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Global Debt Reaches $315 Trillion: A Growing Global Challenge

Global Debt Reaches $315 Trillion: A Growing Global Challenge

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Global debt has reached an all-time high of $315 trillion in early 2024, with both advanced and emerging economies grappling with mounting financial challenges and risks.

In the first quarter of 2024, global debt hit a record $315 trillion, increasing by $1.3 trillion in just three months. This surge in borrowing is happening across both advanced and emerging economies. The U.S. and Japan contributed the most among developed nations, while China, India, and Mexico led the way in emerging markets. As a result, the global debt-to-GDP ratio has climbed to 333%, raising concerns about how countries will manage their growing debt.

Since the pandemic began, global debt has risen by 21 per cent, adding $54.1 trillion. Non-financial corporations now hold the largest share at $94.1 trillion, followed by governments at $91.4 trillion. The financial sector holds $70.4 trillion in debt, and households carry $59.1 trillion.

While stimulus measures have driven this borrowing, many economies are now in a fragile state. In the U.S., debt costs are now higher than defense spending, and the interest bill is expected to grow. This may force the government to consider raising taxes or cutting spending, though there is no clear plan in place.

Emerging markets face even greater risks. With slow growth and high-interest rates, borrowing may become too expensive, forcing some countries to restructure their debt. Worryingly, about a third of these countries have not yet recovered from the pandemic, with incomes still below 2019 levels. In the last quarter, emerging market debt reached a record $105 trillion, a $55 trillion increase over the past decade.

The growing global debt is a serious challenge that will take time and careful planning to address.

FM Nirmala Sitaraman

FM Nirmala Sitharaman To Confer With Industry Leaders Ahead Of Modi Government’s Key Budget Deliberations

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Finance Minister Nirmala Sitharaman prepares for key pre-Budget talks with Indian industry leaders ahead of the Modi 3.0 government’s upcoming budget announcement

Finance and Corporate Affairs Minister Nirmala Sitharaman is set to engage in crucial pre-Budget discussions with key figures from the Indian industry this Thursday. These discussions aim to assess the industry’s expectations for the first comprehensive Budget of the Modi 3.0 government.

The upcoming full-fledged Budget, expected to be presented in the latter half of July, is anticipated to outline the economic roadmap of the Modi-led Government for the next five years.

This meeting holds significance as it marks the first high-level interaction between the government and the industry since Narendra Modi began his third consecutive term as Prime Minister on June 9.
Industry leaders are likely to emphasise the continuation of the government’s public capital expenditure-driven growth strategy, which has been evident in recent years, according to sources.

Rural push

The upcoming Budget is expected to heavily emphasise Rural India, possibly as a strategic response to sluggish consumption trends in those areas, according to sources. Economists and analysts will closely follow the June 20 meeting to hear industry recommendations on utilising the Rs 2.1 lakh-crore surplus from the Reserve Bank of India. There is significant anticipation regarding whether this surplus should be fully dedicated to fiscal consolidation, partly directed towards enhancing social welfare expenditures under the new coalition government, or entirely channelled into bolstering capital expenditure on public infrastructure.

Industry leaders, including Anish Shah from FICCI, Sanjiv Puri from CII, and Sanjay Nayar from Assocham, are expected to attend the pre-budget meeting. Additionally, the Finance Ministry plans to engage with top industry bodies separately this week, led by Revenue Secretary Sanjay Malhotra, as per insider sources. One of the critical points of interest will be India Inc’s stance on the Modi 3.0 government’s approach towards disinvestment and privatisation, given the varied outcomes observed in this domain over the past decade.

Structural reforms

The industry is seeking structural reforms in taxation. Discussions at the June 20 meeting are expected to include policy measures aimed at propelling India to become the world’s third largest economy. Alongside proposals regarding capital gains taxation, industry leaders are likely to advocate for increased free trade agreements. Sources indicate that despite benefiting from a corporate tax rate reduction in September 2019 — when the base rate was slashed from 30 per cent to 22 per cent for existing companies and from 25 per cent to 15 per cent for new manufacturing firms, Corporate India is not anticipated to push for further cuts in tax rates.

Nirmala Sitharaman

Nirmala Sitharaman To Continue As Finance Minister For Modi 3.0

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Nirmala Sitharaman will continue as India’s Finance Minister for another five years under Modi’s administration. Known for her economic reforms and leadership during challenging times, her reappointment highlights the government’s confidence in her capabilities

Nirmala Sitharaman is set to continue her tenure as the Finance Minister of India for the next five years, marking a significant milestone in her career. Having taken over the finance portfolio in 2019 amidst challenging circumstances following Arun Jaitley’s illness, Sitharaman has navigated the economic landscape with resilience and determination.

