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2024 Lok Sabha Elections: Economic Impacts and Policy Shifts
India's economy has experienced rapid growth, with per capita GDP rising by 55% from 2014 to 2023, and the country's global economic ranking improving from ninth to fifth largest. The current budget allocates $134 billion to infrastructure projects, including roads, ports, and railways, supporting economic expansion. India has also emerged as a stock market superpower, with the National Stock Exchange of India becoming the world's sixth-largest exchange and achieving 50% market capitalization growth between February 2023 and February 2024.
Under Prime Minister Modi's decade-long leadership, economic indicators have shown consistent improvement. Government fiscal policies in an election year are particularly impactful, with increased spending on rural employment, cooking gas subsidies, and an extended food subsidy program expected to boost consumption growth. The Reserve Bank of India's cautious approach to interest rates due to high food inflation may lead to a gradual policy rate easing in the latter half of 2024.
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According to Business Standard “The interaction between elections, sectoral growth, and innovation is complex, with the victorious party's policies shaping India's economic path. Following the elections, government capital expenditure may slow down, but this is likely to be balanced by a surge in private investment supported by strong bank balance sheets and a favorable manufacturing environment. This transition from public to private investment could sustain economic momentum.”
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A study estimates that the 2024 Lok Sabha elections will incur around Rs 1.20 lakh crore in expenditure. Campaign strategies have evolved significantly, with a shift away from traditional banners towards greater reliance on digital media.
Gold Prices Soar Amid Economic and Geopolitical Uncertainty
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Gold prices experienced a notable surge starting in early March, with the precious metal exceeding the $2,300 per ounce mark for the first time ever by April. This marked a series of record-breaking gains, as gold reached new lifetime highs for eight consecutive sessions up to April 9.
Analysts attribute the rally to expectations of potential interest rate cuts by the US Federal Reserve, which would enhance the appeal of the non-yielding asset. Despite consistent outflows from global gold exchange-traded funds (ETFs) over the past nine months until February, totaling $5.7 billion in 2024 alone, gold prices continued to climb. The US and Europe led these ETF outflows.
The People's Bank of China (PBC) demonstrated strong demand for gold, purchasing 225 metric tonnes in 2023—the highest among global central banks, as reported by the World Gold Council. China's significant purchases accounted for roughly a quarter of the 1,037 tonnes acquired by central banks worldwide.
Incrementum AG’s Stöferle suggested that the rising gold prices may reflect concerns over escalating geopolitical tensions and potential inflation, signaling the start of a new wave of price increases. In India, gold demand, which has been stable at 700-800 tonnes annually since 2019, is expected to rise to 800-900 tonnes in 2024 due to strong economic growth and higher income levels, according to the World Gold Council.
NPCI urges new players in the UPI space to incentivize users:
This directive is to break the duopoly in the space as the top 2 players Phonpe and Google pay cumulatively holding more than 83% market share in this space. The condition has worsened amid the recent breakdown of RBI on Paytm. Many Paytm users migrated to either of the top players. The National Payments Corporation of India (NPCI) had earlier proposed ensuring no single player in the space accounts for more than 30% transactions in a month. The market share of homegrown BHIM UPI is less than 1%.
There are new players in the space like Cred, Slice, Fampay, Zomato, Groww, Flipkart, etc. However, a small discount-led campaign wouldn’t be enough to break the market share of the top 2 giants. But, these players are yet to get clarity on RBI’s and NPCI’s decision. The new players are not keen on making huge investments for customer acquisition before clarity is received from the regulators.
More news from the week ...
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Samsung overtakes Apple to become the world’s top smartphone seller: Owing to a sales down of iPhones in China due to severe competition from Chinese phone maker Xiaomi, Apple’s market share in the first quarter of 2024 fell which led Samsung to reclaim the top spot. 
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FPI fund infusion robust in the first weeks of April: FPIs remained bullish due to resilient economy and growth prospects in the country. Till now, FPI has infused Rs 13,300 Cr in April. 
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IMF lauds India for maintaining fiscal discipline when election is near: With strong macro fundamentals, IMF said India continues to be the bright spot in the world. The organization has projected a growth of 6.8% for 2024-25. 
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Flipkart’s plans to buy majority stake in Zepto didn’t materialize: Flipkart is desperate to get into quick commerce space as it plans to launch its own quick delivery service in July. Earlier, the company had failed to get a stake in Dunzo and now, the discussions with Zepto didn’t materialize.  
Check out the awesome content from Ambrela
Visual of the Week
Source:BBC.com
The skies above the United Arab Emirates darkened as torrential storms disrupted Dubai's usual pristine appearance on April 17th 2024. Approximately 25cm (10in) of rain—about twice the UAE's annual average—fell in a single day, submerging much of the city's outdoor areas.While heavy rain over the Gulf's desert landscape is not unusual, residents were notified through a public alert system. Nonetheless, Dubai's weather infrastructure was ill-prepared for the heaviest rainfall since 1949. Operations at Dubai International Airport, the world's busiest hub for international air traffic, were also impacted by the flooding.
Test you knowledge !
UPI has revolutionized Indian economy. Are you aware Indians can make payments in other countries too? Can you guess the number of countries that accept UPI payments? 
[A] 2
[B] 4
[C] 5  
[D] 7 
UPI was initially launched in Sri Lanka and Mauritius. But now, 7 countries accept UPI payments. These are Sri Lanka, Mauritius, UAE, Bhutan, Nepal, France and Singapore
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