India to Sustain Role as Global Growth Engine in the Foreseeable Future: IMF Executive Director - Business Guardian
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India to Sustain Role as Global Growth Engine in the Foreseeable Future: IMF Executive Director



Krishnamurthy V. Subramaniam, the Executive Director of the International Monetary Fund (IMF), said on Tuesday that India will continue to be a driver for global growth in the foreseeable future.

In an interview with ANI, he noted that India, ever since the COVID-19 pandemic, has witnessed consistent growth at 7 percent plus. He predicted that India will have 8 percent growth in the fourth quarter and called it “good” growth considering the current global economic situation.

Asked where India stands amid the current global economy, he responded, “I think India will continue to be the driver for global growth in the foreseeable future. The maximum sort of contributor to global growth. I expect growth in India to be consistently above 7 percent in this decade. You would recall back in September 2021, when I was with the government as well. I predicted that India will emerge out of COVID with 7 percent plus growth. So I continue to maintain that assessment.”

Subramaniam, India’s former Chief Economic Adviser, said that the IMF has revised its projection for growth for India in 2024 to 7.8 percent, which he emphasized reflects overall growth.

On being asked about how India’s economy is viewed in the IMF meetings being held in the US, he said, “So, if you look at the Indian economy now, ever since COVID, it has grown consistently at 7 percent plus, 9.7 percent the year after COVID, then 7 percent, and then this year, 8.2 percent, 8.1 percent, and 8.4 percent growth in the first three quarters. So even with a much lower 7.3 percent growth, if it so happens, actually in the fourth quarter, India will have an average of 8 percent growth. And I think that is very good in the current global economic situation. As I said, 3.1 percent expectation for the global economy.”

“Now, the fund itself has revised its projection for growth for India for this year to 7.8 percent, which is reflecting the overall growth. I do want to also mention, I think, that if you look at productivity improvements, this is something that is really important. If you look at the Penn World Table’s data, which is actually what economists use across the world to understand the drivers of growth,. In India, pre-2014 productivity growth annually was 1.3 percent; in contrast, the rate of productivity growth post-2014 has been 2.7 percent, which is more than double. And I think that is a very important driver for growth to continue to be high and for it to be sustainable going forward,” he added.

India’s GDP grew at a massive 8.4 percent during the October–December quarter of the current financial year 2023–24, and the country continued to remain the fastest-growing major economy.

The Indian economy grew 7.8 percent and 7.6 percent during the preceding two quarters, April-June and July-September, according to data released by the Ministry of Statistics and Programme Implementation in February this year.

Asked about critics’ opinions about India’s economy, he referred to two former chief statisticians’ remarks regarding the Indian economy. He said that Pranab Sen and TCA Anant, in an interview, mentioned that there was nothing to worry about about India’s GDP.

“I would say two things. Firstly, if you look at the commentary given by statistical experts, there was an interview of two former chief statisticians, Pranab Sen and TCA Anant, and one former chairman of the National Statistical Commission, PC Mohanan, all of whom were asked about some of the economists’ criticism of the GDP methodology and GDP numbers, and they were unanimous that there is nothing to worry about or nothing to sort of that is untoward about the GDP number. So, I think that there are so many statistical experts across the spectrum saying that the GDP numbers can be trusted. I think I would go by that; let me also add my own assessment,” he said.

He noted that India’s growth in gross value-added versus GDP in the first quarter stood at 8.2 percent.

He said that there was no difference between growth in gross value-added and GDP.

“If you look at the growth in gross value-added versus GDP, in the first quarter, it was 8.2 percent for both, so there was no difference between growth in gross value-added and GDP. In the second quarter, gross value-added grew at 7.7 percent; that was just 40 basis points less than 8.1 percent growth in the GDP in the second quarter,” Subramaniam said.

“Only in the third quarter has there been a higher wedge, with gross value-added growing at 6.5 percent versus 8.4 percent for GDP; even that is quite well understood given the tax buoyancy. I’ve looked at the numbers over the last decade, and the median number for tax buoyancy has been 1.6, or, in other words, a 1 percent increase in GDP growth. Nominal GDP growth has translated into 1.6 percent in terms of the median, so in tax growth, I think when you put all these three aspects together, I think some of the criticism or people saying that they’re surprised about the GDP growth is completely unwarranted,” he added.

On being asked about economist Thomas Piketty’s report, in which he mentioned that India’s income inequality is worse than that under British rule, he stated, “If you look at the recent consumption survey that has been released and now experts have actually clarified very clearly that the 2011–12 consumption survey and the 2022–23 consumption survey are indeed comparable because the survey method is indeed the same, when you look at those numbers, both poverty and inequality have declined significantly.”