Her appointment in 2019 marked a historic moment, as she became the first full-time woman Finance Minister of the country, breaking gender barriers in one of the most crucial ministries. Over the past five years, Sitharaman has implemented key economic policies and reforms aimed at driving growth, promoting financial inclusion and fostering economic stability.

With a background in economics and extensive experience in public service, Sitharaman’s leadership has been instrumental in steering India’s economy through various challenges, including the global pandemic. Her pragmatic approach and commitment to fiscal discipline have earned her accolades from both within and outside the government.

On Sunday, Sitharaman reaffirmed her dedication to public service as she was sworn in for her third consecutive term as a minister under the Modi government, making history once again. Her reappointment as Finance Minister underscores the government’s confidence in her ability to lead the country’s economic agenda forward.

mutual fund

Writing Instrument Makers To Record 13-15% Rise In Revenue: Crisil

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According to the Crisil analysis, capacity expansion and expenditures in product innovation will encourage manufacturers to borrow. The operating margin will increase by 150-200 basis points (bps) year on year to 13 per cent this fiscal owing to decreasing raw material prices

India’s writing instruments business is likely to rise 13 to 15 per cent year on year this fiscal, with a continuing increase in demand from the education sector as students return to the physical method and increased exports due to rising demand from the US, according to a Crisil Ratings research. This follows on the heels of a 33 per cent increase in the previous fiscal year. In the long run, the sector will gain from India’s demographic dividend and an increased per centage of organised players.

According to the Crisil analysis, capacity expansion and expenditures in product innovation will encourage manufacturers to borrow. The operating margin will increase by 150-200 basis points (bps) year on year to 13 per cent this fiscal owing to decreasing raw material prices.

“Demand for writing instruments has surpassed pre-Covid levels, with a complete return to physical education from the interim online mode. The overall growth in the education sector, driven by government initiatives such as the National Education Policy and the Samagra Shiksha Scheme, which focus on integrated school education from pre-school to Class XII, bodes well for the growth of the writing instrument sector,” said Jaya Mirpuri, Director, Crisil Ratings.

Exports are expected to climb 15 to 20 per cent this fiscal year, aided by tie-ups with multinational brands for sales in the US as part of a plan to de-risk from China. Exports account for one-fourth of sector revenue.

Organised manufacturers’ market share increased from 65 per cent to 80 per cent of the Rs 10,000 crore industry during the last three fiscals. The organised part of writing instrument producers, which accounts for over 80 per cent of the business, will benefit from this upturn, the report added.

RBI

CBDC Can Play A Key Role In Cross-Border Payments: RBI’s Das

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We are even more sure that, aside from domestic transactions, CBDC will prove to be the most effective and efficient option for cross-border payments in particular, he stated earlier this month

Reserve Bank of India Governor Shaktikanta Das has stated that the central bank’s digital currency, the Central Bank Digital Currency (CBDC), can play a key role in cross-border payments without much trouble.

He stated that the Reserve Bank India (RBI) has conducted trial operations to promote the CBDC, with ‘great’ outcomes. The CBDC was implemented as a pilot in the wholesale and retail divisions and will now be expanded to the overnight money markets.

We are even more sure that, aside from domestic transactions, CBDC will prove to be the most effective and efficient option for cross-border payments in particular, he stated earlier this month during an engagement at the IMF Governor Talks.He underlined that, while paper currency will continue to exist, the CBDC will be the world’s future currency. CBDC is going to be the future currency of the world and it is necessary that every central bank, every country works on CBDC, he went on to say.

He also stated that the world is going towards technology and CBDCs play an important role since they can truly promote efficient, cost-effective and speedier payments across jurisdictions for cross-border transactions.

The governor also stated that the RBI does intervene in the market, but that ‘our intervention is both ways’. Das stated that the RBI sometimes buys and sometimes sells dollars depending on the direction of the market.

session 2 aarya

Navigating New Frontiers: India’s Growth Amid Geopolitical Crisis

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India’s economy is poised to grow between 6.1 per cent and 6.5 per cent, despite recent projections leaning towards the lower end of that spectrum at 6.1 per cent, says B. Thiagarajan

India, a country renowned for its resilience and adaptability, finds itself at the cusp of a significant economic transformation. In this era of global challenges and opportunities, the nation is redefining its role on the world stage. B. Thiagarajan, Managing Director of Blue Star, recently shared his insights on India’s evolving economic landscape at the BW CFO World Future of Finance Summit 2023 in Mumbai. His keynote address, titled “New Frontiers: Scale, Speed, Smart, Sustainable,” encapsulated the essential elements guiding India’s economic destiny. With optimism in economic growth, the challenges of deglobalisation and a renewed focus on manufacturing, Thiagarajan’s discourse provided a compass for India’s journey towards self-reliance and global competitiveness.

