IntroductionThe central government has reaffirmed its commitment to strengthening macroeconomic stability by focusing on quality spending, expanding social security for vulnerable populations, and achieving fiscal discipline. These objectives, outlined in the Finance Ministry's half-yearly review and the Budget 2024-25, are central to India’s economic roadmap. Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery">Sovrenn Discovery.</a>A Targeted Approach to Fiscal Deficit ReductionThe Centre aims to bring the fiscal deficit to 4.5% of GDP by FY 2025-26, adhering to the fiscal consolidation path announced in the FY 2021-22 Budget. The fiscal deficit for FY 2024-25 was estimated at ₹16.13 lakh crore, representing 4.9% of GDP. By the first half of FY25, the fiscal deficit stood at ₹4.75 lakh crore, or 29.4% of the Budget Estimate (BE).This reduction strategy relies on a balanced mix of market borrowings (₹11.13 lakh crore) and alternative sources like the National Small Savings Fund (NSSF) and external debt.Boosting Capital Expenditure for Sustainable GrowthCapital expenditure remains a cornerstone of the government’s strategy, with an effective Capex target of ₹15.02 lakh crore for FY 2024-25. This focus on infrastructure development is designed to stimulate long-term growth and offset global economic uncertainties caused by geopolitical tensions in Europe and the Middle East.In the first half of FY25, the government utilized ₹21.11 lakh crore, accounting for 43.8% of the total estimated expenditure of ₹48.21 lakh crore. Of this, ₹11.11 lakh crore was allocated for capital investments, emphasizing the importance of building national assets.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>nSocial Security and Quality Spending: A Dual FocusThe government is equally committed to improving public welfare. According to the Finance Ministry’s economic review, initiatives are underway to expand the social security net for underprivileged sections of society. This includes targeted spending on healthcare, education, and rural development, ensuring that economic growth translates to improved living standards.Tax Revenue Trends and Fiscal StabilityThe gross tax revenue (GTR) for FY 2024-25 was projected at ₹38.40 lakh crore, with a tax-GDP ratio of 11.8%. Net tax revenue for the Centre stood at ₹25.83 lakh crore, complemented by non-tax revenue of ₹5.46 lakh crore.Challenges AheadDespite progress, risks to economic growth persist. These include global inflationary pressures, volatile energy prices, and potential slowdowns in key export markets. Addressing these challenges will require a delicate balance between fiscal prudence and growth-centric policies.Looking Forward: Budget 2025-26Finance Minister Nirmala Sitharaman is expected to present the Union Budget on February 1, 2025, which will outline measures to further India’s fiscal and economic goals. As the government navigates these priorities, its focus on quality spending and fiscal discipline will be instrumental in sustaining India’s economic momentum.India’s fiscal strategy is not just about numbers—it’s about ensuring growth with stability, creating opportunities, and building a resilient economy for the future.&nbsp;Also Read: <a href="https://www.sovrenn.com/knowledge/rba-navigates-inflation-risks-confidence-grows-but-uncertainty-remains"><span style="background-color:rgb(255,255,255);color:rgb(32,56,94);font-family:-apple-system, &quot;system-ui&quot;, &quot;Segoe UI&quot;, Roboto, Oxygen, Ubuntu, Cantarell, &quot;Fira Sans&quot;, &quot;Droid Sans&quot;, &quot;Helvetica Neue&quot;, sans-serif;">RBA Navigates Inflation Risks: Confidence Grows, but Uncertainty Remains</a>

The central government has reaffirmed its commitment to strengthening macroeconomic stability by focusing on quality spending, expanding social security for vulnerable populations, and achieving fiscal discipline. These objectives, outlined in the Finance Ministry's half-yearly review and the Budget 2024-25, are central to India’s economic roadmap.

Government’s Fiscal Focus: Prioritizing Quality Spending and Fiscal Discipline

<h2>Confidence in the RBA Grows as Inflation Risks Keep Surprising</h2>The Reserve Bank of Australia (RBA) has grown increasingly confident that inflation is moving sustainably toward its target. However, minutes from the December meeting indicate that it remains too early to declare victory. Mixed signals from consumption trends and a tight labor market continue to pose challenges for policymakers. Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery">Sovrenn Discovery.</a><h3>Balancing Confidence With Caution</h3>In its December 9-10 meeting, the RBA board highlighted a cautious approach. While maintaining the cash rate at 4.35%, the board discussed scenarios where future policy could either ease to boost growth or stay restrictive to curb inflation. Both outcomes were deemed plausible, emphasizing the delicate balance between economic risks and opportunities.<h3>The Path Ahead: February's Key Meeting</h3>The next pivotal moment for the RBA is expected at the February 17-18 meeting. By then, additional data on jobs, inflation, and consumption will inform the board's decision. Traders are already pricing in a 67% chance of a rate cut in February, with two reductions fully priced by July.The central bank's current outlook anticipates the unemployment rate rising to 4.3% in December, peaking at 4.5% in 2025. Inflation, measured by the trimmed mean, is projected to finish 2024 at 3.4% and return to the target band of 2-3% by mid-2025. Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Global Context: RBA's Unique Position</h3>Australia remains a global outlier, as most developed economies, including the U.S. Federal Reserve, have already eased monetary policy substantially. Despite global reductions, the RBA noted that Australian monetary policy might be less restrictive compared to other economies, raising questions about its impact on inflation and growth.<h3>Challenges in Consumption and Labor Markets</h3>The minutes underscore mixed economic outcomes. While consumer sentiment remains in pessimistic territory and business confidence has soured, the unemployment rate unexpectedly declined to 3.9%. This strong labor market could frustrate efforts to reduce core inflation.“Members were alert to the risk that the unemployment rate could increase more than expected if labor demand in the non-market sector were to slow abruptly,” the minutes warned.<h3>Policy Implications: A Waiting Game</h3>The RBA's cautious stance reflects the uncertain impact of its policy settings, particularly as consumption patterns and labor market dynamics remain unpredictable. With inflation risks easing but economic vulnerabilities still present, February's meeting will be closely watched for any shift in the policy narrative.Also Read: <a href="https://www.sovrenn.com/knowledge/india-s-gdp-outlook-2024-25-balancing-growth-and-challenges">India’s GDP Outlook 2024-25: Balancing Growth and Challenges</a>

The Reserve Bank of Australia (RBA) grows confident in inflation nearing its target but remains cautious as December meeting minutes reveal lingering concerns. Mixed signals from consumption trends and a tight labor market challenge policymakers in achieving sustained economic stability.

