Business/TechnologyIndia
As of March 2025, India’s economy continues to demonstrate resilience amid global challenges, maintaining a steady growth trajectory.
18 March 2025
Economic Growth: The World Bank’s latest update highlights India’s robust economic performance despite subdued global conditions. To achieve its ambitious target of $1 trillion in merchandise exports by 2030, India is focusing on diversifying its export portfolio and integrating more deeply into global value chains.
Trade and Tariffs: Trade dynamics are evolving, with the U.S. exerting pressure on India to lower its high tariffs. Recent discussions between Indian Commerce Minister Piyush Goyal and U.S. officials aim to formulate a bilateral trade agreement to prevent reciprocal tariffs. While progress has been made, challenges persist due to India’s traditionally high tariffs, particularly in the agricultural sector.
Financial Sector: The financial landscape has seen significant developments, including the appointment of new regulators to key positions. Tuhin Kanta Pandey now leads the Securities and Exchange Board of India (SEBI), and Sanjay Malhotra serves as the Governor of the Reserve Bank of India (RBI). These appointments signal a strategic shift towards accelerated economic growth, though concerns about regulatory autonomy and accountability have been raised.
Stock Market Performance: Indian stock markets have experienced volatility, influenced by global market sell-offs and domestic sectoral performances. The Nifty 50 and Sensex indices recently recorded declines of 0.3% and 0.36%, respectively, primarily due to downturns in the information technology and private banking sectors. Global economic uncertainties and tariff-related apprehensions have contributed to these fluctuations.
Challenges in the Business Environment: Despite reforms aimed at easing business operations, companies continue to face hurdles such as complex tax structures and bureaucratic procedures, often referred to as ‘tax terrorism.’ Instances of unexpected tax demands have deterred further investments, underscoring the need for more streamlined regulations to enhance India’s business climate.
Renewable Energy Sector: The renewable energy sector confronts challenges, including financial strains and regulatory shortcomings. Allegations of corruption involving major industry players have exposed vulnerabilities within the sector, emphasizing the necessity for robust regulatory frameworks and comprehensive market reforms to ensure sustainable growth.
While India’s economy exhibits strength and resilience, it faces ongoing challenges that require strategic policy interventions and reforms to sustain its growth momentum. Let us understand the fundamentals, from a different perspective as highlighted by Dr. Uma Shankar Singh (Retired IFS); India is growing at the rate of 5.4% , China is growing at 4.9% while the USA is growing at 2.7%. Let us not forget that the USA added 787 billion USD to its GDP at a constant price, China added 895 billion USD to its GDP whereas India added only 256 billion USD at the constant price. India’s economy is slowing down and its growth engines namely, consumption, public investment and private investment seem to be down.The illusion of growth and wellbeing of Indians are seen because 1% of the super rich Indians are on a prowl of obscene consumption where as 30% of the middle class and 69% of the poverty stricken people are cutting up their consumption which is otherwise required to be a developing country at a faster pace. We don’t look at the dwindling economy and attention is diverted to insignificant issues like temples and mosques.
Dr. Singh suggests that the reason for this slow down chiefly focuses on two important issues-that is often overlooked; namely, food inflation and low and nearly stagnant wages. In between 2017 and 2023 the real wages of the agricultural workers (male) rose from Rs 138 per day to Rs 158 per day. According to current projections, inflation in 2025 is expected to be significantly higher compared to 2017, with most estimates placing it around 4.3% in 2025 compared to a lower rate in 2017. Adjusting it to inflation, it may come to less than what a rural worker was getting in 2017. Wages for the female rural agriculture worker is Rs 40 less than this. Similarly, the wages for construction workers(male) in the year 2017 was Rs.176 per day which rose to Rs. 205 per day in 2023. The wage for construction females was Rs 45 lower. Anyone who understands economics may know that one of the easiest boosters is the government investment which has remained constant at 6-7% since the last ten years of the Modi government; but, capital expenditure has come down from 4.7% of GDP (2019-20) to 3.8% of GDP (2023-24). Gross fixed capital formation, which is proxy to private investment has been varying between 21% to 24% unlike 2013 when it was 32%.
Dr. Singh further illustrated that the consumer food price index (CFPI) inflation, which has averaged 8.4% in April-December remains threatening. The health care costs have increased at an annual rate of 14%.The rate of inflation in education has been found to be around 11%. The unemployment rate in the month of December 2024 is 8.4%. The total tax payers in India have gone up in 2024 to the extent of 8.9 crore but a little more than half filed zero taxes therefore, this is a serious issue. Corporate profits have increased in 2024 to the level of Rs.14,11,000 crores compared to Rs.10,88,000 crore in 2023. Dr. Singh remarked on an interesting point for all of us to remember that most of the billionaires are not tax payers.
(This story has not been edited by News Mania staff and is published from a Media Release)
