Given the country’s innate strengths, it is possible to imagine India striking out into the next decade to become the second largest economy in the world not by 2048, but by 2031, and the largest economy of the world by 2060, RBI Deputy Governor Michael Debabrata Patra has said.

In a speech at the Lal Bahadur Shastri National Academy of Administration, Mussoorie, this week, Patra said there is a traditional advantage that is likely to continue working in favour of India’s growth prospects. The development process has been predominantly driven by capital accumulation, which makes investment the main lever of growth which has stabilised at 31.2 per cent during 2021-23, and is showing signs of acceleration.

In his speech now posted on the RBI website, Patra said: “Historically, India’s investment has been financed by domestic savings, with households being the prime provider of resources to the rest of the economy. In the period 2021-23, the gross domestic saving rate has averaged 30.7 per cent of gross national disposable income. Thus, unlike many countries, India does not have to depend on foreign resources, which play a minor and supplemental role in the growth process.”

The current account gap in the balance of payments – has remained modest at around 1 per cent of GDP in 2023-24. This provides insulation to the Indian economy from external shocks and imparts viability and strength to the external sector. Illustratively, India’s gross external debt, which is the accumulation of current account deficits over time, is less than 20 per cent of GDP and almost entirely covered by the level of foreign exchange reserves, Patra explained.

Second, the rising growth trajectory on which India is poised is entrenched by macroeconomic and financial stability as inflation has fallen back into the tolerance band around the target of 4 per cent. This reflects the cumulative impact of steadfast monetary policy actions and supply management. In fact, core inflation that excludes food and fuel and is most amenable to monetary policy has fallen to its lowest level ever.

Alongside macroeconomic stability, financial stability is getting reinforced by prudent financial policies and active on-site supervision complemented with off-site surveillance, which harnesses SupTech, big data analytics and cyber security drills. India’s financial sector is predominantly bank-based. Gross non-performing assets (GNPAs) in the banking system have steadily fallen from their peak in March 2018 to 2.8 per cent of total assets by March 2024, he added.

Another aspect of macroeconomic stability is the ongoing fiscal consolidation. As a result, the general government debt which is estimated at 81.6 per cent of GDP at the end of March 2024 is expected to decline to 78.2 per cent by end of this decade by the IMF. Our projections show that if expenditures are increased on reskilling/upskilling the labour force in the most productive sectors of manufacturing, investing in digitalisation and promoting energy efficiency, the general government debt will fall even further to 73.4 per cent of GDP by 2030-313. This is significant in the context of the IMF’s projections that show the debt ratio as projected to rise to 116.3 per cent in 2028 for advanced economies and to 78.1 per cent for emerging and middle-income countries, Patra said.

He also explained that a potent growth accelerator emerges from India’s favourable demographic dynamics. India’s population is now regarded as its greatest asset in an inter-temporal perspective, especially when the rest of the world ages rapidly and populations shrink. Today, every sixth working-age person in the world is an Indian. India’s demographic dividend is expected to last for more than three decades. Every effort must be made to reap this opportunity, he added.

Patra pointed out that another growth multiplier is India’s digital revolution. India is emerging as a world leader in leveraging digital technologies for transformative change. The trinity of JAM – Jan Dhan (basic no-frills accounts); Aadhaar (universal unique identification); and mobile phone connections – is expanding the ambit of formal finance, boosting tech start-ups and enabling the targeting of direct benefit transfers. India’s Unified Payment Interface (UPI), an open-ended system that powers multiple bank accounts into a single mobile application is propelling inter-bank peer-to-peer and person-to-merchant transactions seamlessly. Payment systems in India operate on a 24 by 7 by 365 basis. The internationalisation of the UPI is progressing rapidly, the RBI deputy Governor added. AGENCIES

 India has shown remarkable resilience amid global challenges by continuously moving on a high growth trajectory on the back of prudent policy measures and vigilant monetary policy stance, industry experts said on Saturday.

The foreign exchange reserves surged by $5.16 billion to reach a lifetime high of $657.16 billion during the week ended July 5, according to the latest RBI data.

“This would accelerate India’s economic growth to new highs, bolstering its global stature. This increase in Forex reserves will boost India’s worldwide attractiveness, supporting domestic trade and industry,” said Shri Sanjeev Agrawal, President, PHD Chamber of Commerce and Industry (PHDCCI).

India’s significant foreign exchange reserves would give the Central bank greater flexibility in managing the country’s currency and monetary policy in light of geopolitical conditions and global macroeconomic headwinds, said experts.

Amit Goel, Co-founder and Chief Global Strategist, Pace 360, said the Central bank has been using its reserves to check volatility in the currency.

