FACTBOX-India’s economy poised for robust growth ahead of annual budget

A burqa-clad woman checks on spices at a wholesale spice market in old quarters of Delhi on May 21, 2024. (AFP/File)
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Updated 17 July 2024
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FACTBOX-India’s economy poised for robust growth ahead of annual budget

  • India’s economy is expanding at the fastest rate among major emerging economies and tax receipts are higher
  • Budget is expected to see an increase in spending on infrastructure and welfare programs such as rural housing

NEW DELHI: India’s economy is expanding at the fastest rate among major emerging economies, and tax receipts are higher, factors that could prompt Finance Minister Nirmala Sitharaman to increase spending in the new 2024/25 budget that will be presented to parliament on July 23.
The budget is expected to see an increase in spending on infrastructure and welfare programs such as rural housing, following bumper dividend payouts from the central bank and increased tax revenue. However, Sitharaman is likely to adhere to the interim budget’s fiscal deficit targets.
Here are some facts about India’s economy:
ECONOMIC GROWTH
The Reserve Bank of India (RBI) has upgraded its growth forecast for the fiscal year 2024/25 to 7.2 percent, up from 7 percent, driven by a resurgence in private consumption, robust investment, and a rebound in exports.

Similarly, the International Monetary Fund has revised India’s growth forecast to 7 percent for 2024/25 from 6.8 percent, aligning with recent updates from rating agencies and private economists.
S&P expects India’s economy will grow at nearly 7 percent annually over the next three years. INFLATION
Retail inflation in India has eased to around 5 percent from over 7 percent in 2022. Still, food inflation remains persistently high at around 9 percent, impacting rural and low-income urban households. This persistent inflation, coupled with minimal growth in real wages, is dampening expectations for early interest rate cuts by the RBI.
FISCAL DEFICIT

India’s federal fiscal deficit, which exceeded 9 percent of GDP during the pandemic, is projected to remain around 5 percent for the current fiscal year.
However, the combined federal and state fiscal deficits are estimated at 7.9 percent of GDP, reflecting a large debt stock and high-interest burden that constrain the capacity for increased state spending.

HIGH UNEMPLOYMENT
Despite a rebound in employment in manufacturing and services, high unemployment among the educated youth remains a challenge for Asia’s third-largest economy.
The unemployment rate for urban youth aged 15-29 was 17 percent in the first quarter of March, with private agencies suggesting that the actual rate may be higher.

India’s overall unemployment rate has remained much higher over the decades than China, according to International Labour Organization estimates, with millions remaining stuck in low-paying agriculture and informal sector jobs. INTERNATIONAL TRADE

India’s goods and services exports are on an upward trajectory, despite concerns over a global slowdown and geopolitical risks.
Exports are projected to reach $800 billion in the current fiscal year ending March 2025, up from $778.2 billion in the previous fiscal year.
Rising services exports and private transfer receipts have helped India’s current account balance, which is showing a $5.7 billion surplus for the first time in 10 quarters in three months through March.


After accepting US deportees, South Sudan wanted sanctions relief for top official, documents show

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After accepting US deportees, South Sudan wanted sanctions relief for top official, documents show

JUBA: After agreeing to accept deportees from the United States last year, South Sudan sent a list of requests to Washington that included American support for the prosecution of an opposition leader and sanctions relief for a senior official accused of diverting over a billion dollars in public funds.
The requests, contained in a pair of diplomatic communications made public by the State Department this month, offer a glimpse into the kind of benefits that some governments may have sought as they negotiated with the US over the matter of receiving deportees.
In the documents, the US expresses “appreciation” to South Sudan for accepting the deportees and details the names, nationalities and crimes for which each individual was convicted.
In July, South Sudan became the first African country to receive third-country deportees from the US Rwanda, Eswatini, Ghana and Equatorial Guinea have since received deportees.
The eight deportees to South Sudan included nationals of Mexico, Cuba, Vietnam, Laos, Myanmar and South Sudan itself.
Contentious deportations
They arrived in the South Sudanese capital of Juba after spending weeks on a US military base in Djibouti, where they were held after a US court temporarily blocked their deportation. Six of the eight men remain at a residential facility in Juba under the supervision of security personnel.
South Sudanese national Dian Peter Domach was later freed, according to the Ministry of Foreign Affairs, while Jesus Munoz-Gutierrez, a Mexican, was repatriated in September.
South Sudanese officials have not publicly said what long-term plan is in place for those still in custody. The third-country deportations were highly contentious, criticized by rights groups and others who expressed concern South Sudan would become a dumping ground.
Details of the deal between the US and South Sudan remain murky. It is still unclear what, if anything, South Sudan may have actually received or been promised. The documents only offer a glimpse into what the South Sudanese government hoped to get in return.
In other cases, Human Rights Watch said it saw documents showing the US agreed to pay Rwanda’s government around $7.5 million to take up to 250 deportees. The US will give Eswatini $5.1 million to take up to 160 deportees, according to the group.
For South Sudan, in one communication dated May 12 and marked confidential, South Sudan’s Ministry of Foreign Affairs raised eight “matters of concern which the Government of South Sudan believes merit consideration.” These ranged from the easing of visa restrictions for South Sudanese nationals to the construction of a rehabilitation center and “support in addressing the problem of armed civilians.”
Request to lift sanctions
But an eye-catching ask was for the lifting of US sanctions against former Vice President Benjamin Bol Mel as well as Washington’s support for the prosecution of opposition leader Riek Machar, the now-suspended first vice president of South Sudan who faces treason, murder and other criminal charges in a controversial case.
The allegations against Machar stem from a violent incident in March, when an armed militia with historical ties to him attacked a garrison of government troops. Machar’s supporters and some activists describe the charges as politically motivated.
Bol Mel is accused of diverting more than a billion dollars earmarked for infrastructure projects into companies he owns or controls, according to a UN report. He wielded vast influence in the government and was touted by some as Kiir’s likely successor in the presidency until he was dismissed and placed under house arrest in November.
Bol Mel was also viewed as a key figure behind the prosecution of Machar, one of the historical leaders of South Sudan’s ultimately successful quest for independence from Sudan in 2011.
Machar was Kiir’s deputy when they fell out in 2013, provoking the start of civil war as government troops loyal to Kiir fought forces loyal to Machar.
A 2018 peace agreement brought Machar back into government as the most senior of five vice presidents. His prosecution has been widely criticized as a violation of that agreement, and has coincided with a spike in violence that the UN says killed more than 1,800 people between January and September 2025.
The UN has also warned that a resurgence of fighting has brought the country “back to the edge of a relapse into civil war.” Machar is under house arrest in Juba while his criminal trial proceeds slowly.
In its communications with the US, South Sudan also asked for sanctions to be lifted over South Sudanese oil companies “to encourage direct foreign investments,” and for the US to consider investing in other sectors including fossil fuels, minerals and agriculture.
When asked if the US government had provided or promised South Sudan anything in return for accepting the deportees, a State Department official said, “In keeping with standard diplomatic practice, we do not disclose the details of private discussions.”
A spokesman for South Sudan’s Ministry of Foreign Affairs, Thomas Kenneth Elisapana, declined to comment.
US aid cuts
Despite accepting the US request to admit deportees, relations between the two governments have been strained in recent months.
In December, the US threatened to reduce aid contributions to the country, accusing the government of imposing fees on aid groups and obstructing their operations.
The US has historically been one of the largest donors to South Sudan, providing roughly $9.5 billion in aid since 2011. Over the years, South Sudan’s government has struggled to deliver many of the basic services of a state, and years of conflict have left the country heavily reliant on foreign aid.