Aurelia Butler

In last year’s Independence Day speech at the Red Fort in Delhi, Narendra Modi made a bold pledge: India would become a developed economy by 2047, when it celebrates 100 years since its founding. The country had three things in its favour, the prime minister declared: “demography, democracy and diversity”.The vow would have seemed implausible a decade ago. In 2013, the year before Modi took power, India was identified by Morgan Stanley among a group of vulnerable emerging-market economies, dubbed the “Fragile Five” for their reliance on foreign capital to fuel their economies and, in many cases, big current account deficits.Ten years later, Modi’s India is firmly in the sights of international investors, consultants and trading partners as one of the world’s fastest-growing big economies and a critical “China plus one” destination for companies seeking to reduce their exposure to political currents in Beijing.In India’s upcoming national election, expected between April and May, Modi will make much of his Bharatiya Janata party’s economic record during its 10 years in government, touting its successes in delivering growth, reducing poverty and building infrastructure including airports, railways and roads.But what do the numbers show?The Financial Times has analysed official data for gross domestic product growth, unemployment and poverty reduction, as well as indicators tracking job creation and employment, examining how they have performed in absolute terms and comparatively against other countries in some cases.India’s statistics are in many cases deficient — the country has not held a census since 2011, for example — or in dispute, as in the case of unemployment data, but the numbers point to some clear trends.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.During Modi’s two terms in office, India has on average been one of the fastest-growing large economies. Between 2014 and 2022, GDP grew at an average of 5.6 per cent in compound annual growth rate terms. An average of 14 other large developing economies had a CAGR of 3.8 per cent over the same period.But India’s growth rate was even higher from 2000 to 2010, at more than 6 per cent on average. Economists said India’s economy would need to grow faster than its current 6-7 per cent rate in order to absorb a growing number of entrants into the workforce and meet Modi’s goal of reaching developed country status by 2047.India is the poorest among the Brics nations, said Raghuram Rajan, professor of finance at the University of Chicago Booth School of Business and a former Reserve Bank of India governor, referring to the grouping that also includes Brazil, Russia, China and South Africa. It also “has a much longer distance of travel before it reaches their level of per capita income”, he said. “Growth has been good, but it has to be set in perspective.”You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Extreme poverty has continued to fall since Modi took power. The share of India’s population living in extreme poverty has fallen from 18.7 per cent in 2015 to 12 per cent in 2021, according to World Bank data. Urban and rural regions both registered a drop in the share of people living below the international poverty line of $2.15 a day.These gains are partly thanks to generous social transfers to the poorest under Modi’s government. In November, India extended one of the biggest such schemes, launched during the Covid-19 pandemic, under which more than 813mn people, or more than half of the population, benefit from free food grains for another five years.“The emphasis of this government has been on efficient delivery of a lot of welfare schemes,” said Krishnamurthy Subramanian, executive director at the IMF and a former chief economic adviser to the Modi government. Its use of technology, including the creation of more than 500mn bank accounts for the poor, linked with biometric identification via India’s digital ID system Aadhaar, has “helped direct welfare transfers precisely to the beneficiaries and eliminate pilferage to middlemen”, he added.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Rapid economic growth has opened the door to the middle class for tens — by some measures hundreds — of millions of Indians over the past decade. According to data from household surveys conducted by People Research on India’s Consumer Economy, an Udaipur-based non-profit think-tank, the middle class — comprising people with annual family income of Rs500,000-Rs3mn ($6,700-$40,000 at 2020-21 prices) — has been among the fastest-growing income groups since Modi took power in 2014.“The top income segment — the rich — has soared from 30mn to 90mn, while 520mn are middle class currently, up from 300mn in 2014,” said Rajesh Shukla, the think-tank’s managing director and chief executive.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Since Modi took power, his government has taken steps to improve public health and hygiene, including a nationwide campaign to build public toilets. Infant mortality has also fallen steadily, though the improvement predates Modi’s time in office. As of 2020, India’s infant mortality rate was lower than South Africa’s.While the Modi government has presided over a period of mostly high growth, the economy has failed to create enough jobs. Unemployment — which has especially hit the country’s youth, the world’s largest population of young people — figured prominently in hard-fought state elections in 2023 and will be a point of attack for Modi’s opponents in this year’s election for the lower house of parliament.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The jobless rate has barely budged during Modi’s time in office and exceeded 10 per cent in October for the first time since the pandemic, according to the Centre for Monitoring Indian Economy, which produces India’s most-cited unemployment figures. Among young people aged 15-34, the CMIE figures are even worse: unemployment in that group stood at 45.4 per cent in 2023.Some economists — as well as the Modi government itself — say the CMIE data is inadequate and prefer to cite unemployment figures gathered by India’s statistics ministry in its Periodic Labour Force Survey, which show a decline in jobless rates.But in a country where millions work in menial or low-quality jobs, other analysts say India’s unemployment numbers cannot be trusted at all. Ashoka Mody, visiting professor of international economic policy at Princeton University and author of the scathing economic history India Is Broken, calls the official unemployment numbers “a meaningless statistic in the Indian context”, arguing that it hides a bigger problem of underemployment.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Women account for a smaller percentage of the labour force than when Modi took power in 2014. India’s female labour force participation rate fell from 25 per cent in 2014 to 24 per cent in 2022, lower than regional neighbours Bangladesh, Sri Lanka and Pakistan. Economists have said getting more women into work would boost India’s growth — by up to 1.5 per cent, according to one World Bank estimate — but safety issues and social pressure prevent many from doing so.“One problem is the availability of jobs, and the availability of jobs where women feel safe outside the home,” said Swati Narayan, associate professor at OP Jindal Global University and author of Unequal, a book about why India lags behind its south Asian neighbours in social and economic development. “In India, there are a lot of taboos about women going outside to work.”You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Spending on roads, railways and other infrastructure has surged under Modi and has been an engine of economic growth. India plans to spend Rs5tn, or 1.7 per cent of GDP, on capital expenditure for building roads and railways, up from 0.4 per cent of GDP in 2014, according to calculations based on the FT’s analysis of Union Budget data. Data compiled by CMIE also point to a construction boom since Modi took office, with India adding more than 10,000km of roads each year since 2018.“This is something that this government has done very well — lots of road and rail network construction,” said Rajan at the University of Chicago.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.India has boasted of its success in bringing nearly 1bn people online, promoting its public digital infrastructure as a model for other developing countries. The Aadhaar system of digital IDs began under Modi’s predecessors in a Congress-led government but has been brought to life during his tenure and parlayed into a full-fledged digital payments ecosystem, dubbed the India Stack. The drive to bring more Indians online was supported by a proliferation of cheap, mostly made-in-India smartphones, which more than 60 per cent of Indians now carry. According to India’s government, the value of digital transactions has grown 70 per cent over the past five years, from Rs1,962tn in the 2017-18 fiscal year to Rs3,355tn in 2022-23.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.India prides itself on its globally connected information technology sector, with a host of domestic and foreign companies clustered in southern India, especially around Bengaluru and Hyderabad, making the country the “back office of the world”.But India is falling short on research and development spending. Its share of the economy has dropped under Modi to less than 0.7 per cent of GDP, a lower rate than that of any other Brics country and far below the roughly 5 per cent of GDP spent by some of the world’s biggest R&D centres, led by South Korea and Israel.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.While many economic indicators have improved, democracy watchdog groups have downgraded India’s rankings on basic freedoms over the past 10 years.The BBC’s India head office and Indian news website NewsClick were raided in 2023, and journalists from other organisations have faced criminal charges or jail time in what watchdog groups describe as a crackdown on free expression.India’s press freedom ranking according to Reporters Without Borders (RSF) dropped to 161 in 2023, down from 140 in 2014 and only three places higher than Russia, which unlike India cannot credibly claim to be a democracy.Defenders of the Modi government’s record have questioned the reliability of rankings on human rights and civil liberties compiled by RSF, Freedom House and other groups, while some Indian civil society groups have argued that a free press — including an independent business press — is crucial not just to protecting Indian democracy but its economy, too.“The reason you move to ‘China plus one’ is because of the undemocratic and opaque power structure in China,” said Yamini Aiyar, chief executive of the Centre for Policy Research think-tank. “If India loses this piece, it will have huge repercussions in the long run.” More

