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The Reserve Bank of India’s rate-setting panel on Friday raised India’s FY25 real GDP forecast to 7.20 per cent from 7 per cent earlier on prospects of improving rural and urban demand conditions buoyed by monsoon forecast, Governor Shaktikanta Das said.The central bank upgraded its quarterly forecast for growth as well, with Q1, Q2, Q3 and Q4 now expected to grow at 7.3 per cent, 7.2 per cent, 7.3 per cent and 7.2 per cent respectively.The MPC at its April meeting, while warning of geopolitical headwinds, projected India's GDP to grow at 7 per cent in the ongoing financial year. India's economy would grow at 7.1 per cent, 6.9 per cent, 7 per cent and 7 per cent in each quarter of FY25.With a 4:2 majority, the Monetary Policy Committee voted to leave the benchmark lending rate unchanged at 6.25 per cent."Domestic economic activity has maintained resilience," RBI Governor Das said while announcing the policy decisions. 110784530"During 2024-25, so far the domestic economic activity has maintained resilience. Manufacturing activity continues to gain ground on the back of strengthening domestic demand. The 8 core industries posted healthy growth in April 2024. Purchasing Managers Index, that is PMI in manufacturing continued to exhibit strength in May 2024 and it is indeed the highest globally," Das said."The services sector maintained buoyancy as evident from available high-frequency indicators. PMI services stood strong at 60.2 in May 2024, indicating continued and robust expansion in activity," he added.Indian economy in FY24Having grown 7.8 per cent in the final quarter of the previous financial year, the Indian economy likely grew at 8.2 per cent in FY24, government data released last week showed. In FY23, India had registered a growth rate of 7 per cent.India has now managed to grow at 7 per cent or above for the third consecutive year. If RBI's Friday forecast for FY25 materialises, it would be the fourth year of 7 per cent or above growth for the Indian economy."The Q4 GDP growth data for 2023-24 shows robust momentum in our economy which is poised to further accelerate. Thanks to the hardworking people of our country, 8.2 per cent growth for the year 2023-24 exemplifies that India continues to be the fastest growing major economy globally," Prime Minister Narendra Modi posted on social media.The GDP data came four days before PM Modi's Bharatiya Janata Party-led NDA was voted back to power in the Lok Sabha with a 293 seat majority. While BJP has emerged as the single largest party in the lower house of the Parliament, it has done so 43 seats short of a majority, pushing India back into coalition era after 10 years. A relatively weaker mandate for PM Modi spurred worries of more threats to India's fiscal discipline and thereby growth prospects.Deutsche Bank in a note said that the Indian economy has exhibited "remarkable resilience" despite higher rates for longer, the Russia-Ukraine war and Covid prior to that, though a strong pickup in real GDP growth during FY24 can be also attributed materially to a very low GDP deflator.The report highlighted that nominal GDP growth decelerated to 9.6% in FY24, down from 14.2% in FY23 and 19% in FY22. However, real GDP growth increased to 8.2% in FY24 from 7% in FY23. This acceleration was driven by a significant drop in the GDP deflator to 1.4% in FY24, compared to 7.6% in FY23 and 9.4% in FY22.Deutsche Bank also advised caution on reading the headline GDP numbers, pointing out that while the real GDP grew 8.2 per cent, real GVA (gross value added) growth was 1 percentage point lower at 7.2 per cent.

