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18-04-2024
Bureau Report + Agencies
NEW DELHI: The International Monetary Fund (IMF) has raised India’s growth forecast for 2024-25 to 6.8% from 6.5% on the back of strong domestic demand and a rising working-age population.
The Reserve Bank of India, the country’s central bank, estimates the economy to grow at 7% in the current financial year that started on April 1.
The IMF estimates Asia’s third largest economy’s gross domestic product to grow at 6.5% in the next financial year, it said in the World Economic Outlook released on Tuesday.
The agency also revised upwards the growth figure for 2023-24 to 7.8% from 6.7% it had forecast in January. India’s own official estimates had pegged growth at 7.6%.
“Global economy remains remarkably resilient, with growth holding steady as inflation returns to target,” the IMF said while predicting the global real GDP growth at 3.2% for 2024 and 2025, the same rate as in 2023.
Meanwhile, India has deferred approval of Paytm’s 500 million rupee ($6 million) investment in its Paytm Payment Services arm in part due to concerns about a Chinese shareholding in the parent company, according to three government officials and a document seen by media.
One 97 Communications (PAYT.NS), opens new tab, popularly known as Paytm, is already under the scrutiny of India’s banking regulator and financial crime-fighting agency after the central bank ordered it to wind down its payments bank in January. The sources indicated this was another reason for the deferral.
Paytm sought government approval last year for the investment it had already made in its newly established payments gateway arm, a necessary step for Paytm Payments Services to receive the payment aggregator licence necessary to accept online payments.
A government panel consisting of representatives of India’s home affairs, finance and industries ministries must approve the investment, with input from the foreign office as China-based Antfin (Netherlands) Holdings owns a 9.88% stake in Paytm.
Although the Ministry of Home Affairs approved the investment in January, the foreign ministry rejected it citing “political grounds”, according to the officials and the document, so the decision was deferred.
One source said the entity’s Chinese ownership has been a concern for the government, which must approve all investments coming from the country or made in companies which have Chinese shareholders.
Since the approval was sought after making the investment, a penalty on Paytm would be imposed, the document showed, without specifying the amount.
“We have received no communication that the investment proposal has been deferred or that a penalty is proposed to be imposed,” Paytm told Reuters.
“In the absence of any such information, any notion of the proposal being deferred due to lack of clarity on Chinese holding and a penalty on Paytm is entirely false and misleading,” the company said.
India’s foreign, home, finance and industries ministries did not reply to emails seeking comment.
There was no indication of how long the decision had been deferred for, nor what may be necessary to secure approval.
Paytm Payment Services’ turnover accounted for a quarter of Paytm’s consolidated revenue from operations in 2022/23, according to its last annual statement.
If approval of the investment is withheld, Paytm would have to withdraw the funds from Paytm Payment Services, another of the sources said.
