Amitabh Kant, India’s G20 Sherpa and former CEO of Niti Aayog, highlighted several positive macroeconomic indicators and forecasted that India is poised to surpass Japan and become the world’s fourth-largest economy by 2025. Currently, India ranks fifth in terms of GDP size, following the US, China, Germany, and Japan. India surpassed the UK in 2022 to attain this position. Just ten years ago, India’s GDP ranked eleventh globally. Presently, India’s GDP is estimated at approximately USD 3.7 trillion.

Some highlights of India’s journey to the top 5 economies of the world in 2024 from Fragile 5 in 2013, according to Kant, among others, record GST collection, over 8 per cent GDP growth in the past three quarters, trading in Indian currency Rupee with various countries (to be precise 27), inflation at manageable levels.

The term Fragile 5 was coined by a Morgan Stanley analyst in 2013 and refers to a set of five emerging countries, including India, whose economy was not doing well back then. The other four countries were Brazil, Indonesia, South Africa, and Turkey. Double-digit growth in the steel, cement, and automobile manufacturing sectors; global leader in digital public infrastructure, with e-transactions surging to 134 billion, accounting for 46 per cent of all global digital payments; accounts opened under Jan Dhan, Aadhaar and Mobile trinity have over Rs 2.32 lakh crore as current balance; average annual inflation between 2013-14 and 2022-23 declined to 5 per cent from 8.2 per cent between 2003-04 and 2013-14 are some other things he attributed to India’s firm growth.

Firm GDP growth forecasts, inflation at manageable levels, political stability at the central government level, and appreciable central bank monetary policy, have all contributed to painting a bright picture for the Indian economy in recent quarters. India’s GDP grew at a massive 8.4 per cent during the October-December quarter of the financial year 2023-24, and the country continued to remain the fastest-growing major economy and is poised to maintain its growth trajectory going ahead.

India is set to remain the fastest-growing among major economies in 2024, according to the latest International Monetary Fund’s World Economic Outlook. IMF, in its latest outlook, raised India’s growth projections for 2024 from 6.5 per cent to 6.8 per cent. India’s economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22, respectively.

Pakistan aims to rollover $12 billion debt from key allies and negotiate new financing from China to address its external financing gap, as disclosed by Finance Ministry insiders.

Pakistan has decided to seek a rollover of approximately $12 billion in debt from key allies like China in the upcoming fiscal year of 2024-25 to bridge a significant $23 billion gap in its external financing. The aim is to meet budget targets before the anticipated arrival of an International Monetary Fund (IMF) team to address the country’s financial challenges.

Finance Ministry insiders disclosed that Pakistan plans to rollover $5 billion from Saudi Arabia, $3 billion from the UAE, and $4 billion from China. Additionally, the estimated budget for the next fiscal year includes new financing from China, with negotiations expected to commence in mid-May ahead of the budget presentation in June.

The federal government aims to achieve budget targets prior to the IMF review mission’s arrival, instructing ministries to complete set targets before negotiations on the new loan program. The details will be provided to the IMF delegation once these targets are met. Furthermore, the budget strategy paper is set to be approved by the federal cabinet before the IMF review mission’s visit.

The Finance Ministry has initiated preparations for the budget, outlining targets for debt repayment, defense budget, and tax collections. Additionally, development and ongoing budget targets will be determined as part of the budget preparation process.

Pakistan has long grappled with meeting its external liabilities, relying on remittances, export proceeds, and foreign loans. However, exports have not kept pace with imports, and avenues for foreign aid have diminished, straining the economy and essential imports. Last year, Pakistan narrowly avoided default through a short-term loan agreement with the IMF, providing $3 billion over nine months. Now, the country seeks a fresh loan to address its economic challenges.

Remittances from Pakistani workers abroad have been a significant source of support, with the country receiving the second-highest remittances of the ongoing fiscal year at $2.8 billion in April 2024. According to the State Bank of Pakistan, remittances increased by 3.5 percent to $23.8 billion in the first 10 months of FY24 compared to the same period last year. Remittance inflows in April 2024 were primarily from Saudi Arabia, the United Arab Emirates, the United Kingdom, and the United States. These remittances peaked near $3 billion in March 2024, marking a 23-month high.

Separately, Pakistan is engaging with Chinese leadership to revive over 1800-megawatt hydropower projects and attract investment from new Chinese companies in the transmission and distribution network as part of the second phase of the China-Pakistan Economic Corridor (CPEC). A high-level delegation led by Planning Minister Ahsan Iqbal is currently in China to pursue existing investors and financial institutions and tap into more firms in the transmission and distribution network.

