The United Nations has revised its growth projections for India’s economy in 2024, now forecasting an expansion of close to seven percent. This upward revision, detailed in the World Economic Situation and Prospects (WESP) mid-2024 report released on Thursday, attributes the robust growth to strong public investment and resilient private consumption.

India’s economy is expected to grow by 6.9 percent in 2024 and 6.6 percent in 2025. This marks an increase from the 6.2 percent GDP growth projected by the UN in January 2024. Despite subdued external demand impacting merchandise exports, sectors like pharmaceuticals and chemicals are anticipated to see significant growth.

The report also projects a deceleration in India’s consumer price inflation from 5.6 percent in 2023 to 4.5 percent in 2024, aligning within the central bank’s target range of two to six percent. Similarly, inflation rates across other South Asian countries are expected to decline further in 2024, ranging from 2.2 percent in the Maldives to 33.6 percent in Iran. Nonetheless, food prices have remained elevated in the first quarter of 2024, particularly in Bangladesh and India.

Improvements in India’s labor market indicators have been noted, with increased labor force participation contributing to the robust economic growth. The Indian government remains committed to gradually reducing the fiscal deficit while increasing capital investment.

South Asia’s economic outlook remains strong, bolstered by India’s robust performance and slight recoveries in Pakistan and Sri Lanka. The regional GDP is projected to grow by 5.8 percent in 2024, an upward revision from January’s 5.2 percent forecast, and by 5.7 percent in 2025. However, tight financial conditions, fiscal and external imbalances, and potential energy price increases amid geopolitical tensions and disruptions in the Red Sea pose risks to the regional outlook.

Globally, the economy is now forecast to grow by 2.7 percent in 2024, up from the 2.4 percent forecast in January, and by 2.8 percent in 2025. This positive revision reflects improved outlooks in the United States, Brazil, India, and Russia. Specifically, the U.S. economy is expected to grow by 2.3 percent in 2024, a notable increase from the previous forecast of 1.4 percent. Strong domestic and external demand benefits large developing economies such as Indonesia, India, and Mexico.

In contrast, many African and Latin American economies continue on a low-growth trajectory, hindered by high inflation, elevated borrowing costs, persistent exchange rate pressures, and political instability. The ongoing conflicts in Gaza and the Red Sea add further uncertainties to the Middle East’s near-term outlook.

Global trade is anticipated to recover in 2024, with early boosts attributed to destocking inventories accumulated during the supply-chain disruptions of 2021-22. China’s foreign trade, particularly exports to Brazil, India, and Russia, grew faster than expected in early 2024. Nevertheless, persistent geopolitical tensions and escalating freight costs continue to challenge global trade.

The mid-year update presents a cautiously optimistic global economic outlook. While major economies have avoided severe downturns and brought down inflation without increasing unemployment, challenges remain. These include higher interest rates, debt sustainability issues, ongoing geopolitical tensions, and escalating climate risks, which threaten development gains, especially for least developed countries and small island developing states.

China’s growth forecast for 2024 has been slightly revised to 4.8 percent from 4.7 percent projected in January, down from 5.2 percent in 2023. The dissipation of pent-up consumer demand post-pandemic and risks in the property sector are significant concerns, though enhanced policy support is expected to boost public infrastructure investments.

Minister of External Affairs, S. Jaishankar, on Friday set out India’s strategy to mitigate the impact of some of the geopolitical realities that the world is faced with today – including the Russia-Ukraine conflict, an escalation of the Iran-Israel conflict that can potentially spread to the Middle East, and the three crises of fuel, food, and fertilizer — while continuing to stabilize the world. While India’s export promotion efforts would continue along with strong partnership building, Jaishankar suggested that the current times call for something more than business-as-usual where ‘trust’ and ‘reliability’ will become critical factors.

“These would be particularly important in the areas of de-risking supply sources and enhancing collaboration in sensitive, critical, and emerging technologies. We firmly believe that India will develop all the requisite national strengths that will make it a leading power in the times to come,” the EAM stated during his address at the CII summit. “The continued focus on reforms requires the support of industry,” Jaishankar added.

Speaking on the many global challenges faced by India and the world since the Covid-19 pandemic, Dr. Jaishankar stated that India has seen robust growth with the help of sweeping reforms and a sharp focus on capital spending with a focus on infrastructure development. This included a combination of making India self-reliant, ease of doing business reforms, large-scale socio-economic programs, a conducive environment for business growth and startup culture, among others, he added.

