India's Economic Growth: Key Sectors, Gov Policies, and Global Trends

India's economy continued to demonstrate its resilience and strength in August, with key sectors showing robust growth and positive indicators. The services sector, a cornerstone of the Indian economy, experienced its fastest expansion in five months, driven by strong demand and easing inflationary pressures. This positive momentum was complemented by other encouraging developments, such as relaxed norms for capital expenditure and increasing competition among banks to attract deposits.

Government economic policies have played a crucial role in supporting India's economic growth. The government's focus on infrastructure development and economic reforms has created a conducive environment for businesses to thrive. Indian government investments in key sectors, such as technology and agriculture, have also contributed to the overall economic growth.

Top Business, Economy, and Policy News

1. India’s services sector expanded significantly in August, marking a five-month high, fueled by strong demand and easing inflation. The HSBC India Services PMI surged to 60.9, indicating sustained and above-average growth.
2. To accelerate capital expenditure, the finance ministry relaxed norms for projects exceeding ₹500 crore. This aims to reinvigorate spending, which had slowed during the general election period. The government's capex target for this fiscal year is ₹11.11 lakh crore.
3. Increased competition among banks saw them offering higher interest rates to attract deposits. By June 2024, over two-thirds of bank deposits offered interest rates of 7% or higher, reflecting rising credit demand.
4. The Global Trade Research Initiative (GTRI) criticized the World Bank’s recommendation for India to reconsider joining the RCEP, calling it outdated and flawed. GTRI emphasized the need for data-driven policy decisions for developing nations.
5. Sanjeev Sanyal, from the Prime Minister's Economic Advisory Council, called for a rethink of India's maritime strategy. He highlighted the need for upgrading infrastructure and investing in maritime resources to bolster India's global standing.
6. The government plans to raise ₹4,700 crore through the sale of a 6.8% stake in GIC Re, contributing to its disinvestment target of ₹50,000 crore for the fiscal year.
7. The GST Council is considering lowering the levy on health and life insurance policies with premiums under ₹50,000, a move aimed at reducing costs for lower- and middle-income groups.
8. India’s paper market continued to dominate globally, with consumption of packaging paper and paperboard growing by 8.2% in 2023-24. Meanwhile, the hospitality sector attracted $93 million in investments in the first half of 2024.
9. Challenges persist in India's semiconductor industry, with infrastructure gaps, weak supply chains, and talent shortages hindering Taiwanese companies’ efforts to establish manufacturing hubs. Marginal growth is expected in the commercial vehicle sector in FY25, while the electric three-wheeler market faces consolidation due to stricter regulations and reduced subsidies.
10. There has been a surge in demand for in-house legal experts in India, driven by complex M&A deals. Conglomerates are strengthening their legal teams to manage these transactions.
11. India’s IT hardware industry opposes government proposals to lower local value addition requirements for procuring certain components, warning that such changes could limit participation in state tenders.
12. India's air safety record improved, with a 25% reduction in risk-bearing incidents over the past two years. The Ministry of Road Transport plans to build 74 tunnels, covering 273 km, with a ₹1 lakh crore investment.
13. The rollout of 5G and 6G technology is expected to drive growth, according to the Telecom Secretary. The government is also working on replacing the 150-year-old Telegraph Act.
14. India's crude oil imports from the US have surged due to tightening Russian sanctions. The government extended the interest equalization scheme for exporters until September 30, 2024.
15. India’s current account deficit is projected to widen to 1% of GDP in Q2 FY25, driven by rising imports and a slowdown in exports.

India's global economic standing has been steadily improving, as the country has emerged as a major player in the global market. India's economic challenges, such as poverty and inequality, are being addressed through various government initiatives. However, India's economic opportunities remain vast, and the country's future looks promising.