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Business Standard
04-07-2025
- Business
- Business Standard
Best of BS Opinion: University-level funding key to India's R&D targets
Hello, and welcome to the Best of BS Opinion, our daily roundup of the day's opinion page. The Research Development and Innovation (RDI) Scheme, which the government announced earlier this week, is an acceptance of the fact that policymakers must find ways to spark innovation and support it with funding. However, a lot will need to be done considering the scheme may not address key concerns about India's research and development (R&D), posits our first editorial. India spends less than 1 per cent of its gross domestic product (GDP) on R&D, compared to 2.5 per cent for both China and South Korea. It has a vast pool of tech graduates, but many migrate abroad or find employment in skill-mismatched roles. Not surprisingly. India ranks 39th on the Global Innovation Index, which is way below its potential. Meanwhile, the US and Japan have had programmes that, along with research institutions and universities, did 'bluesky' fundamental research across many disciplines. In comparison, India lacks both private corporate funding for R&D, as well as funding for such R&D at the university level. RDI may address some of the concerns about private sector research but India must also need to figure out how to channel funding efficiently into fundamental bluesky research in universities and other research organisations. The rise of artificial intelligence, fake news, and deep-fakes pose a clear and present danger to social order and democratic integrity, notes our second editorial. Tackling it will need a careful balance between regulation and free speech principles. In this context, the Karnataka government's draft Bill that allows for jail of up to seven years for fake news and other problematic content is a symbol of legislative over-reach and likely to have a chilling impact on free expression. Given India's biggest constraint in terms of development is bureaucratic and regulatory capacity, it is unfortunate that an increasing amount of this scarce commodity is diverted to channel, influence or restrict the freedom of expression in the country. Unfortunately, authorities in India at all levels have become far too engaged with imposing restrictions on speech. The Union government, too, has at various points amended the Information Technology Rules to give itself broader powers to restrict online platforms. In such an scenario, India's governments must step back and re-examine their approach. The current account deficit poses little concern amid global volatility, but its financing requires close monitoring, write Dharmakirti Joshi and Adhish Verma. Last financial year, India's current account deficit (CAD) came in at a benign 0.6 per cent of gross domestic product (GDP), because both the services trade and secondary income accounts saw a higher surplus. Such low reliance on external financing of CAD is a buffer against volatility in capital flows and attendant currency swings. Meanwhile, S&P Global expects world GDP growth to slow to 2.9 per cent in 2025; this will clearly adversely impact India's exports, even as healthy domestic growth, expected at 6.5 per cent, will support imports. Is that cause for worry for India's current account? Not so much — yet. India's CAD may face marginal pressure this fiscal, but there are no big worries. However, its financing needs monitoring, given volatile foreign capital flows in the light of global uncertainty. However, with comfortable foreign exchange reserves and the expectation of only a marginal rise in CAD, India is in a good position to weather global volatility. The Reserve Bank of India's (RBI's) recent guidelines which cut provisioning requirement on project finance to one per cent from five per cent have been welcomed by most parties. While the RBI has avoided a short-term slowdown in economic activity, our second columnist Prasanna Tantri questions whether these guidelines are a net positive from a long-term point of view. Unfortunately, he writes, the RBI circular does not distinguish between liquidity shocks and fundamental shocks, allowing lenders to extend the date of commencement of commercial operations (DCCO) without recognising NPAs even when the reason for the delay is not a liquidity shock. Extending the same concessions when the reason for delay lies with management could lead to misuse and be socially harmful. Lenders can be asked to have a policy of identifying liquidity shocks and institute a process where the DCCO is extended only after evidence that the delay is due to such shocks. Kuldeep Yadav's Dial 100: Tough Cases, Tougher Policemen Kirpal. The author, who is an actor, fimmaker, and former Naval officer, makes sure to remind readers how to keep themselves safe and watch for dangerous warning signals. The language in the book is straightforward jargon-free, likely because Yadav has also been a screenwriter. Ironically, though, he finds that several criminals learn a lot by just watching B-grade films, particularly those with outlandish and imaginative methods of committing a crime.
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Business Standard
03-07-2025
- Business
- Business Standard
India's current account deficit manageable, but financing needs monitoring
Dharmakirti Joshi Adhish Verma Listen to This Article Last financial year, India's current account deficit (CAD) printed at a non-worrisome 0.6 per cent of gross domestic product (GDP), driven by healthy net invisible receipts. It was a whit lower than 0.7 per cent in 2023-24, despite the goods trade deficit rising to 7.3 per cent of GDP from 6.7 per cent. This happened because both the services trade and secondary income accounts saw a higher surplus, which more than offset the deterioration in the goods trade deficit. Such low reliance on external financing of CAD is a buffer against volatility in capital flows and the attendant currency swings
Times of Oman
06-03-2025
- Business
- Times of Oman
India to grow 6.5% in fiscal 2026 despite challenges: Crisil Intelligence
New Delhi: India's real gross domestic product (GDP) growth would be steady at 6.5 per cent in fiscal 2026 despite uncertainties stemming from geopolitical turns and trade-related issues led by US tariff actions, said Crisil Intelligence in a report on Thursday. CRISIL's forecast for India's economy depends on two key factors. The rating agency anticipates that normal monsoon and commodity prices will continue to remain soft, which will keep the food prices stable. Cooling food inflation, the tax benefits announced in the Union Budget 2025-2026, and lower borrowing costs are expected to drive discretionary consumption, said the report. As per the Crisil Intelligence, the growth is now returning to pre-pandemic rates as fiscal impulse normalizes and the high-base effect wears off. Even with that, the high-frequency Purchasing Managers Index (PMI) data reveals that India maintains its pole position among major economies. "India's resilience is being tested again. Over the past few years, we have built a few safe harbors against exogenous shocks--healthy economic growth, low current account deficit and external public debt, and adequate forex reserves--which provide ample policy latitude. So, while the waters can turn choppy, consumption-led rural and urban demand will be crucial to short-term growth," said Amish Mehta, Managing Director and CEO, Crisil Ltd. He further added that, on the other hand, continuing investments and efficiency gains will aid in the medium term. "We foresee both manufacturing and services supporting growth through fiscal 2031," he added. As per the credit rating company, the manufacturing growth is expected to average 9.0 per cent per year over fiscals 2025-2031, up from 6 per cent on average in the prepandemic decade. The services sector is expected to grow slower, though it will remain the primary growth driver. As a result, the share of manufacturing in GDP will increase to 20 per cent from 17 per cent in fiscal 2025. In fiscal 2026, the credit rating company expects the recent softening in food inflation will continue and pull down the headline further. Inflation softened in fiscal 2025, led by lower non-food inflation, while food inflation has risen. The credit rating company further anticipated another 50-75 basis point rate reduction over the next fiscal. "India has continued to raise its growth premium over advanced countries through infrastructure buildout and economic reforms, including process improvement. Healthy GDP growth, a low current account deficit and adequate forex reserves provide a buffer and policy flexibility but do not insulate the country from external shocks. The risks to the growth forecast of 6.5% are therefore tilted to the downside given elevated uncertainty due to the US-led tariff war," said Dharmakirti Joshi, Chief Economist, Crisil Ltd. As per the report, sharp government focus on expanding capabilities in new-age sectors, achieving higher localisation and driving backward integration in key value chains and reforms such as the Make in India initiative, the phased manufacturing programme and PLI are showing green shoots across sectors. The report, however, added that the global environment presents many headwinds.