RBA Navigates Inflation Risks: Confidence Grows, but Uncertainty Remains

<h2>2024-25 Forecast: India's Quest for Growth Amidst Tough Challenges</h2>India’s economic growth remains a focal point for global observers, with projections for FY 2024-25 reflecting both optimism and caution. While HDFC Securities anticipates GDP growth of 6.4%, challenges such as urban demand slowdown and delayed private capital expenditure (capex) weigh on the outlook. This comes amid the Reserve Bank of India’s (RBI) recent downward revision of GDP growth to 6.6% from 7.2%.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery">Sovrenn Discovery.</a><h3>The Slowdown in Quarterly Growth</h3>The July-September quarter of FY 2024-25 witnessed GDP growth of just 5.4% in real terms, a marked decline from the RBI’s projected 7%. This underperformance highlights the economy's vulnerability to inflationary pressures and external headwinds.<h3>Rural Revival: A Beacon of Hope</h3>Rural consumption emerges as a critical growth driver, buoyed by a strong monsoon, healthy kharif crop output, and robust reservoir levels. Indicators like reduced demand for MNREGA reflect improving labor market conditions. This rural resurgence stands in stark contrast to urban consumption trends, which face hurdles due to persistent inflation and constrained credit availability.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Urban Consumption: The Strain of Inflation</h3>Urban demand continues to falter as inflation curtails the purchasing power of lower-income households. Staples are witnessing slower demand, even as high-ticket discretionary spending remains relatively robust. Restrictions on unsecured retail lending have further impacted consumption, particularly in e-commerce and electronics.<h3>Muted Capex: A Temporary Setback?</h3>The government’s capital expenditure in the first half of FY 2024-25 has been subdued, but a stronger push is expected in the latter half. HDFC Securities projects investments in sectors like BFSI, cement, IT, and energy to accelerate growth, setting the stage for an estimated 6.7% GDP growth in FY 2025-26.<h3>India’s Global Advantage</h3>Despite domestic challenges, India is poised to remain an outlier in global GDP growth. As noted by HDFC Securities MD and CEO Dhiraj Relli, growth will likely be volume-driven, supported by strong performance in key sectors. This positions India as a beacon of resilience amid a slowing global economy.<h3>Historical Strengths and Future Prospects</h3>India’s consistent growth in recent years underscores its economic potential. GDP surged by 8.2% in FY 2023-24, following growth of 7.2% in FY 2022-23 and 8.7% in FY 2021-22. While the pace is expected to moderate, the economy’s long-term trajectory remains robust.Conclusion: Navigating a Complex LandscapeIndia’s GDP outlook for 2024-25 paints a picture of cautious optimism. Rural demand, government spending, and strategic investments provide much-needed support, but urban demand challenges and sluggish capex pose significant risks. Achieving sustained growth will require targeted policy interventions and a balance between consumption and investment. Also Read:<a href="https://www.sovrenn.com/knowledge/rbi-flags-concerns-over-state-budgets-a-call-for-fiscal-prudence"> RBI Flags Concerns Over State Budgets: A Call for Fiscal Prudence</a>

India's economic growth for FY 2024-25 shows mixed outlooks, with HDFC Securities projecting 6.4% GDP growth amid challenges like urban demand slowdown and delayed capex. The Reserve Bank of India has revised its GDP forecast to 6.6%, down from 7.2%, reflecting cautious optimism.

India’s GDP Outlook 2024-25: Balancing Growth and Challenges

<h2>Introduction: Balancing Growth and Fiscal Discipline</h2>The Reserve Bank of India (RBI) has raised alarms about the financial strategies of several state governments, particularly their allocation of funds towards subsidies and welfare schemes.&nbsp;Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery">Sovrenn Discovery.</a><h3>Subsidy Outlay: A Growing Concern</h3>State governments have announced various welfare measures in their budgets for 2024-25, including farm loan waivers, free electricity, transport allowances, and monetary assistance programs. While these initiatives aim to address immediate socio-economic needs, the RBI cautions that such spending risks crowding out investments in critical social and economic infrastructure.<h3>Tax Revenue Efficiency: A Positive Shift</h3>States have shown improved efficiency in tax collection, with the post-pandemic average tax buoyancy rising to 1.4 during FY21-25, compared to 0.86 in the pre-pandemic period (FY13-FY20). A buoyancy rate above 1% indicates revenue growth outpacing nominal GDP growth, enabling states to allocate more funds towards productive asset creation.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Capital Expenditure: Driving Growth Amid Fiscal Challenges</h3>States have earmarked ₹9.2 trillion for capital outlay in FY25, equating to 2.8% of GDP, compared to ₹7.6 trillion (2.6% of GDP) in FY24. This increase aligns with the Centre's push for infrastructure development as a key driver of economic growth. Despite this, the gross fiscal deficit of states is projected at 3.2% of GDP in FY25, up slightly from 2.8% in FY24.The central government’s support through grants has also played a significant role, with an effective capex allocation of ₹15 lakh crore this year.<h3>Debt and Fiscal Deficits: Mixed Performance Across States</h3>The fiscal health of states varies significantly. Smaller states like Arunachal Pradesh, Himachal Pradesh, Sikkim, and Tripura are grappling with high fiscal deficits, while larger economies such as Gujarat and Maharashtra have budgeted lower deficits relative to GDP.The overall debt-to-GDP ratio for states remains at 28.5% as of March 2024, unchanged from the previous year but still above the pre-pandemic level of 31% in March 2021.<h3>Subsidy Rationalization: A Path to Fiscal Sustainability</h3>The RBI has urged states to rationalize subsidies and focus on high-priority expenditures. Centrally Sponsored Schemes (CSS) could also be streamlined to create fiscal space for state-specific needs, reducing the financial burden on both state and central governments.Conclusion: The Need for a Clear Fiscal RoadmapThe RBI’s observations underline the importance of fiscal discipline as states balance welfare spending with long-term growth priorities. A credible, time-bound roadmap for debt and deficit reduction is crucial to ensuring that fiscal policies remain sustainable and development-oriented.By addressing the rising subsidy burden and optimizing spending quality, state governments can build a resilient economic foundation for the future.Also Read: <a href="https://www.sovrenn.com/knowledge/india-must-brace-for-future-trade-barriers-amid-global-policy-shift">India Must Brace for Future Trade Barriers Amid Global Policy Shift&nbsp;&nbsp;&nbsp;&nbsp;</a>

The Reserve Bank of India (RBI) raises concerns over the financial strategies of state governments, focusing on their allocation of funds for subsidies and welfare schemes. Explore the implications of these practices on fiscal stability and economic growth.

RBI Flags Concerns Over State Budgets: A Call for Fiscal Prudence

<h2>India Faces Tougher Trade Challenges: Here's What You Need to Know!</h2>India faces growing challenges as developed economies adopt non-tariff and unilateral duty-related barriers, potentially impacting exports. Director General of Foreign Trade (DGFT), Santosh Kumar Sarangi, highlighted concerns about mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and deforestation regulations. These measures, while targeting environmental goals, act as barriers for goods from developing nations.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery">Sovrenn Discovery</a><h3>Global Policies Reshaping Trade Dynamics</h3>Both the US and the European Union are implementing strategies to prioritize domestic manufacturing:<ul><li>US Policies: The&nbsp;Inflation Reduction Act&nbsp;and&nbsp;CHIPS Act&nbsp;focus on strengthening local industries, indirectly limiting market access for exporters like India.</li><li>EU Regulations: CBAM taxes carbon-intensive imports, while deforestation laws impose strict compliance on exports, creating non-tariff barriers.</li></ul>These policies often violate WTO norms, creating hurdles for exporters.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>India’s Vulnerable Sectors</h3>Sarangi noted potential risks from tariff measures, particularly reciprocal actions by major economies. While agriculture exports to the US may remain unaffected due to limited trade volumes, certain industrial and high-value exports could face significant challenges.<h3>Strategies for Resilience</h3>India must proactively address these barriers by:<ul><li>Strengthening domestic manufacturing and aligning with global environmental standards.</li><li>Diversifying export markets to reduce dependence on vulnerable regions.</li><li>Building alliances with like-minded economies to counter unfair trade practices.</li></ul>India’s preparedness to navigate evolving global trade policies will ensure it not only withstands these challenges but also capitalizes on emerging opportunities.&nbsp;Also Read: <a href="https://www.sovrenn.com/knowledge/us-federal-reserve-cuts-interest-rate-by-25-basis-points-a-key-policy-decision">US Federal Reserve Cuts Interest Rate by 25 Basis Points: A Key Policy Decision&nbsp;</a>