Even then, Jaishankar calls for addressing three critical challenges that India faces given the current challenging global environment: employment, especially those faced by the MSMEs, technology, and national security. The Minister stressed the crucial need to align India’s economic priorities with strategic interests whether in terms of access to new markets, technology, investments, education, and tourism.

He also emphasized the importance of creating logistical corridors for India as new production and consumption centers emerge across the world along with the need for expanding the scale and quality of skilling at home, as a new global workforce emerges. He added that policies and initiatives such as the Production Linked Incentive Schemes, financial support for MSMEs, removal of regulatory impediments, the creation of a conducive environment for businesses, and a commitment to promote manufacturing, have been continuously undertaken by the Government, which will help India leapfrog to a ‘Viksit Bharat’ or a developed nation status by 2047.

India requires its own global financial giants akin to JP Morgan and Citibank, according to B V R Subrahmanyam, CEO of Niti Aayog. Speaking at the CII Annual Business Summit 2024 in New Delhi, Subrahmanyam emphasized the necessity of financial services reforms to achieve this vision.

“We need much bigger banks, more global players, and a financial sector robust enough to support Indian firms not just domestically but globally,” Subrahmanyam asserted. He stressed the importance of forward-thinking regulatory approaches to foster such growth. “Our regulator will have to look at that,” he added.

Another critical reform area highlighted by Subrahmanyam is the liberalization of India’s external sector. Reflecting on past reforms, he pointed out that the economic liberalization of 1991 and 1994, particularly India’s membership in the World Trade Organization, was instrumental in transforming the country’s industrial landscape. “As many as 90 percent of the companies that exist today owe their current scale to the reforms of that era,” he noted. The competitive environment and de-licensing efforts of the time spurred significant growth, a phenomenon that needs to be revisited and expanded.

Subrahmanyam acknowledged the potential risks of an open economy, including the possibility of some companies failing. However, he described this as the “law of capitalism,” suggesting that while some businesses may disappear, many more would emerge, ultimately expanding the economic pie. “Some will vanish, but there will be many more that will emerge. In totality, the pie is going to be much larger,” he remarked.

Education and skilling constitute another vital area for reform, according to Subrahmanyam. He admitted the challenges in this sector are complex but emphasized the importance of addressing these difficulties to drive overall progress. “The answers are very difficult. But till we tackle the difficult problems, the others won’t happen,” he stated.

While India has made strides in job creation, Subrahmanyam pointed out that there has been insufficient progress in labor-intensive sectors. He called for reforms in the application of rules and regulations to facilitate easier business operations. “I think every industrial estate in India should become an enclave which then gets the benefit of far less regulation, far less control,” he proposed.

Subrahmanyam’s call for reforms underscores a broader vision for India’s economic future. By cultivating homegrown financial giants, liberalizing the external sector, and enhancing education and skill development, India can bolster its global economic presence. These steps are crucial for fostering a competitive and dynamic economy capable of supporting large-scale domestic and international business operations.

Subrahmanyam’s vision includes creating an environment where large Indian banks can compete on a global stage, supported by a regulatory framework that encourages growth and innovation. The liberalization of the external sector would open new avenues for trade and investment, building on the success of past reforms. Meanwhile, addressing the educational and skilling challenges would ensure a workforce capable of meeting the demands of a rapidly evolving economy.

To sum it up, B V R Subrahmanyam, CEO of Niti Aayog, envisions an India with its own global financial giants and a robust, competitive economic environment. Achieving this requires significant reforms in the financial sector, liberalization of the external sector, and improvements in education and skilling. These reforms are essential for India to realize its potential as a major global economic player.

Finance Minister highlights policy stability, facilitative policies as key attractions for investors looking to India.

Having launched its tailor-made and customer-centric innovative financial solutions, Rupee112, an RBI-registered lending non-banking financial company.

Having launched its tailor-made and customer-centric innovative financial solutions, Rupee112, an RBI-registered lending non-banking financial company, has rolled out an aggressive growth strategy, targeting Rs1000 crore in revenue and disbursing 3 lakh loans by FY2027 over the next 3 years. This company is expecting to record an INR 250 crore turnover in FY2024-25 and reaching a wider audience with a range of loan options.

In its bid to revolutionize the lending industry, Rupee112 is rolling out instant loan solutions for empowering people facing urgent financial needs with quick access to swift, small-ticket emergency loans. The emerging Fintech company is set to disrupt the unsecured loans market through its innovative financial products which aims at infusing financial resilience in people regardless of their credit score.