In his meeting, Iqbal sought China’s continued cooperation in the early implementation of hydropower projects. Both sides agreed to hold the next round of the Joint Working Group meeting on Energy soon.

In summary, Pakistan’s efforts to address its financial challenges involve seeking debt rollovers, securing new financing, and leveraging remittances from overseas workers. Additionally, the country is pursuing collaboration with China to advance key infrastructure projects under the CPEC. These measures aim to stabilize Pakistan’s economy and pave the way for sustainable growth.

Pakistan’s financial landscape reflects a complex interplay of domestic and international factors, where strategic alliances, economic policies, and global partnerships intersect to shape the nation’s economic trajectory. Amidst the ongoing challenges, the country’s leadership remains focused on addressing fiscal deficits, meeting external financing requirements, and fostering economic resilience.

The decision to seek a rollover of debt from key allies like China underscores Pakistan’s efforts to navigate its external financing gap and stabilize its economy. By engaging with strategic partners, Pakistan aims to alleviate immediate financial pressures and create a conducive environment for sustainable growth. The reliance on debt rollovers reflects the intricacies of managing external liabilities while balancing fiscal obligations and developmental priorities.

At the heart of Pakistan’s financial strategy lies the imperative to achieve budget targets and address structural imbalances before the anticipated arrival of an IMF team. The proactive approach adopted by the federal government underscores a commitment to fiscal prudence and proactive economic management. By setting clear targets and mobilizing resources, Pakistan aims to strengthen its financial position and bolster investor confidence.

The forthcoming negotiations with the IMF represent a critical juncture in Pakistan’s economic trajectory, offering an opportunity to realign policies, implement reforms, and chart a path towards sustainable development. The willingness to engage constructively with international financial institutions reflects a recognition of the importance of external support in addressing economic challenges and unlocking growth potential.

Against the backdrop of economic reforms and financial restructuring, Pakistan’s reliance on remittances emerges as a crucial lifeline, providing vital support to the economy amidst external pressures. The resilience of remittance inflows underscores the resilience of Pakistan’s diaspora community and their enduring commitment to the country’s development. By harnessing the potential of remittances, Pakistan can diversify its funding sources, reduce dependency on external loans, and promote inclusive growth.

The engagement with China under the auspices of the China-Pakistan Economic Corridor (CPEC) represents a cornerstone of Pakistan’s economic agenda, offering a transformative vision for infrastructure development, energy security, and regional connectivity. The revival of hydropower projects and investment in transmission and distribution networks signal a renewed commitment to advancing strategic initiatives that stimulate growth, create employment opportunities, and enhance energy access. The ongoing dialogue with Chinese leadership underscores the depth of the bilateral partnership and the mutual commitment to realizing shared objectives. By leveraging China’s expertise, resources, and technology, Pakistan can accelerate the pace of infrastructure development and unlock the full potential of the CPEC. The collaboration between the two countries exemplifies the principles of South-South cooperation and the potential for mutually beneficial partnerships in driving sustainable development.

As Pakistan navigates the complex terrain of economic reform and restructuring, the imperative of inclusive growth and social development remains paramount. The commitment to inclusive policies, poverty alleviation, and social protection underscores a holistic approach to economic governance that prioritizes the well-being of all citizens. By investing in human capital, social infrastructure, and equitable opportunities, Pakistan can lay the foundation for long-term prosperity and resilience.

In a nutshell, Pakistan’s economic journey reflects a multifaceted tapestry of challenges, opportunities, and strategic imperatives. By embracing a proactive approach to fiscal management, engaging constructively with international partners, and harnessing the potential of remittances and strategic alliances, Pakistan can chart a course towards sustainable development and prosperity. The path ahead may be fraught with obstacles, but with resilience, determination, and strategic vision, Pakistan can overcome challenges and realize its full potential on the global stage.

India’s factory output, measured by the Index of Industrial Production (IIP), in March 2024 posted 4.9 per cent year-on-year growth, moderating from 5.6 per cent in February 2024 and ending fiscal 2024 on a sober note. The IIP growth was led by a robust expansion in electricity even as manufacturing growth rose to a five-month high, albeit on a very low base.

The growth rate of the mining sector for the month of March 2024 over March 2023 was 1.2 per cent, manufacturing grew 5.2 per cent yoy while the growth rate of electricity for the month of March 2024 was 8.6 per cent more than that in March 2023, as per Government data on Friday. Within the manufacturing sector, the top three positive sectoral contributors to the growth of IIP for the month of March 2024 are ‘basic metals with 7.7 per cent growth, pharmaceuticals, medicinal chemical and botanical products with growth of 16.7 per cent and manufacture of other transport equipment with growth of 25.4 per cent.