India confronts rising export challenges as developed economies impose non-tariff and duty-related barriers like the EU’s Carbon Border Adjustment Mechanism (CBAM) and deforestation regulations. DGFT Santosh Kumar Sarangi highlights the impact on trade and goods from developing nations.

India Must Brace for Future Trade Barriers Amid Global Policy Shift

<h2>US Fed Slashes Interest Rates: What This Means for Your Wallet</h2>The Federal Open Market Committee (FOMC), led by Chairman Jerome Powell, reduced the federal funds rate by 25 basis points (bps) to a target range of 4.25-4.50%.&nbsp;Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a><h3>1.&nbsp;US Fed Slashes Key Interest Rates by 25 Basis Points</h3>In a vote of 11-to-1, the FOMC approved the third consecutive rate cut of the year, signaling that the Fed is nearing the end of its current easing cycle. The rate reduction reflects the central bank's efforts to adjust its policy stance amid slower inflation growth. Cleveland Fed President Beth Hammack was the sole dissenter, advocating for a more cautious approach with no change to the current rate.<h3>2.&nbsp;US Fed Signals Slower Pace of Rate Cuts in 2025</h3>Looking ahead, the US Federal Reserve has tempered its rate-cut projections for 2025, indicating a more cautious approach to easing. The Fed now expects only two quarter-point rate reductions in 2025, down from previous forecasts that anticipated a more aggressive pace of cuts.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>3.&nbsp;Inflation and GDP Outlook: Fed Raises Forecasts for 2025</h3>The Fed has revised its inflation and GDP growth forecasts for 2025, signaling both cautious optimism and recognition of persistent inflationary pressures. The latest projections indicate that headline inflation will reach 2.5% in 2025, with core inflation remaining slightly elevated, at around 2.5%.<h3>4.&nbsp;Fed Adjusts RRP Facility Rate to Control Funding Markets</h3>As part of its policy adjustments, the Fed also made changes to its overnight reverse repurchase agreement (RRP) rate, lowering it by 5 basis points. The RRP facility is used to help manage short-term interest rates and maintain smooth functioning of money markets. By reducing the rate on this facility, the Fed aims to stabilize funding markets and manage liquidity effectively, while also supporting the broader objectives of its monetary policy.<h3>5.&nbsp;Market Reaction: Wall Street Reacts to Fed’s Policy Outlook</h3>Following the Fed's decision, financial markets experienced significant volatility. The outlook for fewer rate cuts in 2025 sent shockwaves through Wall Street, with the S&amp;P 500 logging its worst session on a rate decision day since 2001. The tech-heavy Nasdaq 100 suffered a 3.6% decline, while the Dow Jones Industrial Average faced its longest losing streak since 1974.Conclusion: Fed’s Cautious Approach Amid Mixed Economic SignalsThe US Federal Reserve's decision to cut interest rates by 25 bps in December 2024 marks a critical juncture in its monetary policy. While inflation has eased, it remains above the Fed's long-term target, prompting the central bank to adopt a more measured approach moving forward. The market's response underscores the tension between inflation management and growth prospects, with the Fed's cautious outlook for 2025 signaling that the easing cycle may not proceed as quickly as initially expected.As we approach 2025, all eyes will be on the Fed's next moves, especially in light of evolving economic data and the broader global economic environment.Also Read: <a href="https://www.sovrenn.com/knowledge/india-s-trade-deficit-hits-record-high-amid-surging-imports-and-falling-exports">India's Trade Deficit Hits Record High Amid Surging Imports and Falling Exports</a>

The Federal Open Market Committee (FOMC), led by Chairman Jerome Powell, reduced the federal funds rate by 25 basis points (bps) to a target range of 4.25-4.50%. 

US Federal Reserve Cuts Interest Rate by 25 Basis Points: A Key Policy Decision

India’s trade deficit soared to an all-time high of&nbsp;$37.84 billion in November 2024, compared to&nbsp;$21.31 billion&nbsp;in November 2023. This widening gap between imports and exports raises concerns about India’s economic health amid slowing growth, high inflation, and currency pressures.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a><h2>Key Drivers: Gold and Petroleum Imports</h2>The sharp rise in imports can largely be attributed to a&nbsp;fourfold jump in gold imports, which surged to&nbsp;$14.86 billion in November 2024&nbsp;from&nbsp;$3.44 billion&nbsp;in the same month last year. The demand spike was primarily driven by festive and marriage-season purchases, as gold prices declined slightly month-on-month.Crude oil imports also rose&nbsp;7% year-on-year, further adding to the import bill. Experts attribute this to global price fluctuations, which continue to exert pressure on India’s trade balance.<h3>Export Decline and Service Sector Resilience</h3>While imports grew&nbsp;27% year-on-year, merchandise exports fell&nbsp;4.9%&nbsp;to&nbsp;$32.11 billion&nbsp;in November, down from&nbsp;$33.75 billion&nbsp;a year earlier. Sluggish export realizations of petroleum products, a key export category, contributed significantly to this decline.On the brighter side, services exports performed strongly, reaching a record surplus of&nbsp;$18 billion&nbsp;in November 2024.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Economic Impact and Government Outlook</h3>The record trade deficit has raised concerns about India’s&nbsp;current account deficit (CAD), which could climb to&nbsp;1.3-1.5% of GDP&nbsp;by the fiscal year-end. However, government officials remain optimistic. Commerce Secretary Sunil Barthwal emphasized the steady growth in&nbsp;non-petroleum exports, which rose&nbsp;7.4%&nbsp;to&nbsp;$28.4 billion&nbsp;in November, reflecting positive industrial momentum.<h3>A Balanced View: The Path Ahead</h3>While temporary factors like gold imports and falling petroleum prices have skewed the November trade figures, experts believe these anomalies will normalize in the coming months. However, to address the widening trade deficit sustainably, India must focus on enhancing export competitiveness, reducing import dependency, and leveraging its strong service sector growth.ConclusionIndia’s trade deficit may appear alarming, but the resilience of services exports and growing domestic demand offer a silver lining. Strategic policy reforms aimed at boosting manufacturing, simplifying trade regulations, and strengthening global trade relationships will be key to narrowing the deficit and sustaining economic growth in the long run.Also Read: <a href="https://www.sovrenn.com/knowledge/india-should-do-more-to-tax-its-super-rich-a-call-for-equitable-growth">India Should Do More to Tax Its Super-Rich: A Call for Equitable Growth</a>

India's trade deficit hit a record high of $37.84 billion in November 2024, up from $21.31 billion in 2023. The widening gap raises concerns about the nation's economic health amid slowing growth and inflation.