BENGALURU (Reuters) – The Bank of Korea will keep its key policy rate unchanged at 3.50% for an eighth consecutive meeting on Thursday as inflation eases and until at least Q3 despite some concerns around financial stability, a Reuters poll found.With inflation currently at 3.2%, above the central bank’s 2% target, and the Korean won down around 1.8% against the dollar so far this year, the BOK is unlikely to change its hawkish stance anytime soon.However, Governor Rhee Chang-yong said in a New Year speech the BOK would adopt a “policy mix” to bring down inflation and needed to prepare for the possibility of financial uneasiness that may be triggered by monetary policy remaining restrictive.All 38 economists in the Jan. 3-8 Reuters poll expected the BOK to leave the base rate unchanged at 3.50% on Jan. 11.”They (the BOK) will freeze the policy rate for the time being, but are likely to loosen their stance a bit,” said Stephen Lee, chief economist at Meritz Securities Research Center.”The most likely scenario for the BOK’s pivot will be in 2H24. By then, both headline and core inflation will fall below 2.5%…increasing the need for policy support related to a soft-landing. The problem can be bigger if interest rates remain higher throughout the year.”According to the central bank, inflation was expected to return to its target in late 2024.Median forecasts showed interest rates remaining on hold until end-Q2, followed by 25 basis-point cuts in each of the remaining two quarters of this year, unchanged from a November poll.Among those who had forecast through Q3, nearly half or 11 of 24 economists expected interest rates to fall to 3.25%. While 10 saw them at 3.00%, two predicted no change at 3.50% and one saw rates at 2.75%.If realised, the BOK’s easing cycle for this year would be shallower than what is expected from the U.S. Federal Reserve, one of Korea’s largest trading partners.”There is not enough reason for the BOK to begin easing earlier. Healthier exports should mitigate weaker domestic demand following the BOK’s restrictive monetary policy while the government’s fiscal policy can provide selective support for the weaker segments of the economy,” noted Jin Choi, economist at HSBC. “We think the Board will likely retain its cautious stance mainly for two reasons. Firstly, we are not in for fast disinflation ahead. Moreover, the BOK has been stressing the risk of accumulated cost pressures faced by various domestic producers.”Economic growth will improve this year, averaging 2.1% in 2024 from 1.4% last year, BOK estimates showed.(For other stories from the Reuters global economic poll:) More

