Three applauses for the economy

 Three applauses for the economy

India's GDP grew by 7.6% during the July–September quarter, far more than the 6.5% forecast by the RBI. The data's highlights include an 11% increase in investment to Rs 14.71 lakh crore, a 13% growth in construction to Rs 3.04 lakh crore, and a 13.9% growth in manufacturing to Rs 7.15 lakh crore. The distribution of income is problematic, too, since private consumption increased by only 3.1% to Rs 23.7 lakh crore.

In other news, India became the fourth nation to achieve a valuation of this magnitude on Wednesday when the value of shares listed on the stock market surpassed $4 trillion. It was more than 100% of GDP as a proportion. One often monitored indicator of valuation is the market capitalization to GDP ratio. Recent studies that pinpoint the main cause of the rise in market capitalization after the 1980s are more pertinent in this context. Changes in the earnings of businesses listed on stock markets in major economies have the most impact on the structural change in the ratio. The market capitalization to GDP ratio thereby captures significant shifts in the economy.

Since 1996, the US, with the world's most active technology sector, has often seen a market capitalization GDP ratio over 100. India's market capitalization to GDP ratio is now more than100, which is partially due to favorable macroeconomic indices that promote increases. Development of Listed Businesses For instance, the nominal GDP increase of 8.6% over the same time in 2023 was much outpaced by the 20% rise in corporation taxes between April and September of the same year.

Two other criteria support strong tax collection. First, all governmental levels in India benefit from economic development facilitated by the fiscal allocation system. The Indian government has decreased the proportion of the fiscal deficit's revenue shortfall throughout the previous three years. This indicates that a significant portion of the borrowed funds will be invested. Separately, in the first half of 2023–2024, important states plan to boost their capital spending by 47%. Second, changes in the makeup of family savings are occurring in addition to positive macroeconomic variables. Investments in mutual funds have grown over the last three years, with a structural break occurring in 2021–2022. One year, inflows into mutual funds (MFs) climbed by 2.5 times to Rs 1.6 lakh crore, and the next year, they expanded by 12%. Consequently, there is a strong basis for the $4 trillion market capitalization and 7.6% growth rate.

Significant changes are shown by the strong Q2 GDP growth, $4 trillion M-cap, and the transfer in family savings to MF.