India's Trade Deficit Hits Record High Amid Surging Imports and Falling Exports

<h2>The Rising Tide of Inequality in India</h2>India’s wealth distribution has reached alarming levels of disparity. The richest 1% of India’s population now controls 22.6% of the national income and 40.1% of the nation’s total wealth, surpassing inequality levels in countries like the United States and Brazil.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a><h3>What Could Wealth Taxes Achieve?</h3>Piketty’s proposal offers a clear roadmap for India to increase revenue without burdening the middle class. By introducing a 2% annual wealth tax on individuals with assets over ₹100 million ($1.18 million) and a 33% inheritance tax on properties exceeding the same threshold, India could generate revenue worth 2.73% of its GDP annually.<h3>Historical Context: Why Was the Wealth Tax Abolished?</h3>India abolished its wealth tax in 2015, citing inefficiencies in administration and low revenue collection. However, the situation has changed. With advancements in digital tax monitoring and data analytics, the argument against taxing wealth is no longer valid. Instead, robust systems can now be deployed to ensure compliance and transparency.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>The Global Consensus on Taxing the Rich</h3>The G20’s recent commitment to improve the taxation of large fortunes underscores a global recognition of the need to curb wealth concentration. Many developed nations, including France and Germany, levy progressive inheritance taxes and wealth taxes. India’s refusal to implement similar measures keeps it at odds with this international trend.<h3>Counterarguments: The Fear of Capital Flight</h3>Critics, including India’s Chief Economic Adviser V. Anantha Nageswaran, warn that higher taxes could lead to capital flight. However, this fear is not supported by substantial evidence. Studies from countries with progressive tax systems reveal that carefully designed wealth taxes do not necessarily drive investors away but instead encourage reinvestment in productive avenues.<h3>Why Now? The Ethical and Economic Imperative</h3>India’s economy has witnessed a sharp increase in the wealth of its billionaires, who saw their cumulative assets grow by $300 billion in 2022-23, largely fueled by stock market gains. Meanwhile, the middle and lower-income groups continue to struggle with inflation and stagnant wages. Failing to tax the super-rich in this context is not just an economic oversight but an ethical failure.<h3>A Balanced Approach for Equitable Growth</h3>For India to remain a land of opportunity, it must bridge its wealth divide. A targeted wealth tax that spares small landholders and middle-class savers—as suggested by Finance Minister Nirmala Sitharaman—could strike the right balance between revenue generation and fairness.ConclusionIndia’s high levels of inequality demand decisive action. Taxing the super-rich is not about penalizing wealth but fostering an equitable society. As Thomas Piketty aptly stated, such measures are vital for sustainable economic growth. By taking inspiration from global best practices and implementing progressive wealth taxes, India can create a more inclusive future while ensuring its economic stability.&nbsp;Also Read:<a href="https://www.sovrenn.com/knowledge/india-s-economic-resilience-piyush-goyal-s-optimism-amid-challenges"> India’s Economic Resilience: Piyush Goyal’s Optimism Amid Challenges&nbsp;</a>

India's wealth disparity has reached alarming levels, with the top 1% controlling 22.6% of national income and 40.1% of total wealth, surpassing inequality in countries like the US and Brazil.

India Should Do More to Tax Its Super-Rich: A Call for Equitable Growth

<h2>Inflation Eases, Opening Room for Rate Cuts</h2>India’s retail inflation moderated to 5.48% YoY in November, driven by easing food prices, staying within the Reserve Bank of India’s (RBI) tolerance band. December inflation is projected to range between 5.3% and 5.4%, with FY25 inflation estimates at 4.8%–4.9%, gradually aligning with the RBI’s 4% target by FY26. This trend has fueled expectations of a rate-cut cycle to support economic growth, with analysts eyeing February 2025 as a pivotal policy meetingFinding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h3>February 2025: A Window for Easing</h3>Madhavi Arora of Emkay Global highlighted limited scope for deep rate cuts due to global uncertainties and mounting FX pressures. She also suggested unconventional easing, such as relaxing regulatory lending norms, to boost credit growth. Hitesh Suvarna of JM Financial expects a shallow rate-cut cycle of 50–75 basis points, contingent on continued inflation moderation and stable global dynamics.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Global and Domestic Context</h3>The US Federal Reserve has already reduced rates by 75 basis points in 2024 and is expected to cut further. Domestically, the RBI’s reduction of the Cash Reserve Ratio (CRR) by 50 basis points in December 2024 signals readiness for a rate cut. Changes in the RBI’s leadership, including a new Governor, Sanjay Malhotra, and three new external MPC members, may also influence policy direction.<h3>Fiscal Priorities and Challenges</h3>Economist Radhika Rao of DBS Bank predicts inflation to stabilize in the 4%–5% range and anticipates a 25-basis-point rate cut in February, with cumulative reductions of 75 basis points. However, she stressed the importance of fiscal consolidation in the upcoming FY26 Budget. Currency stability and global market dynamics, particularly a strengthening US dollar, remain key challenges for the RBI’s policy decisions.OutlookFebruary 2025 is likely to mark the start of a cautious rate-cut cycle, balancing growth imperatives with external and fiscal challenges. The RBI’s approach will be shaped by domestic inflation trends and global economic developments.&nbsp;Also Read: <a href="https://www.sovrenn.com/knowledge/india-s-economic-resilience-piyush-goyal-s-optimism-amid-challenges">India’s Economic Resilience: Piyush Goyal’s Optimism Amid Challenges</a>

India's retail inflation eased to 5.48% YoY in November, driven by lower food prices, staying within the RBI's tolerance band. December inflation is projected at 5.3%-5.4%, with FY25 estimates at 4.8%-4.9%, aligning with RBI’s 4% target by FY26.

Rate Cuts on the Horizon: A Balancing Act for RBI

Union Commerce and Industry Minister Piyush Goyal expressed confidence in India’s economic recovery, emphasizing that the nation will remain the world’s fastest-growing major economy by the fiscal year-end. Speaking at the Times Network’s India Economic Conclave, he addressed concerns over the recent GDP slowdown while outlining the government’s commitment to structural reforms to sustain long-term growth.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h2>Q2 Slowdown: A Temporary Lag</h2>India’s GDP growth slowed to 5.4% in the September quarter, marking a near two-year low, primarily due to weak manufacturing and mining performance. This was a sharp drop from the 8.1% growth recorded in the same period last year. Goyal attributed the dip to election-related delays in policymaking and infrastructure spending, which created a “lag effect.”Despite the slowdown, India retained its status as the fastest-growing major economy, surpassing China’s 4.6% growth for the quarter. Analysts point to India’s robust services sector and recovering rural demand as key drivers of resilience.<h3>Signs of Recovery in Q3</h3>Early indicators for the third quarter suggest a rebound. Festive spending, increased rural growth, and renewed banking activity are expected to drive stronger performance. Infrastructure projects, delayed in earlier quarters, are now gaining traction. These factors, Goyal said, position India for a recovery by the fiscal year-end.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Structural Reforms for Sustained Growth</h3>Goyal highlighted key reforms, including the&nbsp;One Nation, One Election Bill, aimed at minimizing election-related disruptions, and the&nbsp;Waqf Bill, designed to ensure fairness in policymaking. These measures, he argued, provide a stable foundation for India’s economic growth amid global challenges.<h3>Navigating Global Uncertainties</h3>India’s economy faces external pressures such as supply-chain disruptions from the Red Sea crisis. However, proactive policies and a diversified economic base have mitigated their impact, showcasing India’s adaptability.ConclusionDespite a temporary slowdown, Goyal’s optimism reflects the government’s confidence in India’s fundamentals. Structural reforms, rural demand recovery, and infrastructure investments position the country for strong growth. As the fastest-growing major economy, India’s resilience and adaptability continue to inspire confidence on the global stage.Also Read: <a href="https://www.sovrenn.com/knowledge/sitharaman-flags-inflation-and-geopolitics-as-global-challenges">Sitharaman Flags Inflation and Geopolitics as Global Challenges&nbsp;</a>