With FIIs having already withdrawn around Rs 15,000 crore in the last four days from India amid election related uncertainties, Dalal Street is worried if a lower-than-expected mandate to Prime Minister Narendra Modi will accelerate the pace of outflow in the coming days. As a part of funds are moving towards China and out of a relatively-expensive India, the total outflow of funds in FY24 is now nearing the Rs 50,000 crore mark.However, FIIs may flock to Dalal Street sooner than later as India remains one of the highest growth emerging markets despite a lower-than-expected mandate to Prime Minister Narendra Modi. Brokerages say despite BJP failing to get full majority, continuity of power is a powerful enough narrative to support the economy and even the markets."Global investors haven't got much choice but to remain invested in India and perhaps increase allocations despite the political uncertainty. India is the fastest-growing large economy today and is likely to remain so in the foreseeable future. The valuation premium had run up beyond rational levels and hence some correction in valuations in the near term cannot be ruled out," says Aditya Khemka of InCred Asset Management.Also read | Sensex may hit 1 lakh before 5 years, thinner Modi 3.0 doesn't mean end of bull run: Mark MobiusHere are 3 reasons why FIIs may soon turn buyers:1) Underweight positioningAfter recent selling, foreign investors are not overweight India in any significant dimension. Many FIIs who are waiting on the sidelines in risk-off mode could quickly flood the Street once the new government's policies are clearer."The best is yet to come for FII investments, as net equity flows as a percentage of market capitalization over the last ten years have averaged well below 0.5%, much lower than the 2003-2007 average of 2.5%. Moreover, the inclusion of Indian government bonds in global indices is expected to attract foreign capital inflows worth $100 billion over the next three years," said Hitesh Jain of YES Securities.Kislay Upadhyay, smallcase Manager and Founder at FidelFolio, sees an inflow of Rs 1.5 lakh crore over the next 5-6 months.2) China factorThe recent reversal of "Buy India and sell China" policy in the last one-and-a-half months could be a temporary phenomenon."I think FIIs realise that India is the future. They have already seen that China has problems and they want to diversify away from China. Some of these FIIs who have been badly burned in China, do not even want to go back to China, that is probably a mistake because China is still a viable market. But nevertheless, India is going to benefit from the desire of FIIs to diversify and that is very important," says billionaire investor Mark Mobius.3) Economic fundamentalsMarket experts point out given the fact that as India's GDP growth and fiscal consolidation path remain intact, global investors will allocate more funds."With Modi at the helm, it seems likely the next phase of economic development will proceed and the long-term investment case for India, for now, remains solid," says Amol Gogate, fund manager of Carmignac Portfolio Emerging Discovery.Global brokerage Bernstein's Venugopal Garre said while some focus on subsidies at the expense of capex is likely, material impact is unlikely in the near term. Team Bernstein has retained a view of high single-digit returns, with the Nifty target unchanged at 23,500.Experts are hoping that the government will be able to implement its promises as listed in the manifesto, but any chatter of key allies not supporting this agenda and having a common minimum programme would be disturbing for markets in general, especially FIIs. "Formation of cabinet & presentation of budget would be important from that point of view for the markets over the next few days & weeks," Rakesh Parekh, MD and Co-Head, Portfolio Management Services, JM Financial, says.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of The Economic Times)

Fresh from declaring victory in India's election, Prime Minister Narendra Modi offered few details on the agenda for his third term, but went out of his way to underline he would continue to focus on raising the country's military preparedness and clout.That should come as good news to the United States and its other allies, as they focus increasingly on keeping China’s sweeping maritime claims and growingly assertive behavior in the Indo-Pacific region in check.“The government will focus on expanding defense production and exports,” Modi told a crowd of supporters at his party's headquarters after election results came in. He spoke of his plan to increase security by lowering India's dependence on arms imports. “We will not stop until the defense sector becomes self sufficient.”Defense cooperation with the U.S. has greatly expanded under Modi, particularly through the so-called Quad security grouping that also includes Australia and Japan.It’s a two-way street, giving the U.S. a strong partner neighboring China, which Washington has called its “pacing challenge,” while strengthening India’s defense credibility against a far more powerful rival.“India is currently a frontline state as far as the Americans are concerned,” said Rahul Bedi, a New Delhi-based defense analyst. “The Indian navy is a major player in the Indian Ocean region.”The defense relationship was also at the top of U.S. President Joe Biden's agenda when he congratulated Modi on the election results.In a call, “the two leaders emphasized their deepening the U.S.-India comprehensive and global strategic partnership and to advancing their shared vision of a free, open and prosperous Indo-Pacific region,” the White House said.It added that National Security Advisor Jake Sullivan would soon travel to New Delhi “to engage the new government on shared U.S.-India priorities.”It was about a year into Modi's second term when India's defense focus took a sharp turn toward China, when troops from the two nuclear neighbors clashed in 2020 in the Galwan Valley in the disputed northern border region of Ladakh and 20 Indian soldiers were killed.