Dharmakirti Joshi, Chief Economist, CRISIL notes that the slowdown in March was driven by infrastructure and construction goods, which reflects moderating government capital expenditure at the end of the fiscal. “Among consumer products, while durables slowed, non-durables revived this month, hinting at a moderation in urban demand and a revival in rural demand,” says Joshi.

According to CRISIL, the IIP had increased to 5.7 per cent on-year in February from 4.1 per cent in January, boosted by healthy performance in both consumption and industrial sectors. Meanwhile, January’s reading was revised up from the previous estimate of 3.8 per cent as IIP growth picked up in all three subsectors of manufacturing, mining, and electricity.

Aditi Nayar, Chief Economist, ICRA sees the dip in IIP growth on expected lines as the leap-year effect faded. Nayar observes that the yoy growth in a majority of the available high-frequency indicators witnessed an uptick in April 2024, including vehicle registrations, generation of GST e-way bills, petrol sales which zoomed to a 22-month high of above 14.1 per cent from above 6.9 per cent, partly owing to increased movement in the run-up to General Elections), output of Coal India and electricity generation to a six-month high of more than 9.6 per cent from more than 8.1 per cent, owing to rise in temperatures. “In contrast, the yoy performance of diesel sales to more than 1.4 per cent from more than 3.1 per cent, cargo traffic at major ports to more than 1.3 per cent from more than 3.6 per cent and finished steel consumption to more than 9.4 per cent from more than 9.6 per cent, albeit remaining quite robust deteriorated in April 2024 relative to March 2024.

Government data also shows cumulative growth rate for the period of April-March 2023-24 over the corresponding period of the previous year at 5.8 per cent. The cumulative growth rate of mining for the period of April-March 2023-24 over the corresponding period of the previous year is 7.5 per cent, manufacturing growth was 5.5 per cent and electricity growth, yoy, for the period of April-March 2023-24 was 7.1 per cent.

Joshi foresees a likely slowdown in gross domestic product (GDP) with growth averaging 4.9 per cent in the fourth quarter, compared with 6.2 per cent in the third. On the positive side, as Joshi points out, rural demand, which was a key drag for consumption last fiscal, could revive this fiscal. While early weather forecasts predict a normal monsoon this year, the lagged impact of the Reserve Bank of India’s rate hikes and regulatory tightening of credit could have a moderating impact, especially for urban consumption,” says Joshi.

“A lower fiscal impulse this year is further expected to dial down the capex support to growth in fiscal 2025 as government targets reducing fiscal deficit to 5.1 per cent of GDP from 5.8 per cent of GDP previous fiscal. A pickup in private capex is critical to sustain the investment momentum,” suggests Joshi.

Due to these factors, CRISIL expects gross domestic product growth to moderate to 6.8 per cent in fiscal 2025 over 7.6 per cent estimated for the past year.

JPMorgan Chase & Co. is poised to include India in its emerging market debt index starting from June, according to Gloria Kim, the firm’s global head of index research. Kim highlighted the positive feedback received from most of the firm’s index clients, indicating readiness to trade in the Indian Government Bond (IGB) market. She acknowledged that while there are operational challenges when entering a new market, they primarily relate to counterparties’ operational readiness and flexibility rather than barriers to entry, noting the reforms made by the Indian government.

One of the reasons foreign investors have been hesitant about India’s entry into global indexes is the complexity of the documentation process required for trading. However, JPMorgan announced last September its decision to include India in its emerging market bond index, where it will carry a maximum weight of 10 percent.

Kim estimates that foreign inflows into India could range between $20 billion and $25 billion, assuming an index-neutral position. Currently, the firm’s emerging-market bond gauge manages assets worth $216 billion. Kim emphasized the stickiness of assets tracking the index, noting their consistent nature over time. Since JPMorgan’s announcement, Indian sovereign bonds have witnessed approximately $8 billion in inflows into the Fully Accessible Route securities, although there were some outflows in April amidst a global debt sell-off. Notably, a Bloomberg gauge of Indian bonds has outperformed major peers this year. The long-awaited index inclusion is leaving a significant impact on various Indian assets, with corporate bonds also outperforming peers and foreign exchange reaching record highs. This influx of funds has contributed to the resilience of the Indian rupee against the backdrop of a strengthening US dollar.

Furthermore, Bloomberg Index Services Ltd. will commence including India in its emerging markets index from January, further solidifying India’s position in global financial markets. Kim acknowledged the substantial market reforms implemented by Indian government authorities to attract investors, including extending the trade-matching window for foreign portfolio investors and streamlining the onboarding process through the introduction of a single application form.