Union Minister Piyush Goyal expresses confidence in India's economic recovery, assuring the nation will stay the fastest-growing major economy. He addresses GDP slowdown concerns and highlights the government's focus on structural reforms for long-term growth.

India’s Economic Resilience: Piyush Goyal’s Optimism Amid Challenges

Finance Minister Nirmala Sitharaman has identified inflation and geopolitical tensions as major hurdles to global economic stability, emphasizing the need for unified action. Speaking at the CII Global Economic Policy Forum, she described inflation as a borderless challenge that requires coordinated efforts across nations.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;“Inflation globally is a big challenge. It doesn’t respect borders and is so contagious that no country’s efforts today are entirely successful,” she said. India’s retail inflation hit 6.21% in October, a 14-month high, surpassing the Reserve Bank of India’s target range of 2-6%. Food inflation, accounting for nearly half of the consumption basket, climbed to 10.87%, straining household budgets.<h2>Geopolitical Tensions Disrupt Supply Chains</h2>Sitharaman linked inflationary pressures to global supply chain disruptions caused by conflicts such as the Russia-Ukraine war and Israel-Palestine tensions. These crises, she noted, have destabilized economies and exacerbated inflation, particularly in energy-dependent nations. “The world tasted success in efficient supply chains, but geopolitical factors now outweigh economics,” she observed, calling for stability through balanced political and economic strategies.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Addressing Climate Challenges</h3>The Finance Minister also stressed the economic toll of climate change, highlighting the disproportionate impact on vulnerable populations. “Extreme weather events are eroding the wealth of poor people,” she said, urging action beyond promises. Sitharaman advocated for sustainable agriculture, recommending a shift from water-intensive crops to coarse grains to balance nutritional and environmental needs.<h3>A Call for Global Cooperation</h3>Sitharaman concluded with a call for collective responsibility, stating, “It is incumbent upon all of us—government, industry, and citizens—to work tirelessly to restore some normalcy.”Her remarks underscore the intertwined challenges of inflation, geopolitics, and climate change, emphasizing the urgency of global collaboration to foster economic resilience.&nbsp;Also Read:<a href="https://www.sovrenn.com/knowledge/india-s-slowdown-navigating-challenges-and-seeking-resilience"> India’s Slowdown: Navigating Challenges and Seeking Resilience</a>

Finance Minister Nirmala Sitharaman highlights inflation and geopolitical tensions as key challenges to global economic stability, calling for unified international action at the CII Global Economic Policy Forum.

Sitharaman Flags Inflation and Geopolitics as Global Challenges

<h2>A Sluggish Start to FY25</h2>India’s economic journey in FY25 began on a muted note. The Q2 GDP growth, reported at 5.4%, marked the slowest pace in nearly two years. Gross Value Added (GVA) in Q2 stood at 5.6%, a significant drop from the 7.7% recorded in the same period last year. The industry GVA, a critical measure of manufacturing output, fell to a seven-quarter low of 3.6% yoy, reflecting the adverse impact of climatic disruptions on production.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h3>Declining Investment and Consumption</h3>India's Gross Fixed Capital Formation, a proxy for investments, grew by a mere 5.4% in Q2 compared to 11.6% in the year-ago period. Private consumption growth slowed to 6% from 7.4% in Q1, signalingdampened consumer confidence and constrained purchasing power in urban markets.<h3>Silver Linings in High-Frequency Indicators</h3>Despite these challenges, certain high-frequency indicators signal potential recovery in the second half of FY25. Retail vehicle sales rose by 11.21% y/y in November, reaching 3.2 million units. Similarly, petrol consumption climbed by 8.3% y/y in October, indicating a rebound in mobility and transport activity.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>External Volatility: A Looming Risk</h3>The global economic environment continues to pose uncertainties for India. Comments from the US President-Elect regarding tariffs and de-dollarization have sparked debates on emerging market stability. While market volatility remains subdued, the rupee has faced renewed pressure, hitting record lows against the US dollar.<h3>RBI’s Balancing Act</h3>The RBI’s cautious stance is expected to continue, with a focus on maintaining adequate liquidity and managing interest rate differentials with global peers. The 10-year government bond yield is projected to remain between 6.5%-7.0%, influenced by global monetary policies.<h3>Outlook for H2 FY25 and Beyond</h3>The SBI CAPS report projects a stronger recovery in H2 FY25, supported by improving consumption patterns and stabilizing investment activity. However, external volatility, particularly in FY26, could test the resilience of India’s economy.ConclusionWhile FY25 began on a challenging note, India’s economic fundamentals remain strong. The second half of the fiscal year holds promise, provided both domestic and global headwinds are navigated judiciously. Policymakers must remain vigilant, as their decisions today will shape the trajectory of India’s growth and stability in the years to come.&nbsp;Also Read: <a href="https://www.sovrenn.com/knowledge/india-crosses-usd-1-trillion-in-fdi-inflows">India Crosses USD 1 Trillion in FDI Inflows</a>

India's FY25 economic journey starts on a slow note with Q2 GDP growth at 5.4%, the lowest in nearly two years. The industry GVA falls to a seven-quarter low of 3.6%, impacted by climatic disruptions.

