement its position as a global startup hub. With over 1.5 lakh startups officially recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), the government has been consistently working towards providing adequate financial assistance and resources to these budding enterprises.

“Our focus is on ensuring that startups not only receive initial funding but also get the necessary support to scale up and thrive,” said Finance Minister Nirmala Sitharaman while addressing industry leaders.

The FFS scheme was originally introduced on January 16, 2016, as part of the Startup India Action Plan. With an initial corpus of Rs 10,000 crore, it was aimed at addressing the funding gap faced by startups at various stages—seed, early, and growth phases.

Unlike direct funding schemes, FFS operates through Alternative Investment Funds (AIFs), which then invest in eligible startups. This mechanism helps reduce dependence on foreign venture capitalists while boosting domestic investment channels. The scheme has been instrumental in nurturing homegrown venture capital (VC) firms that back Indian startups.

How the Fund of Funds Has Transformed the Startup Landscape

Over the years, FFS has played a pivotal role in fueling India’s startup ecosystem. Here’s a closer look at its impact: The scheme has unlocked crucial financial resources for startups at different growth stages, allowing them to expand and innovate. It has also reduced the ecosystem’s dependency on foriegn players. By promoting indigenous investment, the initiative has decreased reliance on foreign VC funds, leading to a more self-sufficient startup landscape. Encouraging domestic AIFs has created a strong foundation for Indian investment firms, fostering a robust financial ecosystem. Startups funded through FFS have contributed significantly to job creation and economic expansion.

The latest round of Rs 10,000 crore comes with enhanced strategies and structured investments. The DPIIT continues to act as the nodal monitoring agency, while the Small Industries Development Bank of India (SIDBI) remains the primary operating entity.

Challenges Faced by Startups and the Role of FFS

Despite India’s dynamic startup ecosystem, challenges persist. Some of the major hurdles include:

  • Funding Bottlenecks: Accessing capital beyond initial funding rounds remains a challenge.
  • Regulatory Compliance: Many startups struggle with legal and tax regulations.
  • Market Scalability: Achieving sustainable growth remains a key concern.
  • Global Competition: Indian startups face stiff competition from global tech giants.

By addressing these concerns, FFS continues to act as a catalyst, bridging the financing gap and offering the much-needed support to fledgling businesses.

Industry experts and startup founders have welcomed the government’s renewed focus on fostering entrepreneurship. Kunal Bahl, co-founder of Snapdeal, remarked, “This move will ensure that more Indian startups get access to structured funding, paving the way for stronger and more sustainable businesses.”

Similarly, venture capitalists see this as a golden opportunity for nurturing innovative businesses. “The additional corpus under FFS will encourage more private investment, leading to greater risk-taking and innovation,” noted a senior investment analyst at Sequoia India.

Impact on India’s Startup Ecosystem in 2025 and Beyond

With this new round of funding, India’s startup landscape is expected to witness: More entrepreneurs will be encouraged to register their businesses under DPIIT’s Startup India initiative. More homegrown VC firms are likely to emerge, strengthening domestic investment channels. Key sectors such as fintech, agritech, AI, and healthtech are expected to benefit significantly from this scheme. Indian startups will be better positioned to compete on a global scale.

The Rs 10,000 crore Fund of Funds for Startups is a game-changer for India’s entrepreneurial ecosystem. By ensuring better access to capital, mentorship, and market support, this initiative will further strengthen the country’s reputation as a global startup powerhouse. As more startups emerge and scale up, the economic ripple effect will be profound—leading to job creation, technological advancements, and sustained economic growth.

With this renewed push from the government, India’s startup ecosystem is set to scale new heights in innovation and self-reliance.

Travel, Policy

Union Budget 2025: Centre Unveils Ambitious Plan to Develop Top 50 Tourist Destinations in India

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In a strategic move to bolster India’s tourism sector, Finance Minister Nirmala Sitharaman unveiled a comprehensive plan to develop the country’s top 50 tourist destinations in collaboration with state governments. Announced during the Union Budget 2025-26, this initiative aims to enhance infrastructure, improve accessibility, and upgrade facilities at key tourist hotspots, making India a more attractive destination for both domestic and international travelers.

Boosting Tourism with Strategic Infrastructure Development

The government’s initiative focuses on modernizing transportation networks, enhancing visitor amenities, and implementing sustainable tourism practices across the selected sites. This includes improved road connectivity, digital information centers, sanitation facilities, and eco-friendly accommodations.

“Tourism is a major contributor to our economy, and by developing key destinations, we can generate employment opportunities, attract foreign exchange, and boost local businesses,” said Finance Minister Sitharaman while presenting the budget.

In a significant step to empower small businesses, the government has announced that Mudra loans will be extended to homestay owners. This move will enable individuals, especially in rural and semi-urban areas, to offer budget-friendly accommodation to travelers, thus strengthening the country’s hospitality sector.

The Mudra loan scheme, initially launched to promote small enterprises, will now help homestay entrepreneurs renovate, expand, and market their lodging services to cater to a growing number of tourists. This initiative is expected to encourage community participation in tourism, making it more inclusive and sustainable.

India’s Rise as a Global Medical Tourism Hub

The budget also highlighted India’s medical tourism potential, with the private sector playing a key role in its expansion. India has become a preferred destination for medical travelers due to its affordable yet world-class healthcare facilities.

According to recent industry reports, India’s medical tourism market is projected to grow significantly in the coming years, driven by advanced treatments, skilled healthcare professionals, and cost-effective procedures.

The government plans to enhance this sector by encouraging public-private partnerships (PPPs) in medical tourism. Strengthening healthcare infrastructure in major cities. Simplifying visa procedures for medical tourists and promoting specialized treatment hubs in key metropolitan areas.

Recognizing India’s rich Buddhist heritage, the government will prioritize development at sites linked to Lord Buddha’s life and teachings. Locations such as Bodh Gaya, Sarnath, Kushinagar, and Rajgir will see major upgrades in terms of amenities, preservation efforts, and promotional campaigns to attract more international pilgrims.

This move aligns with India’s broader cultural diplomacy efforts, particularly with Buddhist-majority nations such as Thailand, Japan, Sri Lanka, and Myanmar. The government aims to position India as a spiritual tourism hub, leveraging its deep-rooted Buddhist history to draw more visitors.

Beyond tourism, the budget also earmarked financial support for the Western Kosi Canal project in Bihar’s Mithilanchal region. The project, once completed, is expected to benefit over 50,000 hectares of agricultural land, significantly improving irrigation and water management in the area.

With Bihar being a primarily agrarian state, improved irrigation will lead to higher crop yields, reduced dependence on erratic monsoons, and overall rural economic upliftment. This project is part of the government’s broader mission to enhance water infrastructure and support the agricultural economy.

Economic Impact and Growth Prospects

The tourism and hospitality sector contributes nearly 10% to India’s GDP and employs millions of people across various industries. By investing in destination development, infrastructure, and small businesses, the government aims to attract more foreign tourists, increasing forex reserves,create job opportunities in local communities, boost the hospitality industry, including hotels, restaurants, and transport services.

The Union Budget 2025-26 has placed a strong emphasis on tourism, infrastructure, and rural development, signaling the government’s commitment to economic growth through strategic investments. By developing top tourist destinations, promoting medical tourism, supporting homestay businesses, and investing in irrigation projects, India is set to experience sustained growth in multiple sectors. This initiative not only strengthens India’s tourism economy but also fosters inclusive growth, benefiting both urban and rural communities alike.

As these projects unfold, India’s tourism landscape is poised for a major transformation, making it a global powerhouse in the travel and hospitality industry.