“The rupee is among the best-performing Asian currencies so far this year. The monetary authority will continue to build reserves ‘opportunistically’ as they help prevent volatility in the market,” said Goel.

A strong forex kitty enables the RBI to intervene in the spot and forward currency markets by releasing more dollars to prevent the rupee from going into a free fall.

RBI Governor Shaktikanta Das had recently said that India’s external sector remains resilient and overall, the Central bank remains confident of meeting the country’s external financing requirements comfortably.AGENCIES

 As India embarks on its journey to become ‘Viksit Bharat’ by 2047, it’s important that we have appropriate credit ratings and call out global agencies for biases and lack of transparency for not objectively assessing India’s strong economic fundamentals, G20 Sherpa and former NITI Aayog CEO, Amitabh Kant, said on Saturday. 

Addressing the CareEdge Ratings ‘Conversations 2024’ conference in Pune, he said the notion that developing countries offer more risky investments is not solely based on objective financial metrics but is significantly influenced by subjective assessment.

Kant stressed the need for promoting home-grown credit ratings agencies, saying that appropriate sovereign credit ratings are actually a very critical issue that impacts not only India but also the entire emerging economies.

Hailing India’s high growth rate of around 8.2 per cent, he stressed that future growth will come from cutting-edge areas.

According to Najib Shah, Chairman, CareEdge, the world is moving away from domination by a single superpower, a single currency and moving towards a more balanced and complex system that’s emerging and evolving.

“Such an environment also has implications for the financial situation. Destructive competition between the US and China has ushered in a new era of competing geopolitics and economies. The role of the credit rating agency will be important here for acting in a transparent, competitive, professional manner,” Shah told the gathering.

At the event, Gulshan Malik, Deputy Managing Director, State Bank of India (SBI) said the banking sector in India is adequately capitalised as well as ready to fund the next phase of growth which is very critical. AGENCIES

 Sridhar Vembu, CEO and Co-founder of Cloud software major Zoho, on Saturday said the company has opened its first dedicated factory to assemble the Karuvi line of power tools.

The company, situated in Tenkasi district in Tamil Nadu, last month announced to invest an undisclosed amount in manufacturing startup Karuvi, which would create jobs in smaller towns and villages.

“The factory is in a small village called Mathapuram in Tenkasi district, close to the Zoho office in Mathalamparai village,” informed Vembu on X social media platform.

“We have trained a group of about 15 talented young people drawn from surrounding villages to work in the factory,” he said, adding that this is a small beginning for a big dream in rural manufacturing.

Zoho has also invested in an aerospace startup called Yali Aerospace.

The investments are part of its ongoing efforts to build deep-tech know-how and manufacturing capabilities in India.

According to Vembu, Karuvi and Yali are startups that are not only innovating in their respective fields but are also creating jobs and bringing technical skill-sets to smaller towns and villages.

Karuvi is a mechatronics startup that has launched 10 tools ranging from drills and power saws to angle grinders. The Karuvi products are manufactured with around 95 per cent locally sourced components.

According to MSD Prasad, CEO of Karuvi, they will add more tools to the portfolio and plan to have at least 30 products by the end of 2025.AGENCIES

 Three people were killed after a plane crashed in the Moscow Region, the Russian Emergencies Ministry said in a statement.

According to preliminary information, the plane, a Russian-designed Superjet 100, fell in a forest area in the Kolomensky district of the Moscow Region, Xinhua news agency reported on Friday.

The crash took place during a test flight after a scheduled repair, the TASS news agency reported.

No casualties have been reported among the local population. AGENCIES

 At least 60 bodies of Palestinians were found on the streets and in houses after the Israeli army withdrew from some neighbourhoods in Gaza City in the northern Gaza Strip, the Civil Defence Service in Gaza said.

The Civil Defence Service said on Friday that its crew members began to recover the deceased from the Tal al-Hawa neighbourhood and some areas west of the city following the withdrawal of Israeli army forces.

The Israel Defense Forces (IDF) said in a statement on Friday that its troops started a “counterterrorism” operation in the area earlier this week after intelligence indicated that Hamas and Islamic Jihad militants and infrastructure were embedded inside the UNRWA headquarters in Gaza City.

The IDF said on its X account on Friday that it found large quantities of weapons in a compound near UNRWA’s headquarters, Xinhua news agency reported.

It added that the troops opened a “defined corridor” to enable civilians to evacuate from the area at the start of the operation.

On Thursday, more than 60 bodies were also recovered from the rubble in the eastern Gaza City neighbourhood of Shujaiya after a two-week Israeli ground offensive.