India’s Slowdown: Navigating Challenges and Seeking Resilience

India has achieved a remarkable milestone, with&nbsp;FDI inflows surpassing USD 1 trillion&nbsp;from April 2000 to September 2024. This underscores the nation's standing as a stable and attractive global investment hub.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery">Sovrenn Discovery.&nbsp;</a><h2>Key Sources of Investment</h2>Mauritius led with&nbsp;25% of total FDI inflows, followed by&nbsp;Singapore (24%), and the&nbsp;United States (10%). Other notable contributors include the Netherlands (7%), Japan (6%), and the UK (5%).<h3>1- Top Contributors (2000-2024):</h3><ul><li>Mauritius: USD 177.18 billion</li><li>Singapore: USD 167.47 billion</li><li>United States: USD 67.8 billion</li></ul><h3>2- Sectors Driving Growth</h3>FDI inflows have been concentrated in:<ul><li>Services: The largest recipient, reflecting India's growing knowledge economy.</li><li>IT and Hardware: Supported by the nation's technological prowess.</li><li>Telecommunications, Trading, Construction, and Manufacturing: Key contributors to economic development.</li></ul>Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>3- FDI Trends and Policies</h3>FDI inflows from&nbsp;2014-2024&nbsp;reached&nbsp;USD 667.4 billion, marking a&nbsp;119% increase&nbsp;compared to the preceding decade. Manufacturing FDI surged by 69% during this period, driven by initiatives like&nbsp;Make in India&nbsp;and the&nbsp;PLI schemes. India’s&nbsp;liberalized FDI policies, including&nbsp;100% FDI under the automatic route&nbsp;in most sectors, have enhanced investor confidence.<h3>4- Outlook: Sustained Momentum</h3>Experts predict robust growth in FDI inflows, supported by:<ul><li>Macroeconomic Stability: Strong GDP growth and better industrial output.</li><li>Government Reforms: Improved M&amp;A regulations and enhanced infrastructure investments.</li><li>Private Equity Resurgence: Renewed interest in tech and growth-stage investments.</li></ul>ConclusionFDI remains a cornerstone of India’s economic growth, driving industrial progress and innovation. With a conducive policy environment and strong fundamentals, India is poised to attract greater foreign investments, ensuring long-term prosperity and global competitiveness&nbsp;Also Read: <a href="https://www.sovrenn.com/knowledge/gst-hike-on-tobacco-aerated-beverages-new-35-slab-proposed">GST Hike on Tobacco, Aerated Beverages: New 35% Slab Proposed</a>

India has achieved a major milestone with FDI inflows surpassing USD 1 trillion from April 2000 to September 2024, highlighting the country's status as a stable and attractive global investment hub.

India Crosses USD 1 Trillion in FDI Inflows

<h2>Key Decisions: Status Quo on Rates, CRR Cut</h2>On December 6, the RBI’s&nbsp;Monetary Policy Committee (MPC)&nbsp;kept the&nbsp;repo rate unchanged at 6.5%&nbsp;for the eleventh consecutive time but cut the&nbsp;Cash Reserve Ratio (CRR) by 50 basis points to 4%.&nbsp;This move, aimed at injecting liquidity, could release an estimated&nbsp;₹1.1-1.2 lakh crore&nbsp;into the banking system. The MPC maintained a&nbsp;'Neutral' policy stance, reflecting caution amid rising inflation and global uncertainties. RBI Governor Shaktikanta Das emphasized balancing inflation control with economic growth.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h3>Growth Slows, Inflation Rises</h3>The RBI revised its&nbsp;GDP growth forecast for FY25 downward to 6.6%&nbsp;(from 7.2%) and increased its inflation projection to&nbsp;4.8%&nbsp;(from 4.5%). The central bank stressed vigilance, citing volatile global conditions and domestic inflationary pressures.<h3>What Experts Say</h3>1- Liquidity and Rate Cuts:<ul><li>Dhawal Dalal, Edelweiss Mutual Fund: Predicts the first&nbsp;rate cut in February 2025, contingent on easing food inflation.</li><li>Anil Rego, Right Horizons PMS: Expects credit-sensitive sectors like auto and real estate to benefit from enhanced liquidity.</li></ul>Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n&nbsp;2- Economic Balancing Act:<ul><li>Mohit Batra, Markets Mojo: Sees rate cuts post-Union Budget 2025 as the government and RBI address growth without spurring inflation.</li></ul>3- Implications for Markets and SectorsThe&nbsp;CRR cut&nbsp;is expected to boost banking liquidity, improve net interest margins, and drive credit growth. Sectors such as&nbsp;real estate and automobiles&nbsp;are poised to gain. However, experts agree that durable inflation control remains critical for sustained economic momentum.Outlook: February 2025 in FocusWhile the RBI has set the stage for rate cuts, the timeline depends on inflation easing and global stability. As Union Budget 2025 approaches, fiscal and monetary alignment will be key to addressing India’s growth and consumption challenges.The cautious optimism reflected in the RBI’s balanced approach signals stability amid economic complexities, with February 2025 emerging as a potential turning point for monetary easing.Also Read: <a href="https://www.sovrenn.com/knowledge/india-s-services-sector-growth-holds-firm-amid-cost-pressures">India’s Services Sector: Growth Holds Firm Amid Cost Pressures&nbsp;</a>

On December 6, the RBI's Monetary Policy Committee kept the repo rate unchanged at 6.5% for the eleventh time, while cutting the Cash Reserve Ratio (CRR) by 50 basis points to 4%, potentially injecting ₹1.1-1.2 lakh crore into the banking system.

RBI Monetary Policy Decision: Is an RBI Rate Cut on the Horizon After Union Budget 2025?

India’s services sector, a critical driver of the economy, demonstrated resilience in November despite inflationary challenges. The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&amp;P Global, slipped marginally to&nbsp;58.4&nbsp;from October’s 58.5 but remained comfortably above the&nbsp;50-point threshold&nbsp;for over 40 months, signaling continued expansion.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h2>Robust Yet Moderating Growth</h2>While total sales rose at a rate&nbsp;four points above the long-term average, new orders and output growth slowed. Export orders from Asia, Europe, Latin America, and the US grew at their fastest pace in three months, though they remained below mid-year levels.<h3>Record Job Creation Amid Confidence</h3>Employment surged, registering the&nbsp;fastest growth since the survey began in 2005, fueled by robust business confidence, growing new orders, and international demand. However, this growth came amid escalating price pressures.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Inflationary Challenges</h3>Input and output prices climbed at their steepest rates in 15 months and nearly 12 years, respectively, driven by high food and labor costs. Service providers faced sharper cost pressures compared to manufacturers, leading to higher selling prices.<h3>Economic Context</h3>India’s economy expanded&nbsp;8.2% in FY24, surpassing the Reserve Bank’s 7% projection. However, GDP growth slowed to&nbsp;6.7% in Q1 FY25&nbsp;and further to&nbsp;5.4% in Q2 FY25&nbsp;due to weakening manufacturing and urban consumption.<h3>Manufacturing and Composite Output Trends</h3>The HSBC India Manufacturing PMI eased to&nbsp;56.5&nbsp;in November, marking an 11-month low. Consequently, the Composite Output Index, combining services and manufacturing, fell to&nbsp;58.6&nbsp;from October’s 59.1, reflecting broad economic moderation.OutlookThe services sector continues to be a cornerstone of India’s economy, contributing over&nbsp;50% to GDP. Policymakers must address inflationary pressures to sustain growth while leveraging the sector’s strong demand and historic employment gains. India’s services sector stands resilient, but balancing growth with inflation management will be key to maintaining momentum in the months ahead.Also Read: <a href="https://www.sovrenn.com/knowledge/gst-hike-on-tobacco-aerated-beverages-new-35-slab-proposed">GST Hike on Tobacco, Aerated Beverages: New 35% Slab Proposed</a>

Explore India's services sector growth amidst rising cost pressures. Discover key insights into its resilience and performance in the face of challenges.

