Economic Growth Overview

The National Statistics Office (NSO) released the first advance estimates for India's GDP growth, indicating a sharp slowdown to 6.4% in FY25 from 8.2% in FY24. Nominal GDP growth remains stable at 9.7%, slightly higher than FY24's 9.6%.

Fiscal Implications and Government Strategy

• The government aims to hit a fiscal deficit target of 4.9% of GDP, aided by buoyant revenue collections and weaker capital expenditure.

Supply and Demand-Side Metrics

• The Gross Value Added (GVA) metric, a supply-side estimate, is more reliable than the GDP measurement for India.
• Both GDP and GVA grew by 6.4% in FY25, lower than the economy's potential growth.

Historical Context and Growth Drivers

• Pre-Covid, GDP and GVA averaged 6.7% and 6.4% respectively from FY16 to FY20.
• New growth drivers include services exports and improved banking and corporate balance sheets, although government debt and household leverage have increased.

Current and Projected Performance

• Growth is expected to strengthen in H2 FY25 to 6.6% for GVA and 6.7% for GDP.
• NSO's estimates are based on data from the first eight months of FY25 and are subject to revision.

Sectoral Performance

• Stronger growth is anticipated in agriculture, with GVA growth accelerating to 4.5% in H2 from 2.7% in H1.
• Private final consumption expenditure is expected to grow by 7.3% in FY25, compared to 4% in FY24.
• The construction sector continues to show robust growth at 8.6%, outperforming pre-Covid levels.

Clinical Trials and Regulatory Framework in India

The Supreme Court of India is examining the regulations surrounding clinical trials, especially those conducted by multinational pharmaceutical companies in poorer countries.

Key Points

• Supreme Court Involvement: The court allowed a petitioner to submit objections to the existing rules concerning clinical trials. 
• Regulations Overview:
  • In 2019, the Indian government framed new rules for drugs and clinical trials.
  • Amendments to these rules were notified in 2024 to improve patient safety and align with global standards.
• Concerns Raised by NGO:
  • Swasthya Adhikar Manch, an NGO, filed a PIL in 2012, highlighting the misuse of Indian citizens in clinical drug trials conducted by multinational firms.
  • Allegations include exploitation of poor citizens as "guinea pigs" without adequate compensation.
• Legal Proceedings:
  • The court granted four weeks for objections to be filed against the existing rules.
  • The Centre's additional solicitor general argued that the PILs had become irrelevant due to the 2019 and 2024 rule updates.
• Historical Context:
  • In 2013, the Supreme Court found the existing norms "deficient" and pushed for the introduction of new protective rules.

Conclusion

The Supreme Court's intervention aims to ensure that clinical trials in India prioritize the welfare of Indian citizens and adhere to stringent safety protocols, rather than merely serving the interests of multinational companies.

RBI's Warning and Debt Management Strategies

The Reserve Bank of India (RBI), in its Financial Stability Report, highlighted the risk of consumer credit stress potentially affecting secured loans. It was noted that many individuals carrying unsecured credit card and personal loans also have secured loans like home or vehicle loans, which could be classified as non-performing if defaults occur.

Strategies for Reducing Debt Burden

• Merge Multiple Loans
  • Consolidate various loans into one with a lower interest rate.
  • A top-up loan on a home loan can help pay off high-interest credit card dues and personal loans.
  • Interest rates: 
    • Credit card dues: 36–42%
    • Personal loans: 10–31%
    • Top-up home loans: Slightly higher than home loans by 0.5-1 percentage point.
  • Other consolidation options: Loans against securities/property.
  • Debt consolidation loans: 
    • Interest rate: 12–14% depending on credit score and tenure.
    • Restrictions: Often restricted to repaying existing loans with no further borrowing allowed until repayment.
• Pay Highest-Cost Debt First (Avalanche Method)
  • Prioritize high-interest loans like credit card dues.
  • Pay minimum on all loans to avoid default and use surplus to clear high-cost loans.
• Pay Smallest Loan First (Debt Snowball Method)
  • Focus on clearing the smallest loan for a psychological victory.
  • Frees up cash to tackle larger, higher-cost loans.

Key Points to Remember

• Avoid further borrowing and EMI-based purchases.
• Be cautious of high interest rates and penalty charges from defaults.
• Avoid risky investments like equities or cryptocurrencies for debt resolution.
• Consider asset monetization like gold or mutual funds if default is imminent.
• Maintain a good credit score for future borrowing.
• Ensure EMIs do not exceed 30-40% of take-home salary.
• Build a contingency fund equal to at least six months’ expenses.

Budgeting Tips for Debt Management

• Create and strictly adhere to a budget.
• Evaluate all income sources including salary, incentives, and rental income.
• Prioritize paying fixed costs like EMIs, utilities, and school fees first.
• Plan shopping trips with a list to avoid impulse purchases.
• Cut down on non-essential spending such as entertainment and dining out.