Economy
The week in charts: GDP estimate, Nadella’s plan, ₹100 crore homes
Summary
Every week, Plain Facts publishes a compilation of data-based insights, with easy-to-read charts, to help you delve deeper into the stories reported by Mint in the week gone by.
The first advance estimates released on Tuesday forecast India's growth at 6.4%, the slowest in four years. However, this number will undergo repeated revisions in subsequent releases. Meanwhile, Microsoft CEO Satya Nadella has revealed plans to invest in expanding artificial intelligence (AI) capacity in India.
Revision trends
The first advance estimates for 2024-25 projected a 6.4% GDP growth for India, the lowest since 2020-21. However, these are early estimates and get revised significantly in subsequent releases. The revisions between the first and the final estimates occur in both directions. A Mint analysis shows that real GDP growth was revised upwards more often than downwards between 2016-17 and 2023-24, with upward revisions surpassing 100 basis points in two of those eight years. However, the Budget, which will be presented next month, will have to use first advance estimates for its revenue and expenditure projections.
Services dominance
India’s services exports surpassed goods exports, reaching $35.7 billion—about $3 billion more than goods--in November 2024, preliminary data showed. If this holds true after the final data is released, it would be a historic shift in almost three decades. India’s share in global services exports has steadily grown, reaching 4.2% by 2023, while its share in goods exports has remained flat since the 2008 global financial crisis. A major driver of this growth is the rise of software and business services.
Eye for AI
$3 billion: That’s the investment Microsoft is planning to make in India to enhance its AI and cloud capabilities, CEO Satya Nadella announced while on his visit to the country. The announcement follows his meeting with Prime Minister Narendra Modi, where they discussed technology and AI. Nadella expressed enthusiasm about supporting India’s AI-first vision and long-term development goals. The funds 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 programme.
Market fears
Fears of a new virus triggered a market plunge on Monday, erasing ₹11 trillion in investor wealth. The BSE Sensex fell over 1.5%, while the Vix (volatility index) surged by 15.6%. The detection of cases of the human metapneumovirus (HMPV) in India added to existing concerns such low corporate earnings, economic growth and a weakening rupee. Disappointing quarterly updates from banks and slowing credit growth further dampened sentiment. Foreign selling and shorting of derivatives dragged the indices below key levels, signaling continued market weakness.
Slowing manufacturing
A sharp decline in urban consumption has stalled India's growth, especially affecting the manufacturing sector which grew just 2.2% in the July-September as against 7% in the previous quarter. Urban demand plummeted due to stagnant earnings and soaring food inflation, forcing consumers to curb spending. While rural demand showed signs of recovery, it wasn’t enough to offset urban weakness, a Mint primer showed. This, combined with sluggish exports and adverse monsoon effects on power and mining, led to a manufacturing slowdown.
Luxe deals
₹100 crore: That is the price of some of India’s most exclusive luxury homes, with cities like Delhi-NCR, Mumbai, and Bengaluru seeing record transactions in 2024. Areas such as Pali Hill in Mumbai and Golf Course Road in Gurgaon are at the forefront, driven by billionaires, CEOs, and celebrities seeking such luxurious properties. Developers like Rustomjee and DLF have sold such ₹100 crore-plus units. India’s real estate market surged 16% in sales value in 2024, fueled by higher prices and larger homes, despite a slight drop in home sales.
Capex strain
To meet its capex target ahead of the Union Budget, the Centre is considering easing conditions for states to access 50-year interest-free loans. As of November, the government has achieved only 48% of the budgeted capex, indicating a significant shortfall, despite have set a moderate target of 17% for the current financial year as against 30% increase seen from FY21 to FY24. Since the Centre had allocated ₹1.5 trillion for loans to states, easing of rules for faster disbursal of loans may help in fast-tracking capex.
Chart of the week: Global to local
India's tech firms have reduced their reliance on H-1B visas over the years. In 2024, companies like Cognizant, Infosys, TCS, and Wipro secured 25,261 H-1B visas, a sharp drop from 2014 when they received 48,163 visas. At the same time, these firms upped their hiring in the US, reflecting a shift towards local hiring.
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