Initial preliminary forecasts released on Tuesday predicted India’s growth rate would be 6.4%, the slowest in four years. However, this number will be revised repeatedly in subsequent releases. Meanwhile, Microsoft CEO Satya Nadella has revealed plans to invest in expanding its artificial intelligence (AI) capabilities in India.
Revision trends
Initial preliminary forecasts for 2024-25 predicted India’s GDP growth rate to be 6.4%, the slowest since 2020-21. However, these are early estimates and may be significantly revised in subsequent releases. Corrections between the initial quote and the final quote are made in both directions. According to the Mint’s analysis, real GDP growth was revised upward more than downward between 2016-17 and 2023-24, with upward revisions exceeding 100 basis points in two of those years. However, the budget proposal to be submitted next month will require the use of advance estimates for revenue and expenditure forecasts.
Service advantage
India’s services exports exceeded goods exports, reaching $35.7 billion in November 2024, about $3 billion more than goods, according to preliminary data. If this holds true after the final data is released, it would be the first historic change in nearly 30 years. India’s share in global services exports has steadily increased, reaching 4.2% by 2023, while India’s share in goods exports has remained flat since the 2008 global financial crisis. The main driver of this growth is the rise of software and business services.
AI eyes
$3 billion: This is Microsoft’s planned investment in India to strengthen its AI and cloud capabilities, CEO Satya Nadella announced during a visit to the country. The announcement came after a meeting with Prime Minister Narendra Modi where they discussed technology and AI. Mr. Nadella expressed enthusiasm for supporting India’s AI-first vision and long-term development goals. The funding will be used to expand Microsoft’s Azure cloud services and AI infrastructure, including new data centers. Nadella also revealed plans to train 10 million people in AI skills by 2030 through the company’s ADVANTA(I)GE India program.
market anxiety
Fears over the new virus caused market selloff on Monday, INRInvestor assets are 11 trillion. The BSE Sensex fell over 1.5%, while the Vix (volatility index) rose 15.6%. The detection of human metapneumovirus (HMPV) infection in India has added to existing concerns such as weak corporate profits, economic growth and weak rupee. Disappointing quarterly reports from banks and slowing credit growth further soured sentiment. Derivative selling and short selling by foreigners pushed the index below key levels, suggesting continued market weakness.
Manufacturing slowdown
A sharp decline in urban consumption has slowed India’s growth, particularly affecting manufacturing, which grew at just 2.2% in the July-September quarter, compared with 7% in the previous quarter. Sluggish profits and high food inflation have sharply reduced demand in urban areas and forced consumers to cut back on spending. Although demand in rural areas is showing signs of recovery, it is not enough to compensate for weakness in urban areas, the Mint’s primer showed. This, combined with weak exports and the negative impact of the monsoon on power and mining, led to a slowdown in manufacturing.
luxury sale
INR$100 million: This is the price of some of India’s most exclusive homes, with cities like Delhi-NCR, Mumbai and Bangalore seeing record deals in 2024. Areas like Pali Hill in Mumbai and Golf Course Road in Gurgaon are at the forefront. , driven by billionaires, CEOs, and celebrities who seek such luxury real estate. Developers like Rustomjee and DLF sell such things. INRMore than 10 billion units. India’s real estate market saw a 16% increase in sales in 2024, driven by rising prices and larger homes, despite a slight decline in home sales.
Capital investment burden
To meet capital expenditure targets ahead of the Union Budget, the Center is considering easing conditions for states to avail 50-year interest-free loans. As of November, the government had achieved only 48% of its capital expenditure budget, and has set a modest target of 17% for the current fiscal year, compared to the 30% increase expected from FY21 to FY24. However, there is a significant shortage. The center has assigned INR$1.5 trillion in loans to states and loosening rules to make loans faster could help speed up capital spending.
Chart of the Week: From Global to Local
Indian technology companies have reduced their reliance on H-1B visas in recent years. In 2024, companies like Cognizant, Infosys, TCS and Wipro secured 25,261 H-1B visas, a significant drop from 48,163 in 2014. At the same time, these companies increased hiring in the United States, reflecting a shift toward local hiring.
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