One of the highlights of Thiagarajan’s keynote was his optimistic outlook for India’s GDP growth. He said, “India’s economy is poised to grow between 6.1 per cent and 6.5 per cent, despite recent projections leaning towards the lower end of that spectrum at 6.1 per cent.” The consensus among various stakeholders, including government bodies and corporate leaders, underscores the belief that India is primed for significant economic growth, he added.

Thiagarajan addressed the profound shift to deglobalisation, which is challenging conventional notions of globalisation. While not a universal phenomenon, it demands that Indian businesses, particularly CFOs, adapt and unlearn established practices to navigate this changing landscape.

The MD highlighted the resurgence of manufacturing in India, marking the end of an era characterised by heavy reliance on the service sector. This shift presents both opportunities and challenges for businesses, with CFOs playing a central role in this transformation.

Thiagarajan emphasised the need for businesses to find a delicate balance between self-reliance, as promoted by the “Make in India” initiative and international trade agreements. “The ongoing debate centres on the business case for this approach, given the presence of tariffs and non-tariff barriers from trading partners,” he said.

The keynote session recognised that India’s future growth hinges on consumption, primarily driven by the aspirational middle class residing in Tier 3, 4 and 5 cities, as well as rural areas. To thrive in this new landscape, businesses must pivot toward providing affordable products and services tailored to this evolving consumer base. In the context of innovation, research and development and breakthrough technologies, Thiagarajan urged businesses to differentiate themselves and compete on a global scale.

The session acknowledged a significant shortage of finance professionals, with Thiagarajan projecting a substantial demand-supply gap. He encouraged finance professionals to embrace versatility by rotating roles to meet the evolving demands of the market.

As businesses experience rapid growth, maintaining high governance standards is imperative. Governance issues often accompany expansion, making it crucial for companies to prepare for such situations.

solar

Corporate Investment In Global Solar Business Up By 55% From Jan-Sept: Report

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The sector’s resilience can be attributed to a strong global push to achieve energy transition objectives, as well as substantial demand created by the Inflation Reduction Act, which has helped the sector weather perils,” said Raj Prabhu, Group CEO, Mercom Capital

Corporate investment in the global solar business increased 55 per cent to USD28.9 billion between January and September 2023 primarily owing to pressure to satisfy energy transition goals, Mercom Capital said in its latest report. According to the latest estimate from the U.S.-based research agency, global corporate funding in the sector was USD 18.7 billion in the first nine months of 2022.

“The sector’s resilience can be attributed to a strong global push to achieve energy transition objectives, as well as substantial demand created by the Inflation Reduction Act, which has helped the sector weather perils,” said Raj Prabhu, Group CEO, Mercom Capital.

The report highlighted that Juniper Green Energy received a USD 350 million investment from AT Capital Group and Vitol in India’s venture capital segment to help it meet its aim of tripling its operational capacity to 2.5 GW by 2026 and move forward with its ambitious development plans. Furthermore, Waaree Energies has raised USD 120.8 million in a second round of equity funding headed by ValueQuest to assist boost its current manufacturing capacity by 6 GW.

In the debt funding category, Adani New Industries acquired a USD 394 million trade finance facility from Barclays PLC and Deutsche Bank AG to meet the company’s working capital needs.

Serentica Renewables completed the financing for its future hybrid renewable energy projects in Karnataka. REC Ltd, a power industry lender, has provided the total loan funding of USD 370.6 million. In addition, the company has reached financial close on another hybrid renewable energy project in Karnataka, with a total loan funding of USD 313.3 million acquired from power sector lender Power.

 

inflation

India Set To Overtake Japan As Asia’s Second-Largest Economy By 2030, Says S&P Global

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“The near-term economic outlook is for continued rapid expansion during the remainder of 2023 and for 2024, underpinned by strong growth in domestic demand,” said S&P Global

India, the fifth-largest economy in the world, is anticipated to pass Japan and become the third-largest economy in the world by 2030 with a GDP of USD 7.3 trillion, acccording to S&P Global Market Intelligence’s most recent issue of PMI.

The Indian economy showed two consecutive years of strong, sustained growth in 2021 and 2022, and it has continued to do so in 2023.

The fastest-growing global economy in this fiscal year is likely to be India, whose gross domestic product (GDP) is predicted to increase by 6.2 to 6.3 per cent in the fiscal year that ends in March 2024. The third-largest economy in Asia experienced a stunning 7.8 per cent growth in the April-June quarter.