“China really is India's long term strategic challenge, both on the border and in the Indian Ocean as well,” said Viraj Solanki, a London-based expert with the International Institute for Strategic Studies.“This has resulted in a number of defense partnerships by India shifting, or just focusing on countering China's growing influence in the Indo-Pacific region,” he said.Beijing has a close relationship with Pakistan, India's traditional rival, and China has been increasing defense cooperation with India's neighbors, including Nepal and Bangladesh, as well as the Maldives and Sri Lanka.“China is really trying to engage more with these countries and develop its own influence and presence,” Solanki said. “I think that is a concern for New Delhi and something that will lead to increased competition in the Indian Ocean over the next few years.”In congratulating Modi on the election results, Chinese Foreign Ministry spokesperson Mao Ning said that a “sound and stable ” relationship between India and China was “in the interest of both countries and conducive to the peace and development of the region."She also added that China stood “ready to work with India,” but her comments were significantly more muted than the Foreign Ministry's remarks on Modi's last win in 2019 — before the border fight. At that time, the Foreign Ministry called the two nations “important neighbors” and said China wanted to "deepen political mutual trust, carry out mutually beneficial cooperation and push forward the closer partnership between the two countries.”Modi has always governed with his party in the majority, but after a lackluster performance in the election will now be forced to rely on coalition partners, and will face a stronger and invigorated opposition.The main opposition Congress party is unlikely to challenge Modi's defense reforms, but has been critical of how he has handled the border issue with China and may pressure him on that front, Bedi said.“Modi has not been entirely truthful, or very economical with the truth as far as the situation in Ladakh is concerned,” he said. He referred to a Defense Ministry document that was published online, and quickly removed, which had suggested Chinese troops entered Indian territory during the 2020 confrontation.“The opposition, I am sure, will raise questions and ask the government to come clean on what the real situation is.”Under Modi's program of military modernization and reform, his government has sought to grow the private defense manufacturing sector, a space previously occupied solely by the government-run organizations, and has eased foreign direct investment regulations to try and encourage companies to establish themselves in India.In a flagship project, the country launched its first home-built aircraft carrier in 2022, part of a plan to deploy two carrier battle groups to counter China’s rising maritime power.Much of India's military equipment is of Russian origin, and delays on delivery and difficulties of procuring spare parts due to Russia's invasion of Ukraine has also provided impetus for India to diversify defense procurement, looking more to the U.S., France, Israel and elsewhere, Solanki said.As it seeks to strengthen ties with India, Washington has agreed to a deal that will allow General Electric to collaborate with Hindustan Aeronautics to produce fighter jet engines.Speaking at the Shangri-La defense conference in Singapore last weekend, U.S. Defense Secretary Lloyd Austin said the countries were also co-producing armored vehicles.“The relationship that we enjoy with India right now is as good or better than our relationship has ever been,” he said. “It's really strong.”

SEOUL, South Korea: For the first time, workers at Samsung, the conglomerate that dominates the South Korean economy, went on strike Friday. The action comes as Samsung Electronics fights to regain its edge in the business of making memory chips, a critical component in the advanced artificial intelligence systems that are reshaping long-standing rivalries among global technology companies. Workers in Samsung's chip division were expected to make up the majority of those who will not report to work Friday for a planned one-day strike. Union representatives said that multiple rounds of negotiations over wage increases and bonuses had broken down. "The company doesn't value the union as a negotiating partner," said Lee Hyun Kuk, vice president of the Nationwide Samsung Electronics Union, the largest among five labor groups at the company. It says it represents 28,000 members, about one-fifth of Samsung's global workforce, and that nearly 75% voted in favor of a strike in April. A Samsung Electronics representative said the company was trying to reach an agreement with the union but declined to comment further on the strike. The work stoppage was not expected to affect Samsung's manufacturing output. It was timed to fall between a national holiday and the weekend, on a day that many people in South Korea planned to take as vacation. It was not clear how many workers would participate in the action. At a small rally in front of Samsung's headquarters in Seoul on Friday morning, workers gathered as organizers played protest songs over loudspeakers. Still, it was awkward timing for the company, which has been trying to reassure clients and investors that its chip business can meet the demands of the artificial intelligence boom. Samsung has been the world's largest maker of memory chips for years and reported about $1.4 billion in profit from its chip division in the first quarter of this year. But that comes after four straight quarters of losses. Samsung ended last year with its weakest earnings in more than a decade. Heading into the year, its local rival, SK Hynix, claimed the top spot in the market for the next generation, high-bandwidth memory chips just as demand for them took off. Companies developing artificial intelligence systems like Nvidia scrambled to buy them. Analysts say that SK Hynix anticipated this demand earlier than Samsung did. (This article originally appeared in The New York Times.)