Speaking about the growth plans, Vikkas Goyal, Founder, Rupee112, said, “We are extremely excited to witness the response to our financial product offerings. At Rupee112, it is our single-minded endeavour to provide emergency loans to individuals facing urgent financial needs. Today, the Indian market is flooded with several similar lending products. However, the Indian market is diverse with varying customer needs. Hence, our continuous endeavour is to identify the gaps in the market and create suitable, swift, and accessible financing options for those in financial crises. Our mission was born out of a commitment to serving everyone and bringing about financial stability in the lives of people from all walks of life. We have been experiencing a healthy growth trajectory, which is reflected in our consistent 20% month-over-month revenue growth. By disbursing over 3 lakh loans, we aim to achieve triple-digit revenue growth in the next three years. We’re also endeavouring to reach out to a larger target audience by executing an inclusive growth strategy.”

“Based on our present Monthly Recurring Revenue (MRR), we expect to reach a turnover of 250 crores this year. Our target is to achieve a 300% growth, reaching a turnover of 1000 Crores within the next three years,” Vikkas Goyal, Founder, Rupee112, added.

Backed by industry-leading Fintech technologies and credit assessment systems, ‘Rupee112’ facilitates a 100% paperless, digital lending process, which can credit low-tenure EMI loans within 30 minutes of disbursal time. With flexible repayment options tailored to individual needs, Rupee112 is furthering an inclusive financing solution accessible to individuals extending urgent financial support to individuals irrespective of their credit rating and without the need of any collaterals.

Founded in 2023, Rupee112 boasts of an in-house tech team dedicated to app development and a proprietary customer management system. Furthermore, the company leverages Multiple Account Aggregators for swift data analysis and CIBIL checks, ensuring efficient and secure loan processing. With the commitment to launching innovative loan programs and products to cater to the evolving customer demand, Rupee112 is developing lending products customized for specific objectives.

About Rupee112: Rupee112, a Gurgaon-based Fintech start-up, leverages technology to provide instant loans and revolutionize financial accessibility for salaried professionals in India.

In 2023, Indian private equity and venture capital funding experienced a significant downturn, with deals decreasing by 35 percent from USD 62 billion in 2022 to USD 39 billion in 2023. This decline was primarily attributed to global factors such as weakened investor sentiments, high interest rates, slowdown in consumption, and geopolitical tensions.

However, amidst this challenging environment, a Bain India report highlights several bright spots in the Indian economy. While PEVC investments are expected to remain tempered in 2024, traditional sectors like healthcare, advanced manufacturing, infrastructure, and renewable energy are likely to attract substantial investments. This optimism is driven by positive fundamentals and supportive government policies, including Productivity Linked Incentive (PLI) schemes.

The report underscores the potential benefits of global supply chain diversification for Indian manufacturers, particularly in export-oriented sectors such as electronics, pharmaceuticals, and chemicals. With competitive positioning and government support, Indian manufacturers stand to gain significantly from this trend. Additionally, the report identifies generative AI as a sector where India can excel globally, garnering increasing attention from Indian funds.

The decline in investments during 2023 was particularly pronounced in the venture capital (VC) segment, with a 60 percent reduction attributed to their exposure to high-growth businesses with less established economic models. However, traditional sectors remained relatively resilient, experiencing a moderate decline of 15 percent. Notably, healthcare investments reached a high of USD 5.5 billion in 2023, nearly three times the levels seen in 2022.

Advanced manufacturing also witnessed increased activity, driven by global supply chain diversification and government incentives. Investments in electric vehicle (EV) original equipment manufacturers (OEMs) and packaging sectors saw notable growth. Conversely, investments in software as a service (SaaS) and new-age tech declined sharply by 60 percent, reflecting investor preference for proven economic performance.

Despite the slowdown in deal-making, 2023 marked a significant year for Indian exits, with exit value soaring by 15 percent to USD 29 billion. These sales benefited from the depth of the Indian markets, which outperformed major economies, attracting increased investments from domestic investors.

India’s role in Asia-Pacific PE-VC activity has been on the rise, accounting for 20 percent of all investments in 2023, up from 15 percent in 2018. This trend has attracted capital from both domestic and global funds, leading to diversification across various sectors and asset classes within India.

Looking ahead, India is poised to be the fastest-growing major economy in 2024, resulting in higher capital deployment. A stable economic landscape, government initiatives to reduce fiscal deficit, and efforts to curb inflation contribute to this positive outlook. The “China+1” policy is expected to benefit Indian manufacturers, while India-focused funds actively explore investment opportunities in generative AI.

In a nutshell, while Indian PE-VC funding faced challenges in 2023, the outlook remains optimistic, with traditional sectors and emerging technologies driving investment opportunities. With supportive policies and a growing role in regional investment activity, India is positioned for continued growth and resilience in the coming years.