“The near-term economic outlook is for continued rapid expansion during the remainder of 2023 and for 2024, underpinned by strong growth in domestic demand,” said S&P Global.

The recent acceleration of FDI into India is a reflection of the country’s positive long-term growth prospects, which are supported by a youthful population profile and fast expanding urban household incomes.

“It is projected that India’s nominal GDP, expressed in USD, will increase from USD 3.5 trillion in 2022 to USD 7.3 trillion in 2030. By 2030, the size of the Indian GDP would surpass that of Japan due to the country’s strong economic growth, making India the second-largest economy in the Asia-Pacific region, according to the report.

By 2022, the Indian GDP was already larger than the GDPs of France and the UK combined. India’s GDP is anticipated to exceed Germany by 2030.

The long-term forecast for the Indian economy, according to S&P Global, is underpinned by a number of important growth factors.

“India’s sizable and rapidly expanding middle class, which is assisting in driving consumer expenditure, is a significant positive aspect. India is becoming an increasingly important investment destination for a wide range of multinationals in several industries, including manufacturing, infrastructure, and services,” according to the report. This is due to the country’s rapidly expanding domestic consumer market as well as its sizable industrial sector.

The present digital transformation of India is predicted to drive the rise of e-commerce, altering the retail consumer market landscape during the next decade. According to S&P Global, this is bringing global multinationals in technology and e-commerce to the Indian market.

The report states, “India’s strong FDI inflows have been boosted by large inflows of investments from global technology MNCs such as Google and Facebook that are attracted to India’s large, fast-growing domestic consumer market, as well as a strong upturn in foreign direct investment inflows from manufacturing firms.” 

Overall, India is expected to continue to be one of the world’s fastest-growing economies over the next decade.

 

coal

Mineral Production Goes Up By 12.3% In August 2023: Report

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At the same time, the cumulative growth for the period April- August 2023-24 over the corresponding period of the previous year is 8.3 per cent

The index of mineral production of the mining and quarrying sector for the month of August 2023 (Base: 2011-12=100) at 111.9, is 12.3 per cent higher as compared to the level in the month of August 2022, As per the provisional data of the Indian Bureau of Mines (IBM).

At the same time, the cumulative growth for the period April- August 2023-24 over the corresponding period of the previous year is 8.3 per cent. The production level of important minerals in August 2023 were: Coal 684 lakh tonne, Lignite 28 lakh tonne, Natural gas (utilised) 3110 million cu. m., Petroleum (crude) 25 lakh tonne, Bauxite 1428 thousand tonne, Chromite 148 thousand tonne, Copper conc. 10 thousand tonnes, Gold 113 kg, Iron ore 181 lakh tonne, Lead conc. 30 thousand tonnes, Manganese ore 233 thousand tonnes, Zinc conc. 132 thousand tonnes, Limestone 365 lakh tonne, Phosphorite 107 thousand tonnes, and Magnesite 10 thousand tonnes,.

Important minerals showing positive growth during August 2023 over August 2022 include Gold (46.8 per cent), Phosphorite (40.7 per cent), Manganese Ore (36.9 per cent), Copper Conc. (18.9 per cent), Coal (17.8 per cent), Iron Ore (14.9 per cent), Limestone(13.8 per cent), Natural gas (U) (9.9 per cent), Magnesite (4.5 per cent), Petroleum(crude) (2.1 per cent), Chromite (1.4 per cent ). While minerals like Bauxite (-1.5 per cent), Zinc Conc.(-4.1 per cent), Lignite(-5.4 per cent ) and Lead Conc. (-15.1 per cent) show negative growth.

 

 

parag desai

Wagh Bakri’s Parag Desai Dies In Tragic Road Accident

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Desai played a significant role in leading industry platforms like the Confederation of Indian Industry (CII) and other international organisations

 
 
 

The Executive Director of the famous tea brand Wagh Bakri, Parag Desai passed away in a tragic road accident on Sunday. Desai was also 4th generation entrepreneur at the Wagh Bakri group. 

Desai was a famous tea tester and a leading international businessman who had also years of experience in sales & marketing. He had a turnover of more the Rs.1500 crores (USD 200 million).

Desai played a significant role in leading industry platforms like the Confederation of Indian Industry (CII) and other international organisations. Apart from being an entrepreneur, he was also a prolific speaker and led many business groups to their utmost heights by suggesting innovative marketing, branding and packaging strategies to them. Desai was also awarded by the Ahmedabad Management Association.

 

 

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