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Indian Economy

Ratan Tata, Visionary Leader and Philanthropist, Passes Away at 86

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Ratan Tata, the esteemed former chairman of the Tata Group and one of India’s most beloved business icons, passed away on Wednesday at the age of 86. Tata had been admitted to Breach Candy Hospital in Mumbai for age-related health conditions, including blood pressure complications. Despite rumors about his deteriorating health over the past week, his passing has left the nation mourning a towering figure in Indian industry and philanthropy. Known for his leadership and integrity, Ratan Tata transformed the Tata Group into a global powerhouse after taking over as chairman in 1991. Under his guidance, the group made bold international acquisitions, including Tetley, Jaguar Land Rover, and Corus Steel, firmly establishing India’s presence in the global business landscape. His leadership not only expanded the Tata Group but also brought international attention to India’s economic potential. Beyond business, Tata was deeply committed to philanthropy, contributing to education, healthcare, and rural development through the Tata Trusts. His quiet demeanor and humility endeared him to millions. Despite his immense success, he led a modest life, avoiding the lavish lifestyle associated with billionaires. Tata received numerous honors throughout his life, including India’s highest civilian awards, the Padma Bhushan in 2000 and the Padma Vibhushan in 2008. His philanthropic efforts and contributions to society earned him further accolades, including the Assam Baibhav in 2021 for advancing cancer care in Assam. Prime Minister of India shared condolence over the loss saying “My mind is filled with countless interactions with Shri Ratan Tata Ji. I would meet him frequently in Gujarat when I was the CM. We would exchange views on diverse issues. I found his perspectives very enriching. These interactions continued when I came to Delhi. Extremely pained by his passing away. My thoughts are with his family, friends and admirers in this sad hour. Om Shanti.” Alongside, President of India has tweeted a message saying “In the sad demise of Shri Ratan Tata, India has lost an icon who blended corporate growth with nation building, and excellence with ethics. A recipient of Padma Vibhushan and Padma Bhushan, he took forward the great Tata legacy and gave it a more impressive global presence. He inspired seasoned professionals and young students alike. His contribution to philanthropy and charity is invaluable. I convey my condolences to his family, the entire team of the Tata Group and his admirers across the globe.” As the nation mourns his passing, Defense Minister Rajnath Singh expressed his condolences, calling him a “Titan of the Indian industry” and a visionary who left an indelible mark on India’s economy and society. Ratan Tata’s legacy as a business leader and philanthropist will continue to inspire generations to come. The country unites in grief, with heartfelt tributes and condolences flooding in from across the spectrum – business tycoons, political dignitaries, and ordinary citizens alike – to celebrate the extraordinary life and achievements of Shri Ratan Tata. India has lost a giant, a visionary who redefined modern India’s path. Ratan Tata wasn’t just a business leader – he embodied the spirit of India with integrity, compassion and an unwavering commitment to the greater good. Legends like him never fade away. Om Shanti 🙏 pic.twitter.com/mANuvwX8wV — Gautam Adani (@gautam_adani) October 9, 2024 It is a very sad day for India and India Inc. Ratan Tata’s passing away is a big loss, not just to the Tata Group, but to every Indian. At a personal level, the passing of Ratan Tata has filled me with immense grief as I lost a dear friend. Each of my numerous interactions with… — Reliance Industries Limited (@RIL_Updates) October 9, 2024 My last meeting with Ratan Tata at Google, we talked about the progress of Waymo and his vision was inspiring to hear. He leaves an extraordinary business and philanthropic legacy and was instrumental in mentoring and developing the modern business leadership in India. He deeply… — Sundar Pichai (@sundarpichai) October 9, 2024 Ratan Tata: the man who made India proud. His legacy remains in posterity. May his soul rest in peace. pic.twitter.com/Sk414lTjKW — Uday Kotak (@udaykotak) October 9, 2024 I am unable to accept the absence of Ratan Tata. India’s economy stands on the cusp of a historic leap forward. And Ratan’s life and work have had much to do with our being in this position. Hence, his mentorship and guidance at this point in time would have been invaluable.… pic.twitter.com/ujJC2ehTTs — anand mahindra (@anandmahindra) October 9, 2024 Deeply saddened by the demise of legendary industrialist and true nationalist, Shri Ratan Tata Ji. He selflessly dedicated his life to the development of our nation. Every time I met him, his zeal and commitment to the betterment of Bharat and its people amazed me. His commitment… pic.twitter.com/TJOp8skXCo — Amit Shah (@AmitShah) October 9, 2024 The passing away of Ratan Tata is the end of an era. He was deeply associated with the modernisation of Indian industry. And even more so with its globalisation. Was my privilege to have interacted with him on numerous occasions. And benefitted from his vision and insights.… — Dr. S. Jaishankar (@DrSJaishankar) October 10, 2024 I am heartbroken to hear of the passing of Ratan Tata Ji, a proud son of the nation. Over three decades, I was privileged to have a deeply personal and close family relationship with him, where I witnessed his humility, simplicity, and genuine respect for everyone, regardless of… — Nitin Gadkari (@nitin_gadkari) October 9, 2024

