Economic Security-India Fastest Growing Economy In The World

 India's GDP growth rate for the July-September quarter soared to 7.6%, surpassing the RBI's projection of 6.5%. Notable highlights include a 13.9% surge in manufacturing to Rs 7.15 lakh crore, a 13% increase in construction to Rs 3.04 lakh crore, and an 11% rise in investments to Rs 14.71 lakh crore. Despite these gains, the distribution of income saw private consumption growing by only 3.1% to Rs 23.7 lakh crore.

A significant milestone was achieved as the value of shares listed on the stock market reached $4 trillion, making India the fourth country globally to attain this valuation level. This represents over 100% of the GDP, a crucial metric indicating a profound economic transformation. Notably, the US, with its dynamic technology sector, has consistently maintained a market capitalization-GDP ratio exceeding 100% since 1996. India's current ratio reflects favorable macroeconomic indicators supporting the profit growth of listed firms, evidenced by a remarkable 20% growth in corporate tax between April and September 2023, outpacing the 8.6% nominal GDP growth for the same period.

Robust tax collections are attributed to two key factors. Firstly, the composition of India's fiscal allocations has been restructured to support economic growth at all government levels, with a reduction in the share of revenue deficit in fiscal deficit over the last three years. This shift indicates a higher proportion of borrowing directed towards investments. Secondly, the capital expenditure of major states witnessed a substantial 47% increase in the first half of 2023-24.

The positive macroeconomic landscape is complemented by a noteworthy change in the composition of household savings. Over the past three years, there has been a surge in mutual fund investments, with 2021-22 marking a structural shift. Flows into mutual funds that year escalated by 2.5 times to Rs 1.6 lakh crore, with a subsequent 12% growth in the following year. The $4 trillion market capitalization and the impressive 7.6% growth rate are, therefore, underpinned by a solid foundation. The high Q2 GDP growth, $4 trillion market capitalization, and the shift in household savings towards mutual funds signify profound and far-reaching economic changes.