“For instance, using the USD 1.9 per capita per day in 2011, PPP numbers have declined from 12 percent to 2 percent. That’s a significant decline. Even using a higher threshold of USD 3.2 per capita per day again in 2011 purchasing power parity, the decline has been from more than 50 percent to less than 30 percent. So I think it’s significant. The same survey numbers also reveal that inequality has declined, and this is carefully constructed data using a very large consumption survey. Both urban and rural inequality have declined,” he added.

Speaking about the decline in the Gini coefficient, he said, “For instance, the Gini coefficient has actually declined from 36 in 2012 to, I think, less than 30 in 2022; this is for urban areas and rural areas; the Gini has declined from 29 to 27. So, I think the carefully constructed data from consumption clearly shows that consumption inequality has declined significantly, and as for the analysis done by Thomas Piketty, I think it is a sort of mix of a lot of data, especially tax data, and I think there are clearly methodological concerns.”

“For instance, if you look at capital gains, which are treated as income, in the tax data, that is not treated as being counted as part of GDP calculations. So also, there are some very heroic assumptions that have to be made in order to be able to actually assess inequality just from tax data, which is that taxes are paid by a very small section. Because in order to compare inequality, you have to actually look at the tax data vis-à-vis those people who actually are a large section who don’t pay taxes, so I think lots of heroic assumptions have to be made, and I think if they do it far more without any overt and covert biases, I think what they would find would be closer to what the consumption survey data is clearly revealing, which is a significant decline in inequality right now,” he added.

Lauding India’s digital infrastructure, he stressed that it is an important lesson for the Global South.

He recalled his visit to India and said that he used digital modes of payment for buying vegetables at the local market with his mother. He noted that local vendors are accepting digital payments in India. He stressed that digital infrastructure in India is an important lesson for the Global South, and it has been created as a public good.

“This is an aspect, especially at the IMF board, that really gladdens my heart.

If you look at how digital transactions are done in India, you can use your phone to pay for a glass of coconut water or a coffee, or even if, a few months ago, I was actually with my mom and went for some shopping, basically for vegetables, in the local mandi, and I pulled out my phone and I was able to pay, so it’s just become so widespread and everybody is using one.

One can even actually go and shop, for instance, in a Sarojini Nagar or in a fashion street in Bombay, and the street vendors are also actually taking digital payments,” he said.

“That’s the kind of widespread use of digital payments that has basically happened. And that’s what is reflected in the IMF’s being very appreciative of the kind of infrastructure that has been created.

One critical aspect, and these are actually important lessons for the Global South, is that this digital infrastructure has been created as a public good.

The sovereign has created it rather than allowing or requiring the private sector to create it. What that means is that when the private sector creates such infrastructure, it can become a monopoly, and therefore the prices may not be affordable for everybody.

In contrast, the sovereign Indian government creating this access has been widespread. And I think that’s a very important lesson for the Global South,” he added.

He said that Prime Minister Narendra Modi has said that India is willing to share its knowledge about digital infrastructure with other nations.

He stated that the use of digital infrastructure for remittances globally can reduce time and have enormous efficiency gains.

He said, “I think the Honourable Prime Minister has been on record saying that India is more than happy to actually share the knowledge from this with all the countries, including the advanced economies.

For instance, there are a lot of remittances, and I think the use of this digital infrastructure for remittances globally can actually reduce not really not only the time but even the cost for this, and I think that can be enormous efficiency gains for the global economy, so not only the Global South but even advanced economies can I think learn from India on this aspect.”

Asked about concerns regarding the geopolitical situation and crisis in West Asia, he said, “So, I think the current meetings come at a time when the economy can express some cautious optimism about it.

If you look at the projections for global growth, compared to 3.1 percent, which was a projection in January, the IMF has revised them 10 basis points higher to 3.2 percent. So, there is some cautious optimism.”

“I think the situation in West Asia is still evolving, and overall, the impact of that on global growth is something that will be difficult to predict. My sense is that, compared to, for instance, the war in Europe, which had significant implications for the supply side, the impact directly on the economy, I think, will be lower.

It does add uncertainty, for sure, but unlike in the case of the war in Europe, there won’t be a direct impact on aggregate supply or demand in the global economy. So, I would continue to be cautiously optimistic about the current global economic situation,” he added.

Notably, Israel has launched a counter-offensive against Hamas after the terrorist group launched an all-out attack on Tel Aviv on October 7. Israel has vowed to destroy Hamas. Amid the ongoing war between Israel and Hamas, Iran has launched a series of strikes on Israel in retaliation for a suspected Israeli attack on the Iranian consulate in Damascus, Syria, earlier this month.