India’s Services Sector: Growth Holds Firm Amid Cost Pressures

The Group of Ministers (GoM) has recommended increasing the GST on cigarettes, tobacco, and aerated beverages from&nbsp;28% to 35%, marking the introduction of a fifth GST slab. This move aims to boost revenue and curb the consumption of demerit goods. The proposal, led by Bihar Deputy Chief Minister Samrat Chaudhary, will be presented to the GST Council on&nbsp;December 21, 2024.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h2>Proposed GST Changes</h2><h3>New 35% Slab</h3><ul><li>Applicable to&nbsp;tobacco products,&nbsp;cigarettes, and&nbsp;aerated beverages.</li></ul><h3>Apparel</h3><ul><li>Below ₹1,500: No change (5% GST).</li><li>₹1,500 to ₹10,000: Hiked to&nbsp;18%.</li><li>Above ₹10,000: Increased to&nbsp;28%.</li></ul><h3>Other Key Changes (October 2024 Proposal)</h3><ul><li>Packaged drinking water (20+ litres): Reduced to&nbsp;5%&nbsp;(from 18%).</li><li>Bicycles under ₹10,000: Reduced to&nbsp;5%&nbsp;(from 12%).</li><li>Shoes over ₹15,000: Increased to&nbsp;28%&nbsp;(from 18%).</li></ul>Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h2>Impact Analysis</h2>1. Revenue Boost: Higher tax on luxury and demerit goods is expected to enhance the government's fiscal position.2. Consumer Behavior: Likely to discourage consumption of products like tobacco and sugary beverages.3. Business Impact: Industries producing demerit goods may face reduced demand, while affordable goods manufacturers could benefit.<h2>Next Steps</h2>The GST Council will review and finalize these proposals in its December 21 meeting. The council may also retain the GoM for periodic rate rationalization, ensuring alignment with fiscal and socio-economic objectives.This hike reflects the government’s commitment to balancing revenue generation with public welfare, making it a key development in India’s tax policy landscape.Also Read: <a href="https://www.sovrenn.com/knowledge/raghuram-rajan-warns-us-public-debt-a-growing-vulnerability">Raghuram Rajan Warns: US Public Debt a Growing Vulnerability&nbsp;</a>

India's Group of Ministers proposes a GST hike on cigarettes, tobacco, and aerated beverages from 28% to 35%, introducing a fifth GST slab to boost revenue and reduce demerit goods consumption. The proposal will be presented to the GST Council on December 21, 2024.

GST Hike on Tobacco, Aerated Beverages: New 35% Slab Proposed

<h2>Factory activity at 11-month low in November amid cost pressure</h2>India's manufacturing sector showed signs of a slowdown in November, with growth easing to its weakest level in 11 months due to mounting price pressures and softer domestic demand. The latest data from the HSBC India Manufacturing Purchasing Managers Index (PMI) highlighted a nuanced picture of the sector, balancing domestic challenges with robust export demand.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h3 style="margin-left:0px;text-align:justify;">PMI Indicates Slower Expansion</h3>The HSBC India Manufacturing PMI, compiled by S&amp;P Global, dipped to 56.5 in November, down from 57.5 in October. While still above the critical 50-point threshold that signifies expansion, the reading was the lowest since September and below the preliminary flash estimate of 57.3.The PMI has consistently remained above its long-term average for nearly three years, reflecting overall resilience in India’s manufacturing landscape. However, November’s data underscores a deceleration in factory orders and production.<h3>Price Pressures Erode Domestic Demand</h3>Input costs surged at the fastest rate since July, driven by rising prices for key materials such as chemicals, cotton, leather, and rubber. Consequently, manufacturers raised output prices at the sharpest rate since October 2013, transferring increased costs of freight, labour, and raw materials to consumers.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Export Orders Offer a Silver Lining</h3>Despite domestic headwinds, export demand surged in November, with new export orders reaching a four-month high. Indian manufacturers saw increased orders from key markets, including the US, Japan, China, and Italy.<h3>Government’s Vision: A $10 Trillion Economy</h3>India’s ambition to become a $10 trillion economy within the next decade hinges heavily on a robust manufacturing sector. The government has ramped up capital expenditure to enhance infrastructure, create jobs, and invigorate industrial activity. Focus areas include semiconductors, renewable energy, and electric vehicles, crucial to the nation’s long-term economic growth.<h3>Improved Demand Outlook for 2025</h3>The Reserve Bank of India’s (RBI) maintained GDP growth projection of 7.2% for FY25 reflects confidence in the strength of rural and urban demand. Factors such as a favourable monsoon and a post-festival consumption boost are expected to sustain momentum.Survey findings revealed manufacturers replenishing input stocks at a pace above historical averages, indicating cautious optimism. Additionally, finished goods inventories, which had been in decline since 2017, stabilized in November.<h3>Navigating Challenges in 2024 and Beyond</h3>While India's manufacturing sector continues to expand, the pace of growth is tempered by intensifying price pressures and domestic competition. Business leaders remain optimistic about the future, banking on capacity expansion, marketing initiatives, and new product launches to drive demand in 2025.&nbsp;Also Read:<a href="https://www.sovrenn.com/knowledge/india-s-cooperative-sector-to-generate-over-11-crore-jobs-by-2030"> India’s Cooperative Sector to Generate Over 11 Crore Jobs by 2030&nbsp;</a>

India's manufacturing sector saw a slowdown in November, with growth hitting its weakest level in 11 months due to price pressures and weaker domestic demand, while export demand remained strong, according to HSBC's PMI data.

India’s Manufacturing Growth Slows to 11-Month Low in November Amid Price Pressures

<h2>India's cooperatives may add over 11 crore jobs by 2030</h2>India's cooperative sector is set to play a transformative role in the nation’s employment landscape, with the potential to create 5.5 crore direct jobs and 5.6 crore self-employment opportunities by 2030, according to a report by management consultancy firm Primus Partners.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h3>Steady Employment Growth</h3>The&nbsp;Indian Cooperative Movement&nbsp;report highlights the sector’s impressive progress, with jobs increasing from 1.2 million in 2007-08 to 5.8 million in 2016-17—a staggering 18.9% annual growth rate. This trend underscores the sector’s ability to provide stable employment while driving inclusive economic development.<h3>Catalyst for Self-Employment</h3>Cooperatives have also emerged as a major driver of self-employment. Opportunities doubled from 15.47 million in 2006-07 to 30 million by 2018. With an annual growth rate of 5-6%, the sector is projected to generate 56 million self-employment opportunities by 2030, creating new pathways for income generation in rural and semi-urban areas.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Boost to GDP</h3>By 2030, the cooperative sector is expected to directly contribute 3-5% to India’s GDP. Including the impact of self-employment, this contribution could exceed 10%, reinforcing the sector’s critical role in agriculture, rural industries, and small enterprises.<h3>Policy Support and Modernization</h3>The creation of the Ministry of Cooperation in 2021 marked a turning point for the sector. Focused on modernizing governance, streamlining policies, and promoting cooperative enterprises, the ministry is addressing key challenges like funding and sustainability. India’s 8.5 lakh cooperative societies, with 29 crore members, require robust policy frameworks to ensure autonomy, self-reliance, and democratic management.Looking AheadThe cooperative sector is well-positioned to be a cornerstone of India’s economic growth. With the right interventions, it could create over 11 crore employment opportunities and contribute significantly to GDP, fostering a more inclusive and sustainable economy.&nbsp;Also Read: <a href="https://www.sovrenn.com/knowledge/india-s-economic-outlook-a-cautious-optimism-amid-global-challenges">India’s Economic Outlook: A Cautious Optimism Amid Global Challenges</a>

India's cooperative sector is poised to create 5.5 crore direct jobs and 5.6 crore self-employment opportunities by 2030, transforming the nation's employment landscape, according to a report by Primus Partners.