Israel has been conducting a large-scale offensive against Hamas in the Gaza Strip to retaliate against a Hamas rampage through the southern Israeli border on October 7, 2023, during which about 1,200 people were killed and more than 250 were taken hostage.

The Gaza-based health authorities said on Thursday that the Palestinian death toll from ongoing Israeli attacks on Gaza has risen to 38,345. AGENCIES

 The H5N1 highly pathogenic avian flu virus may be more infectious to humans if passed on from cattle than directly from birds,  local media reported, citing a team of researchers in Japan.

The researchers led by Yoshihiro Kawaoka, director of the University of Tokyo, Pandemic Preparedness, Infection and Advanced Research Center, published their findings in the online edition of the British scientific journal Nature dated July 9, reported Xinhua news agency.

The team used receptors in human respiratory cells to react with both bovine-derived and avian-derived H5N1 viruses and found that the bovine-derived virus had stronger binding strength than the avian-derived virus, with the data suggesting that the former “more efficiently infects humans” than the latter, the media report published in Japanese daily Mainichi Shimbun said on Wednesday.

The researchers also confirmed that bovine-derived virus is highly pathogenic to mice and ferrets. When ferrets and mice were infected with bovine-derived H5N1, the virus multiplied throughout the body, including the brain and muscles, and was highly virulent, it added.

“It has been suggested that the nature of the virus may have changed. We should be concerned about human-to-human transmission as well in the future,” Kawaoka said.

The H5N1 strain is characterised by its extremely high infectivity and virulence in birds. Global outbreaks began in the 2000s, causing mass deaths of chickens in many regions.

A series of cases of infection in various mammals have been found since 2020, with 28 human infections reported to the World Health Organisation, but no cases of human-to-human transmission have been confirmed, Mainichi Shimbun reported. AGENCIES

 With 12 new fatalities confirmed, Israel has recorded 31 deaths from West Nile fever since an outbreak in the country in early May, health authorities said.

The Health Ministry on Friday, in a statement, reported 49 new infection cases, bringing the country’s total to 405, close to the annual record high of 425 cases in the year 2000, Xinhua news agency reported.

The Ministry attributed the high morbidity to warmer and more humid weather in the region, which is favourable to mosquitoes, a host that transmits the virus from birds through bites to humans.

The Israeli news website Ynet reported that most of the infected are elderly, aged 70 years and above, while children were also diagnosed with the virus.

Most human infections show no to mild cold symptoms, but occasionally, some people develop severe illnesses affecting the central nervous system.

Earlier this week, Israel’s chief veterinary officer, Tamir Goshen, told the news website that 159 birds were found infected with the virus in the last two months, compared to only three infections among birds in 2023. AGENCIES

 An Ecuadorian court sentenced five defendants accused of murdering former presidential candidate Fernando Villavicencio to prison terms between 12 and 34 years.

Carlos Angulo, alias “Invisible,” one of the leaders of the drug trafficking gang “Los Lobos,” and Laura Castillo were sentenced to the maximum penalty of 34 years and eight months in prison for orchestrating the murder, reported Xinhua news agency.

Another two men and a woman were sentenced to 12 years in prison as accomplices.

The court also demands full reparation for the suffering of Villavicencio’s family.

Villavicencio, a 59-year-old politician and journalist, was killed in an armed attack after a political rally in the city of Quito on Aug. 9, 2023. He was campaigning in early elections after then-President Guillermo Lasso dissolved the National Assembly amid a political crisis. AGENCIES

 Gitanas Nauseda was inaugurated as President of Lithuania for a second term, according to a statement from Lithuania’s Presidential Palace.

The inaugural ceremony started at noon on Friday with a ceremonial event in the Lithuanian Parliament, the Seimas, where Nauseda took the presidential oath with his hand on the Constitution, Xinhua news agency reported.

At the inauguration, Nauseda said that Lithuania’s defence budget should reach four per cent of GDP, which would allow Lithuania to develop long-range air defence, a missile shield to protect the Baltic Sea coast, and fortifications to protect land borders.

On domestic policy, Nauseda promised to further reduce social exclusion, create a more family- and senior-friendly environment, as well as focus on regions, culture, and education.

After the oath-taking ceremony at the Seimas, the President attended a Holy Mass at Vilnius Cathedral and saluted a formation of colour guards, squads, and commanders in Cathedral Square.

The Lithuanian government has returned its powers to the President, who will instruct the Cabinet to continue its work as a caretaker government until the Seimas votes again on Ingrida Simonyte’s nomination to continue as Prime Minister.

Nauseda, a 60-year-old economist, was re-elected president in May after defeating his rival Simonyte in the second round of presidential elections. AGENCIES