The Indian economy has the capability to drive immediate priorities and achieve its long term goals, though there are several notes of caution and potential downsides. These downsides can be addressed with strong policy and fiscal measures. This will require focused planning and consistent implementation. The statutory changes need to be well defined and linked to these long term benefits.
World Bank – The World Bank recently released a new report, a new India Country Economic Memorandum titled ‘Becoming a High-Income Economy in a Generation’. The report mentions that India will need to grow by 7.8 percent on average over the next 22 years to achieve the country’s aspirations of reaching high-income status by 2047. Recognizing India’s fast pace of growth averaging 6.3 percent between 2000 and 2024[1], the report notes that India’s past achievements provide the foundation for its future ambitions. Getting there however would require reforms and their implementation to be as ambitious as the target itself. “Lessons from countries like Chile, Korea and Poland show how they have successfully made the transition from middle- to high-income countries by deepening their integration into the global economy,” said Auguste Tano Kouamé, World Bank Country Director. “India can chart its own path by stepping up the pace of reforms and building on its past achievements.” The report evaluates three scenarios for India’s growth trajectory over the next 22 years. The scenario which enables India to reach high-income status in a generation, requires India to: a) achieving faster and inclusive growth across states; b) increasing total investment from current 33.5 percent of GDP to 40 percent (both in real terms) by 2035; c) increasing overall labor force participation from 56.4 percent to above 65 percent; and d) accelerating overall productivity growth.
International Monetary Fund – The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with India. As per this, real GDP is expected to grow at 6.5 percent in 2024/25 and 2025/26 (same as its World Economic Outlook Update, January 2025, reported by Asia Law Portal here), supported by robust growth in private consumption on the back of sustained macroeconomic and financial stability. Headline inflation is expected to converge to target as food price shocks wane. The current account is expected to widen somewhat but remain moderate at -1.3 percent of GDP in 2025/26. Looking ahead, India’s financial sector health, strengthened corporate balance sheets, and strong foundation in digital public infrastructure underscore India’s potential for sustained medium-term growth and continued social welfare gains. Executive Directors commended the authorities’ prudent macroeconomic policies and reforms, which have contributed to making India’s economy resilient and once again the fastest growing major economy.
Risks to the economic outlook are tilted to the downside. Deepening geo-economic fragmentation could affect external demand, while deepening regional conflicts could result in oil price volatility, weighing on India’s fiscal position. Domestically, the recovery in private consumption and investment may be weaker than expected if real incomes do not recover sufficiently. Weather shocks could adversely impact agricultural output, lifting food prices and weighing on the recovery in rural consumption. On the upside, deeper implementation of structural reforms could boost private investment and employment, raising potential growth.
Proposed Changes to Regulating Advocates – In its continuous effort to strengthen the legal framework in India, the Government of India is proposing to amend the Advocates Act, 1961. The draft of the Advocates (Amendment) Bill, 2025 was published by the Department of Legal Affairs under the Ministry of Law and Justice and comments from the general public were invited to be submitted by February 28, 2025. There were several key changes proposed such as expanding the definition of legal practitioner to include any advocate or law student ‘doing legal work in any private or public organization including but not limited to statutory and autonomous bodies, domestic and foreign law firms and corporate entities’. For the first time in-house counsel were recognised and foreign law firms were acknowledged. The draft Bill introduced nomination of members by the Government of India to the Bar Council of India (BCI), which would possibly interfere with the independence of the BCI’s functioning. Perhaps the most contentious amendment was addition of a new clause ‘Prohibition on the boycotts or abstention from courts’ work’. This led to massive protests by lawyers across the country and it was widely reported that this ultimately led to the withdrawal of the draft Bill. The Government released an update stating that ‘considering number of suggestions and concerns received, it has been decided to conclude the consultation process now. Based on the feedback received, the draft Bill, as revised will be processed afresh for consultation with stakeholders’.
Insurance Sector Foreign Investment – The Union Budget 2025 was presented by the Union Minister of Finance, Government of India and it was mentioned that foreign direct investment (FDI) limit for the insurance sector will be raised from 74 to 100 per cent. This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified. The government in 2020 had permitted 100% FDI in insurance intermediaries such as insurance brokers. In November 2024, the Department of Financial Services had initiated the process of public consultation on raising FDI in Indian insurance companies from 74% to 100% as well as enabling an insurer to carry on one or more classes of insurance business and activities related/incidental to insurance. At the heart of the measures is ‘Insurance for All by 2047’ goal being pursued by the government.
Data Protection Framework Update – As reported last month by Asia Law Portal, the Ministry of Electronics and Information Technology (MeitY) has drafted the Digital Personal Data Protection Rules, 2025 to facilitate the implementation of the Digital Personal Data Protection Act, 2023 (DPDP Act). MeitY had invited feedback/comments from its stakeholders on the draft Rules to be submitted by February 18, 2025. In response to the representations received from several stakeholders, MeitY has now decided to extend the last date for receipt of feedback/comments till 5th March 2025.
ASEAN-India Trade in Goods Agreement – The 7th ASEAN-India Trade in Goods Agreement (AITIGA) Joint Committee and related meetings for discussions on the review of the AITIGA concluded on February 14, 2025 in Jakarta, Indonesia. As per the Department of Commerce, Government of India’s social media post, both sides made some progress in the matter. Both sides recalled the leaders decision to conclude substantially this year and urged to the sub committees to work on priority basis to achieve the goal. The Ministry of Trade and Industry (MTI), Singapore is seeking feedback on the AITIGA review. The public consultation period is from 17 February to 18 March 2025. All previous meetings have been covered by Asia Law Portal, with the last update here.
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