Page 22 - Policy Economic Report - September 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

In its Asian Development Outlook update for September, the ADB noted that an above-average
monsoon in most parts of the country will lead to strong agricultural growth, enhancing the rural
economy. It maintains a positive outlook for the industry and services sectors, private investment,
and urban consumption for 2024-25 and 2025-26. Additionally, a new government policy offering
employment-linked incentives to workers and firms could increase labor demand and support job
creation starting in the financial year 2025-26.

ADB cited that geo-political risks can be offset by higher foreign direct investment, which could
support growth and investment, particularly in manufacturing. Additionally, improvements in the
supply of agricultural products may reduce food prices, potentially lowering consumer inflation.

ADB has pegged retail inflation for the current financial year at 4.7%. It said the food prices are likely
to remain elevated despite higher agriculture output expectations.

9. Annual FDI inflows to India may rise to $100bn soon: Department for Promotion of Industry
and Internal Trade (DPIIT)

According to Department for Promotion of Industry and Internal Trade (DPIIT), the annual inflow of
foreign direct investment (FDI) to India is likely to increase to $100 billion in the coming years from an
average of around $67 billion recorded in the past 10 years.

The government has taken several steps to streamline the approval process for FDI applications in the
sectors like defense, railways, telecom, and insurance.

FDI inflows to India increased to $22.49 billion in the first quarter of the current financial year as
against $17.56 billion recorded in the corresponding period of the last year. Cumulative FDI inflow to
India increased to $667.4 billion during the period 2014 to 2024, which is 119% higher over the
preceding decade (2004-14). FDI equity inflows into the manufacturing sector over the past decade
(2014-24) increased to $165.1 billion, marking a 69% increase compared to the previous decade (2004
-14), which saw inflows of $97.7 billion.

Further, India allows up to 100% FDI under the automatic route in most of the sectors, except certain
strategically important areas. The highest FDI inflows in India in the past one decade have come in the
sectors like automobiles, telecommunications, and pharmaceuticals. Prime Minister Narendra Modi
government launched Make-in-India initiative in 2014 to boost domestic manufacturing to cut
dependence on imports. The Make in India initiative has resulted in a significant enhancement in
India's industrial capacity and export competitiveness over the last decade.

With strategic interventions in renewable energy, green technologies, and advanced manufacturing,
the initiative is ensuring that Indian products meet the highest global standards.

The Production-Linked Incentive (PLI) scheme, which was introduced in 2020, has resulted in Rs 1.32
lakh crore ($16 billion) in investments and a significant boost in manufacturing output of Rs 10.90 lakh
crore ($130 billion) as of June 2024. Over 8.5 lakh jobs have been created directly and indirectly due
to the initiative.

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