Challenges are still on the way
Though the world’s most loved emerging market, India is now feeling jittery a little but the ceaseless journey is on.
It is the delivering high economic growth – 6 per cent-plus expected in 2023 and 2024 which makes India stand apart from most other emerging markets in the world. And this is what International Monetary Fund says.
The year 2023 showed India as the world’s most-loved emerging market. Outside investment has poured in billions of dollars this year only. Significantly, they have pulled money from most other developing economies as researched by Bloomberg.
The abundance of enthusiasm creates a little bit of apprehension too: How long this bastion of stability is going to continue depending upon $4 flip-flops?
High economic growth in Indian financial year of 2023 is more significant due to its existence during the turmoil caused by a strong dollar along with a five hundred and twenty five basis-point increase in the interest rates of America.
The credit goes to the central bank which has been using its tight lid on domestic liquidity thus helping to keep the rupee stable. Good news is this that after around seven months, June 2024 would witness Indian inclusion in JPMorgan Chase & Co.’s global bond indexes. Moreover, this move expects to draw in about twenty four billion dollars within a short period of time.
But at the stock market is little shaking and worrying in this direction. The RBI also is taking more direct steps to rein in debt-fueled consumption. On one hand where the octopi have assets; the non-octopi have liabilities. Thus, consumer loans means the process which helps the masses keep their heads above water being surrounded by high food and energy costs.
The situation shows that the finance companies and banks have been so actively pushing retail credit out of the door which this month has compelled the central bank to step in and raise capital requirements against unsecured personal loans.
Undoubtedly this is a wise thing to do. Lending to the for borrowers with a tarnished or limited credit history is now greatly efficient in India because of the new digital technologies which are employed to attract and screen borrowers, pool their loans as well as fetch a deposit-taking institution for taking the credit risk.
Nevertheless, retail loans, growing at double speed of total advances, could spiral out of control. And that could turn into a recipe for future trouble surrounded by stagnant real wages and high unemployment.