Additionally, the registration process was simplified by accepting digital signatures and scanned copies for account registration. Kim also highlighted the availability of India-dedicated bond exchange-traded funds and UCITS funds, offering intraday liquidity to investors, which have contributed to improving market accessibility and tradability for foreign portfolio investors.

Overall, India’s inclusion in global bond indexes represents a significant milestone for the country’s financial markets. The reforms undertaken by Indian authorities, coupled with increased investor confidence, are expected to enhance India’s attractiveness as an investment destination and further integrate it into the global financial system.

India’s consumer price inflation is anticipated to have slightly eased to 4.80% in April, a figure just below March’s rate, as per economists surveyed by Reuters. Despite a moderation in headline inflation in recent months, food prices, constituting nearly half of the consumer price index (CPI) basket, have remained elevated, putting pressure on household budgets.

The persistent heatwave in certain parts of the country continues to pose an additional risk to India’s inflation trajectory, as highlighted in the latest Reserve Bank of India bulletin. The Reuters poll, conducted from May 3-8 and involving 44 economists, projected consumer price inflation to have slipped to 4.80% in April, compared to 4.85% in March. Forecasts ranged between 4.50% and 5.10%, with a third of respondents predicting inflation to surpass the March reading.

Suman Chowdhury, chief economist at Acuite Ratings, commented, “Food inflation is sticky, and it is still around 8%… it is difficult for food inflation to come down further and headline inflation is not going to fall in a hurry.” Chowdhury emphasized the challenges in reducing food inflation and suggested that headline inflation would likely persist around 5% or even increase in the coming months.

V. Anantha Nageswaran, the government’s chief economic adviser, remarked on Wednesday that the Indian economy is in a better position than before to pursue “non-inflationary” growth. Forecasts indicate that inflation is expected to return to the Reserve Bank of India’s (RBI) 4% medium-term target in the next quarter, coinciding with expectations for the central bank to implement an interest rate cut, as indicated by a separate Reuters survey.

However, India’s robust economic growth rate, recorded at 8.4% in the October-December quarter, along with the anticipation that the U.S. Federal Reserve will delay its first rate cut, are likely factors that could prompt the RBI to ease monetary policy at a later stage. Kunal Kundu, India economist at Societe Generale, noted, “We believe monetary policy has little to no influence on inflation especially when supply constraints drive food inflation.” Kundu added that with India’s growth at an unusually high level and the central bank’s focus on headline inflation, the first rate cut move is anticipated during the fourth quarter of 2024, although the decision could potentially be deferred to 2025.

Regarding core inflation, which excludes volatile food and energy prices, the median forecast of 22 economists indicated a figure of 3.18% in April. Notably, official core inflation figures are not published, adding complexity to assessing the broader inflationary landscape.

In summary, while headline inflation in India is projected to have slightly eased in April, persistent challenges in food prices and broader economic dynamics continue to influence the inflation outlook. The RBI’s response through monetary policy measures, particularly regarding interest rate cuts, remains closely watched amidst the evolving economic landscape.

Southern Asia, encompassing nations such as India, Pakistan, and Bangladesh, stands as a significant recipient of international remittances, underlining the pivotal role of labour migration in bolstering family livelihoods and fostering economic growth.

India emerged as the world’s largest recipient of remittances in 2022, surpassing the $100 billion mark for the first time and reaching over $111 billion, as stated by the United Nations migration agency, the International Organization for Migration (IOM), in its World Migration Report 2024 launched on Tuesday. Alongside India, other top remittance recipient countries included Mexico, China, the Philippines, and France.

The report underscored India’s prominence in remittance receipts, with the nation’s remittance inflows crossing $100 billion in 2022. Historically, India has consistently ranked among the top countries receiving remittances, with significant contributions from migrant workers primarily employed in the Gulf States and other countries worldwide.

In 2022, India received over $111 billion in remittances, securing its position as the leading recipient globally. This milestone reflects the substantial financial contributions of Indian expatriates to their families and the Indian economy. Notably, India’s remittance figures have seen steady growth over the years, with previous years witnessing significant milestones such as $53.48 billion in 2010, $68.91 billion in 2015, and $83.15 billion in 2020.

Southern Asia, including countries like India, Pakistan, and Bangladesh, has emerged as a major recipient of international remittances, reflecting significant labor migration from the region. These inflows play a crucial role in supporting the livelihoods of millions of families and contributing to economic development.

While India continues to lead in remittance receipts, Pakistan and Bangladesh also feature prominently among the top recipients, receiving nearly $30 billion and $21.5 billion, respectively, in 2022. However, the report highlighted the challenges faced by migrant workers from these countries, including financial exploitation, excessive debt due to migration costs, xenophobia, and workplace abuses.

