India’s foreign exchanges reserves saw a sharp increase to achieve the record for the highest peak till date. Global rating agencies are also looking favourably towards India’s economic growth forecasts. The Government’s procurement portal is also contributing to growth and revenue generation.
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Foreign Exchange Reserves – India’s foreign exchange (Fx) reserves have soared in FY24 so far after declining in FY23, reflecting the Reserve Bank of India’s strategy to build them up for a rainy day. By shoring up the reserves, the central bank is trying to insulate the country from external shocks arising from volatile energy prices and supply chain disruptions, prevent excessive volatility in the Rupee, and reassure foreign investors about India’s ability to service its external debt service payment obligations.
The reserves jumped $64.182 billion since March-end 2023 till March 22, 2024 against a decline of $28.531 billion in the year ago period. As on March 22, 2024, India’s fx reserves stood at a record $642.631 billion, surpassing the previous peak of $642 billion in September 2021. The country holds the fourth largest fx reserves in the world after China, Japan and Switzerland. India’s reserves in the financial year so far (up to March 22, 2024) have been boosted mainly due to increase in foreign currency assets (up $58.572 billion) and gold holding (up $6.287 billion) during the said period. The other two components of reserves declined – special drawing rights (down $173 million) and Reserve Tranche position in the IMF (down $503 million).
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Fitch Ratings – Fitch Ratings recently raised India’s growth forecast for the next financial year (FY25) to 7 per cent from 6.5 per cent estimated earlier (reported by Asia Law Portal here), citing robust domestic demand and sustained growth in business and consumer confidence. It also expects the growth in the current financial year to clock 7.8 per cent, slightly higher than the government’s own forecast of 7.6 per cent. It also noted that consumer price inflation picked up in the last months of 2023, driven by food prices and the Reserve Bank of India (RBI) has kept its key policy rate at 6.5 per cent, and in its communication, has focused on confirming its hawkish policy stance of “withdrawal of monetary accommodation” and the need to bring inflation down towards the target.
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Moody’s – Moody’s Investor Services recently raised India’s growth forecast for 2024 calendar year to 6.8%, from 6.1% estimated earlier (reported by Asia Law Portal here), on the back of ‘stronger-than-expected’ economic data of 2023 and fading global economic headwinds. India’s real GDP expanded 8.4% year-over-year in the fourth quarter of calendar year 2023, resulting in a 7.7% growth for full-year 2023. “Capital spending by the government and strong manufacturing activity have meaningfully contributed to the robust growth outcomes in 2023,” Moody’s Investors Service said. “With global headwinds fading, the Indian economy should be able to comfortably register 6-7% real GDP growth,” it added. “India is likely to remain the fastest growing among G20 economies over our forecast horizon,” Moody’s said in its Global Macroeconomic Outlook for 2024. For 2025, the GDP growth is estimated at 6.4%. The agency said high-frequency indicators show that the economy’s strong September and December quarter momentum carried into the March quarter of 2024. “Robust goods and services tax collections, rising auto sales, consumer optimism and double-digit credit growth suggest urban consumption demand remains resilient. On the supply side, expanding manufacturing and services PMIs add to evidence of solid economic momentum,” Moody’s said.
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This year’s interim union budget budget targets capital expenditure allocation of ₹11.1 lakh crore or 3.4% of GDP in 2024-25 (fiscal year 2025), 16.9% above the 2023-24 estimates. “We expect policy continuity after the general election and continued focus on infrastructure development,” Moody’s said.
Government Procurement Portal – India’s ‘Government e-Market’ or GeM portal is the world’s third largest e-commerce platform for public procurement after Korea’s ON-line E-Procurement System (KONEPS) and Singapore’s GeBIZ with a total sales value crossing Rs. 4 lakh crore in the current financial year ending on March 31, a senior official said. Launched in August 2016, the total value of orders placed through GeM in 2018-19 was Rs.17,445 crore, which gradually went up to about Rs.1.07 lakh crore in 2021-22. In the previous financial year (FY23), the value of orders (or GMV) was a little over Rs.2.01 lakh crore. While both public and private sector companies can sell their products and services through GeM, buyers can only be government entities, including gram panchayats.