SINGAPORE (Reuters) – The dollar paused its rally on Tuesday, as traders reaffirmed their bets for a slew of Federal Reserve rate cuts this year on the belief that inflation in the U.S. is slowing sufficiently.In cryptocurrencies, bitcoin hovered near its strongest level since April 2022 on growing anticipation of imminent approvals of spot bitcoin exchange-traded funds (ETF).The euro last stood at $1.0950, away from its recent three-week low of $1.0877, while the Japanese yen distanced itself from the 145 per dollar level following a broad decline in the greenback as U.S. Treasury yields slipped. [US/]The moves were partly driven by the New York Fed’s latest Survey of Consumer Expectations which showed that U.S. consumers’ projection of inflation over the short run fell to the lowest level in nearly three years in December.A reading on U.S. inflation is due later in the week, which will likely provide further clarity on how much room the Fed has to ease rates this year.”The big story last night, the catalyst, was the data regarding inflation expectations going forward,” said Kyle Rodda, a senior financial market analyst at Capital.com.”While it’s still a tight labour market, we’re still seeing those sort of disinflationary impulses in the United States, which again raises the probability that the Fed will have capacity to cut rates fairly soon.”Futures point to nearly 140 basis points worth of easing priced in for the Fed this year.Against a basket of currencies, the U.S. dollar eased slightly by 0.08% to 102.22, having risen 1% last week.Sterling advanced 0.04% to $1.2754, while the risk-sensitive Australian and New Zealand dollars likewise edged higher.The Aussie last gained 0.04% to $0.6723, away from its three-week low of $0.6641 hit last Friday. The kiwi rose 0.05% to $0.6256 and was similarly some distance away from Friday’s three-week trough of $0.6182.In Asia, data on Tuesday showed core inflation in Japan’s capital slowed for the second straight month in December, taking some pressure off the Bank of Japan (BOJ) to rush into exiting ultra-loose monetary policy.The yen was little changed following the release, and was last 0.17% higher at 143.975 per dollar.Elsewhere, bitcoin hovered near the $47,000 mark and last stood at $46,923, after having scaled a 21-month top of $47,281 in the previous session.A raft of investment managers had on Monday disclosed the fees they plan to charge for their proposed spot bitcoin ETF, in another step toward approval this week by the U.S. securities regulator.”Obviously, there’s clearly fundamental reasons why you’d feel bullish about this – it shows greater integration of crypto assets into the traditional financial ecosystem, there’s likely going to be increased flow and demand, by extension, for bitcoin and other cryptocurrencies,” said Capital.com’s Rodda.”What I’d be very wary of is a ‘buy the rumour, sell the fact’ situation.”Ether, the second-largest cryptocurrency, steadied at $2,314.70. More

