Current Affairs - Economy

The International Monetary Fund (IMF) has retained India’s GDP growth rate at 7% for the current fiscal year ending March 31, 2025. This projection highlights India's robust economic performance amidst global uncertainties. While the growth rate for the following fiscal year (2025-26) is expected to moderate to 6.5%, the current year’s projection reflects strong economic activity. In contrast, global growth is set at 3.2% for 2024, and the U.S. economy's growth rate was revised upward to 2.8%.

The Indian government initially reduced the export tax on parboiled rice from 20% to 10% before revoking it entirely to boost exports. This reduction aimed to enhance India's competitiveness in the global market, particularly against major rice-exporting countries like Pakistan, Thailand, and Vietnam. By eliminating the tax, India seeks to capitalize on surging inventories and a predicted bumper crop, increasing rice shipments and strengthening its position in the international rice trade. This move reflects the government's efforts to promote economic growth and support the agricultural sector.

In August 2024, the Employees' Provident Fund Organisation (EPFO) reported a 9% year-on-year growth in employment opportunities, highlighting the expanding job market in India. EPFO added 18.53 lakh net members during this period, with 9.30 lakh new enrollments, including 2.53 lakh female members. These numbers reflect a steady increase in employment, especially when compared to previous months such as July, June, and May. The growth rate underscores the positive impact of EPFO's efforts to improve job accessibility across sectors.

The IMF report projects that global public debt will reach 93% of global GDP in 2024 and approach 100% by 2030. This significant increase in debt levels raises concerns about sovereign yield volatility and debt risks. To mitigate these risks, the IMF recommends that countries implement fiscal adjustments between 3.0% and 4.5% of GDP. Additionally, the report introduces a "debt-at-risk" method to assess uncertainties in debt projections, estimating a potential surge to 115% of GDP by 2026 in a worst-case scenario. Effective management of debt levels is crucial for maintaining global economic stability.

The Reserve Bank of India's Monetary Policy Committee (MPC) has maintained the repo rate at 6.5% for the 10th consecutive time. This decision reflects the MPC's balanced approach to managing inflation and supporting economic growth. The repo rate remains a crucial tool for regulating money supply and influencing interest rates in the economy. By keeping the rate unchanged, the RBI aims to sustain India's growth momentum, projected at 7.2% for FY25, while maintaining inflation within the target range of 4%.