India’s Cooperative Sector to Generate Over 11 Crore Jobs by 2030

The US economy grew at an annualized&nbsp;2.8%&nbsp;in Q3 2024, driven by robust&nbsp;consumer spending&nbsp;and steady&nbsp;business investments, according to the Bureau of Economic Analysis. Consumer spending, which increased&nbsp;3.5%, led the growth, although slightly revised down due to softer merchandise purchases. Business investments, especially in equipment, surged, with a&nbsp;39%&nbsp;rise in spending on computers and peripherals—the largest since 2020. However, nonresidential fixed investment slowed to&nbsp;3.8%, reflecting caution amid economic uncertainties. Meanwhile, trade dynamics and inventory adjustments restrained growth, subtracting&nbsp;0.57&nbsp;and&nbsp;0.11 percentage points, respectively.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery">Sovrenn Discovery.&nbsp;</a><h2>Inflation and Federal Reserve Policy</h2>The Fed’s preferred inflation metric, the&nbsp;personal consumption expenditures (PCE) price index, rose&nbsp;1.5%, while core PCE excluding food and energy climbed&nbsp;2.1%. This moderation supports the Fed’s cautious stance on interest rate cuts, balancing growth with inflation control.<h3>Labor Market Trends</h3>Initial jobless claims remained historically low, but continuing claims hit their highest level since 2021, signaling challenges for unemployed workers finding new jobs. Despite these mixed signals, the labor market remains a key pillar of economic resilience.Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>Corporate Profits and Business Sentiment</h3>After-tax corporate profits were flat, with profit margins for non-financial corporations slightly improving to&nbsp;15.6%. Optimism around President-elect Donald Trump’s fiscal agenda, including tax cuts and trade tariffs, has buoyed stock markets. However, economists warn of potential inflationary risks from expansive fiscal policies.<h3>Government Spending Boost</h3>Government spending expanded&nbsp;5%, driven by a&nbsp;14%&nbsp;rise in defense outlays. This robust increase highlights fiscal priorities that supported GDP growth despite weaker trade contributions.OutlookWhile the economy remains resilient, challenges like inflation, global trade uncertainties, and labor market shifts pose risks. Policymakers must navigate these carefully to sustain growth in the quarters ahead.&nbsp;Also Read: <a href="https://www.sovrenn.com/knowledge/india-s-growth-outlook-diverging-paths-of-s-and-p-and-fin-min">India’s Growth Outlook: Diverging Paths of S&amp;P and FinMin</a>

The US economy grew at an annualized 2.8% in Q3 2024, driven by strong consumer spending (up 3.5%) and robust business investments, particularly a 39% surge in spending on computers and peripherals, the largest since 2020.

US Q3 GDP Growth: Resilience Amid Challenges

<h2>Contrasting Views on India’s Economy</h2>S&amp;P Global Ratings has lowered India’s GDP growth projections, citing high interest rates, reduced fiscal stimulus, and global headwinds. The agency now forecasts growth at&nbsp;6.8% for FY25, easing further to&nbsp;6.7% in FY26, down from earlier estimates. It highlights challenges such as subdued export demand, weaker construction activity, and geopolitical uncertainties, particularly following the US elections.In contrast, the Ministry of Finance remains optimistic, projecting stable growth between&nbsp;6.5% and 7%&nbsp;for FY25. It points to strong agricultural output, rising domestic demand, and resilient high-frequency indicators like the&nbsp;Purchasing Managers’ Index (PMI)&nbsp;and e-way bill generation as signs of economic stability.Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at&nbsp;<a href="https://www.sovrenn.com/discovery/Large%20Order%20Receipts">Sovrenn Discovery.</a>&nbsp;<h3>1- Decoding the Downturn</h3>S&amp;P’s report attributes the slowdown to:<ul><li>High borrowing costs, curbing urban demand.</li><li>Softening fiscal stimulus&nbsp;in the post-election period.</li><li>Global trade challenges, particularly weaker export recovery amid slowing demand in developed markets.</li></ul>Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at&nbsp;<a href="https://www.sovrenn.com/education">Sovrenn Educatio</a>n<h3>2- Ministry’s Cautious Optimism</h3>The Finance Ministry highlights factors driving growth, including:<ul><li>Robust agriculture, supported by favorable monsoon and increased minimum support prices.</li><li>Stable inflation trends, with early signs of easing food prices in November.</li></ul><h3>3- Inflation and Monetary Policy</h3>India’s retail inflation hit&nbsp;6.21% in October, breaching the Reserve Bank of India’s target range for the first time in over a year. Food inflation, a key contributor, surged to&nbsp;10.87%, its highest in 15 months. While this may delay rate cuts, S&amp;P anticipates just one policy rate reduction in FY25 as inflationary pressures persist.<h3>4- Balancing Global and Domestic Dynamics</h3>India’s export growth remains a concern, but the services sector continues to show strength. The Ministry’s confidence stems from improving domestic demand and policy measures to stabilize inflation. However, S&amp;P warns that external risks, including changing US trade policies, could weigh on growth.A Tale of DivergenceThe differing estimates reflect the balancing act between global headwinds and domestic resilience. With GDP data for Q2FY25 expected soon, the numbers will provide further clarity on India’s growth trajectory. While S&amp;P’s caution underscores external challenges, the Ministry’s optimism highlights the enduring strength of India’s domestic economy.Also Read: <a href="https://www.sovrenn.com/knowledge/centre-s-capex-target-building-momentum-amid-challenges">Centre’s Capex Target: Building Momentum Amid Challenges&nbsp;</a>

S&P Global Ratings has revised India's GDP growth projections, lowering forecasts to 6.8% for FY25 and 6.7% for FY26. Factors include high interest rates, reduced fiscal stimulus, global headwinds, and challenges like subdued export demand and geopolitical uncertainties.

Date	Title
Dec 26th 24	Government’s Fiscal Focus: Prioritizing Quality Spending and Fiscal Discipline
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Dec 16th 24	RBI Monetary Policy Decision: Is an RBI Rate Cut on the Horizon After Union Budget 2025?
Dec 4th 24	India’s Services Sector: Growth Holds Firm Amid Cost Pressures
Dec 3rd 24	GST Hike on Tobacco, Aerated Beverages: New 35% Slab Proposed
Dec 3rd 24	India’s Manufacturing Growth Slows to 11-Month Low in November Amid Price Pressures
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Dec 3rd 24	US Q3 GDP Growth: Resilience Amid Challenges
Dec 2nd 24	India’s Growth Outlook: Diverging Paths of S&P and FinMin

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