LONDON (Reuters) – British retailers reported lacklustre sales around Christmas, according to industry data released on Tuesday which may add to concerns that the economy has tipped into a mild recession, less than a year before a likely national election.The British Retail Consortium (BRC), a trade body for supermarkets and other big stores, said spending in cash terms in December was 1.7% higher than a year earlier, representing a fall in purchases after inflation is taken into account.”The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer confidence continued to hold back spending,” BRC Chief Executive Helen Dickinson said.British shoppers have had to contend with high inflation and the Bank of England raising interest rates to a 15-year high of 5.25% in response to the jump in prices.Consumer price inflation was 3.9% in November. This was down from 10.1% in January, but wages failed to keep up with prices for most of 2023 and the economy shrank by 0.1% in the third quarter. Economists polled by Reuters expect data due on Friday to show another fall in the three months to the end of November.In 2023 as a whole, retail spending rose 3.6%, driven by an 8.1% rise in spending on food, the BRC said. Non-food spending over the course of last year fell by 0.1%, with a 1.5% annual drop in the final three months of 2023.”Christmas shoppers ditched clothing, jewellery and technology gifts, opting for beauty, health and personal care products,” Paul Martin, head of retail at survey sponsors KPMG, said.So far, Christmas trading reports from retailers have been mixed. Clothing chain Next and discount supermarkets Aldi UK and Lidl GB have reported robust outcomes but sportswear group JD (NASDAQ:JD) Sports Fashion warned on its annual profit. December’s BRC figures marked a slowdown from November’s sales growth of 2.7%. Official retail sales data – which covers more stores than the BRC – showed a 5.7% annual rise in non-fuel spending for November, or a 0.3% rise in sales volumes after adjusting for inflation.Separate figures from Barclays also showed weaker spending growth, though the bank saw some silver lining, saying part of the fall reflected lower inflation. Its customers spent 2.3% more on credit and debit cards in December than a year earlier, down from November’s 2.9% growth. Spending at petrol stations and supermarkets fell or slowed in December, reflecting lower fuel prices last month and seasonal promotions in November which encouraged shoppers to stock up. But spending in pubs, bars and clubs was up strongly.”We expect (inflation) to fall further in the opening months of 2024. This puts more spending power in the pockets of UK consumers and should help support them to continue to spend, even against the tough backdrop of weak economic growth,” Barclays Chief Economist Jack Meaning said. More

Fino Payments Bank, having met the revised minimum capital necessity of Rs 200 crore (1Rs=$0.012), is poised to enhance its banking infrastructure. CEO Rishi Gupta highlighted the bank’s readiness, stating that the capital threshold has been achieved. The financial results for the quarter ending September FY24 underscore the bank’s robust financial health, showcasing a net profit surge of 41.5% to Rs 19.5 crore and an 18.2% increase in revenues, reaching Rs 358.6 crore.The RBI’s initiative to permit payment banks like Fino Payments Bank to upgrade to SFBs after five years of operations is part of a broader strategy. This plan is designed to fortify the banking sector’s foundation and improve the availability of financial services, especially catering to the needs of small businesses and farmers, who often lack sufficient access to traditional banking services.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

This comment comes as the ECB continues to navigate the delicate balance between supporting economic growth and curbing inflation.The ECB’s stance on interest rates suggests a cautious approach to monetary policy, as European officials monitor inflation trends before making further adjustments. The PBOC’s strategy, on the other hand, represents a more proactive measure to invigorate economic activity through monetary easing.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

“My view has evolved to consider the possibility that the rate of inflation could decline further with the policy rate held at the current level for some time,” Bowman said in remarks prepared for delivery to the South Carolina Bankers Association 2024 Community Bankers (NASDAQ:ESXB) Conference. Bowman had previously indicated she felt another rate hike would likely be needed to beat inflation, which by the Fed’s preferred measure has fallen from 40-year highs in 2022 to around 2.6% as of November.”Should inflation continue to fall closer to our 2 percent goal over time, it will eventually become appropriate to begin the process of lowering our policy rate to prevent policy from becoming overly restrictive,” Bowman said.The Fed last month held its policy rate steady in the 5.25% to 5.5% range, where it has been since last July, and signaled that its next move could be a reduction in the policy rate sometime in 2024.Bowman’s comments Monday suggest she is on board with that view, though she said she remained vigilant about risks that could push inflation back upward – including geopolitics, a recent easing in financial conditions and labor market tightness that could keep services inflation too high. “While the current stance of monetary policy appears to be sufficiently restrictive to bring inflation down to 2 percent over time, I remain willing to raise the federal funds rate further at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed,” Bowman said. More