The Gulf States remain significant destinations for migrant workers, with high proportions of migrant populations contributing to various sectors such as construction, hospitality, security, domestic work, and retail. Notably, migrants from countries like India, Egypt, Bangladesh, Ethiopia, and Kenya constitute a significant portion of the workforce in these countries.

Despite the substantial contributions of migrant workers, the report underscored the vulnerabilities they face, including rights violations and exploitation. The 2022 football World Cup in Qatar brought attention to the importance of migrant labor in the Gulf region but also highlighted concerns regarding labor rights and working conditions.

India, with its large diaspora spread across the globe, continues to be a significant player in international migration. With nearly 18 million international migrants, India ranks among the top countries of origin for migrants worldwide. Additionally, India is also a destination country for immigrants, with over 4.48 million immigrants residing in the country.

The report also shed light on migration trends in other parts of the world, such as Asia, where countries like China are significant sources of internationally mobile students. The United States remains the largest destination country for international students globally, followed by the UK, Australia, Germany, and Canada.

However, the report also highlighted challenges such as irregular migration, particularly to the United States, which has seen an increase in arrivals from countries like Venezuela, Cuba, Nicaragua, Haiti, Brazil, India, and Ukraine. The COVID-19 pandemic has exacerbated vulnerabilities among migrant workers, leading to job losses, wage theft, and insecurity.

In India, the pandemic has had a profound impact on internal and international migration patterns, with significant disruptions to labor mobility and employment opportunities. The decline in blue-collar workforce mobility towards cities has affected industries reliant on migrant labor, contributing to economic challenges.

The World Migration Report 2024 provides valuable insights into global migration trends, highlighting the significant contributions of migrant workers to economies worldwide while also underscoring the challenges and vulnerabilities they face. As countries grapple with the complexities of migration, addressing issues of rights, labor conditions, and social protection remains paramount in ensuring the well-being and dignity of migrants.

In addition to its comprehensive analysis of remittance trends and migration patterns, the World Migration Report 2024 also delves into the broader implications of migration on societies, economies, and governance structures worldwide.

Migration is a multifaceted phenomenon that encompasses various forms of movement, including labor migration, refugee flows, and international student mobility. These movements have profound socio-economic impacts, shaping demographic profiles, labor markets, and cultural landscapes in destination countries while influencing development trajectories in countries of origin.

One significant aspect of migration highlighted in the report is the growing importance of remittances as a source of external financing for low- and middle-income countries. Remittances serve as a lifeline for millions of households, enabling them to meet basic needs, invest in education, healthcare, and entrepreneurship, and contribute to poverty reduction and economic development.

Moreover, migration fosters cultural exchange, diversity, and innovation, enriching societies with new perspectives, skills, and traditions. International students, for instance, contribute to knowledge transfer, research collaboration, and academic excellence, enhancing the global competitiveness of educational institutions and fostering cross-cultural understanding.

However, migration also presents challenges and complexities, including issues related to labor rights, human trafficking, irregular migration, and xenophobia. Migrant workers often face exploitation, discrimination, and precarious working conditions, particularly in sectors such as agriculture, construction, and domestic work.

Furthermore, the COVID-19 pandemic has exacerbated vulnerabilities among migrant populations, exposing gaps in social protection, healthcare access, and labor rights. Lockdowns, border closures, and travel restrictions have disrupted migration flows, leading to job losses, income disparities, and humanitarian crises.

The report underscores the need for comprehensive and rights-based migration policies that prioritize the well-being, dignity, and empowerment of migrants while addressing structural inequalities and systemic barriers. This includes measures to enhance labor rights, social protection, access to healthcare, and legal pathways for migration, as well as efforts to combat human trafficking, smuggling, and exploitation.

Furthermore, the report emphasizes the importance of international cooperation and multilateral governance frameworks to address global migration challenges effectively. Collaboration among countries of origin, transit, and destination is essential to ensure safe, orderly, and regular migration flows while upholding human rights, labor standards, and environmental sustainability.

In conclusion, the World Migration Report 2024 provides valuable insights into the complex dynamics of migration, remittances, and mobility worldwide. By examining trends, challenges, and opportunities in migration governance, the report offers a roadmap for policymakers, practitioners, and stakeholders to promote inclusive, equitable, and sustainable migration outcomes for all. As countries strive to recover from the COVID-19 pandemic and build back better, harnessing the potential of migration as a driver of development and resilience will be crucial in shaping a more inclusive and prosperous future for communities around the world.