Asked about some commentators’ views regarding India’s GDP growth, he said, “I think shared on that earlier I said that the gross value-added actually, as you saw in the first-quarter growth in gross value added and that in GDP was the same 8.2 percent, second quarter 7.7 percent for gross value added, while GDP growth was 8.1 percent, not a large difference, only in the third quarter. And as I also said, statistical experts across the spectrum have actually clearly opined that the GDP methodology and these GDP numbers are quite robust.”

Lauding the growth of the Indian economy, he said that the Indian economy is doing very well. He further said that Bangladesh and Sri Lanka are part of IMF programs and added that these nations are implementing a lot of IMF programs.

He said, “I think the Indian economy is clearly doing very well. A couple of countries that are part of my portfolio, Bangladesh and Sri Lanka, are actually part of IMF programs now. Sri Lanka, as we all know, has had some economic difficulties and is going through them. I think they’re implementing a lot of reform programs.”

“Bangladesh is also part of the IMF program. And I think things are also looking cautiously optimistic. A new government has come into power. But I think clearly, in terms of the overall state of the economy, India seems to be clearly the star there,” he added.

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International Relations

UN raises India’s 2024 growth forecast to nearly 7%



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.

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International Relations

Jaishankar seeks ‘more than business-as-usual’ to tackle global challenges



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.

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India needs its own global giants like JP Morgan and Citibank, says Niti Aayog CEO



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.

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Sitharaman calls for proactive govt-industry alliances towards developed India



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

Finance Minister Nirmala Sitharaman on Friday asked industry to leverage opportunities at national and global levels through government-industry partnerships as the country gears up to realize the goal of emerging as a developed country by 2047, drawing attention to India’s policy stability, corruption-free decision-making, facilitative government policies, and robust legal framework which in consonance make India an attractive destination for business. “There is a big role for the private sector for making this happen and the government would be a facilitator and enabler in the process,” Sitharaman said speaking on “co-creating the future responsibly: role of business,” at the annual business summit 2024 of the Confederation of Indian Industry (CII).

Articulating the vision for new India, the Finance Minister outlined four key opportunities for growth in India which extends to all segments of the economy. The first, she highlighted, was the compelling India growth story which is expected to contribute significantly to global growth, as recognized and affirmed by global agencies such as the IMF and S&P. The large consumer market which is expected to double by 2031, a rise in consumption spending, and a secular rise in spending on financial services are the other triggers which would ensure that the country would continue to remain the fastest growing economy in the future, Sitharaman said.

Elaborating further on the subject, the Finance Minister noted that according to the RBI and the Economic Survey, India has graduated from the twin balance sheet problem of the past to the twin balance sheet advantage which has led to vibrancy in the market thereby propelling investment expansion by corporates on one hand and willingness and capacity of banks to lend. Secondly, the demographic dividend would be with the country for the next 30 years and dependency level is at a historic low and when complemented with skill development, through public-private partnership, inclusive of areas such as artificial intelligence, big data etc., this is a sure shot measure to bring prosperity and raise consumer demand, Sitharaman observed.

The Finance Minister also highlighted India’s transition towards green energy and a sustainable future as other drivers of new markets and new demand. “The solar push by the government as well as an impetus towards green hydrogen and green ammonia would also provide significant job opportunities to the youth,” she maintained. Alluding to the pressing need to increase manufacturing competitiveness, Sitharaman called for greater sophistication and improved productivity. The government would provide supportive policies for India to be a part of the global value chain.

Sitharaman underlined India’s advantage of figuring among the top investment destinations which pitched the country in a position to take advantage of global investors who are attempting to derisk their operations as a result of the China plus one policy. This would also help the country to become self-reliant. She also referred to the PLI scheme which has contributed significantly towards transforming the mobile and electronic sectors and creating value addition in smartphones. Noting India’s role as a preferred destination with over 50 percent of global capability centers having based their operations in the country.

The industry body has also worked with the government on a range of issues such as the reduction of corporate tax rates, extending GST compliance dates during the Covid period, and adopting a capex-led growth strategy, said CII President R. Dinesh and complimented the finance minister for reining in the fiscal deficit with a laser focus. Former Chairman, ICICI and chairman, National Bank for Financing Infrastructure and Development KV Kamath, was conferred with the CII President’s award for 2024 for his exemplary contribution to industry and society.

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Rupee112 aims for Rs1000 cr revenue, 3L loans by FY2027



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.

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India’s PE-VC market sees mixed results in challenging year



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.

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