Weakened Modi Government Faces Challenges in Fiscal Consolidation

Can a weakened Narendra Modi government continue its work of narrowing the fiscal gap, which it has been able to do in recent years? Economists say it is doable, but perhaps not at the pace the government would have preferred. Following exit polls, analysts were optimistic about the Indian economy’s fiscal deficit coming down to its target of 4.5 percent by FY26. This optimism was based on the prediction of a landslide victory for the BJP-led NDA. However, the actual election results were different: the NDA has enough numbers to form a government at the Centre, but the BJP on its own falls short of the majority of 272 seats needed in the 543-seat Lok Sabha. The narrower margin of victory for Indian Prime Minister Narendra Modi’s alliance in elections will forestall reforms that could have potentially facilitated aggressive fiscal consolidation, an analyst at Moody’s Ratings told Reuters in an interview. “If the BJP, like it did in 2014 and 2019, had won over 273 seats on its own, it could have pushed on with curbing the gap at a much more aggressive speed,” said Christian de Guzman, senior vice president of the sovereign risk group at Moody’s. “It looks like the prospects for even more aggressive consolidation are not as bright as they were before the election results. However, I still think that the prospects for consolidation will remain intact, and they will retain a level of fiscal discipline.” India’s Fiscal Deficit Plans India aims to narrow its fiscal deficit to 4.5 percent of GDP by the end of FY26, down from the 5.1 percent projected for the current year ending in March 2025. Some reports indicate that India is now likely to bring down its FY25 fiscal deficit target to 4.9 percent. The smaller mandate for Modi raises the risk of more populist spending to consolidate political support, Guzman said. Although the BJP’s manifesto and the Interim Budget announced by Finance Minister Nirmala Sitharaman did not hint at much populist spending, the full budget due in July will be more telling. This budget will account for the government’s plans, including the Reserve Bank of India’s record Rs 2.11 lakh crore surplus transfer. The government could use this surplus to further consolidate the fiscal position or to garner political support, Guzman added. “A shaky political outcome perhaps suggests higher odds for the latter.” Challenges to Ambitious Reforms Fitch Ratings noted that the weakened majority for Modi’s alliance could pose challenges for the more ambitious elements of the government’s reform agenda. Guzman acknowledged India’s high growth and robust economic prospects over the medium-term are already factored into their ratings, as is the progress made on macroeconomic and financial stability. However, to upgrade India’s sovereign outlook or rating, Moody’s would need to see a “much more material improvement on the fiscal side,” Guzman explained. This includes a significant reduction in government debt and an improvement in debt affordability, such as a reduction in the proportion of revenue accounted for by interest payments or debt servicing.

Amit Shah Prioritizes Rupee Trade as Top Agenda for New Government

Amit Shah, the Home Minister of India, has emphasized the significance of trade conducted in the Indian rupee, calling it a top priority for the new government. The move to facilitate trade in the national currency has reached its final stages of negotiation with several countries, although matters have been temporarily suspended due to ongoing Lok Sabha elections. Shah highlighted the potential of rupee trade as a significant step forward, citing the country’s robust fundamentals and the relative stability of the Indian currency against most international counterparts. Finance Minister Nirmala Sitharaman echoed this sentiment, emphasizing that many countries are showing interest in establishing trade relations based on rupee transactions. Following the Reserve Bank of India’s July 2022 circular permitting invoicing, payment, and settlement of trade in Indian rupees, rupee invoicing has gained traction. India has already initiated rupee trade with neighboring countries like Nepal and Bhutan, while efforts are underway to facilitate trade in the national currency with Russia and Sri Lanka. The transition to rupee invoicing is expected to bring various benefits, including lower transaction costs, enhanced price transparency, faster settlement times, and reduced hedging expenses. Additionally, it is anticipated to contribute to the internationalization of the rupee and alleviate the burden of holding foreign reserves by the RBI. Sitharaman emphasized India’s stable economic fundamentals, transparent taxation policies, and robust systems, which have bolstered investor confidence and positioned India as an attractive destination for trade and investment. With a growing middle class and a sizable market, India’s economic prospects appear promising, garnering attention and engagement from global partners. Overall, the prioritization of rupee trade underscores the government’s commitment to leveraging India’s economic strengths and fostering stronger trade ties on both regional and international fronts.

Indian Cabinet Approves Rs 9,589 Crore FDI in Suven Pharmaceuticals by Cyprus-Based Firm

The Cabinet has given its nod for a foreign investment of approximately Rs 9,589 crore in Suven Pharmaceuticals by Berhyanda Ltd, a company based in Cyprus. This approval pertains to the acquisition of up to 76.1% of Suven Pharmaceuticals’ shares by Berhyanda through the transfer of shares from existing promoter shareholders and public shareholders via a mandatory open offer. The total foreign investment could potentially rise to 90.1% in Suven Pharmaceuticals. Various regulatory bodies, including SEBI, RBI, and CCI, have assessed the proposal, and it has now received Cabinet Committee on Economic Affairs (CCEA) approval. The decision is contingent upon compliance with all relevant rules and regulations. Over the past five years (from 2018-19 to 2022-23), the pharmaceutical sector has attracted a total of Rs 43,713 crore in foreign direct investment (FDI). Notably, the sector experienced a significant 58% growth in FDI in the previous fiscal year.