Dear Readers,

The festive season is in full swing. Malls are adorned with dazzling decorations, and streets are radiating cheer. Offices are celebrating the camaraderie of Secret Santa, a delightful tradition that fosters bonds among colleagues. I’m sure many of you may already be on vacation or making your way through roads and airports, chasing the sunrise of a brand-new year.


Amid this vibrant activity, we must pause to reflect on a crucial economic narrative—consumption.

Looking at the crowds and travel many economists are predicting higher consumption...but that's where my point is. I think consumption data is skewed and should not be fully trusted. Looking at the crowd at Goa we cannot say the consumption is booming. The simple reason is there are limited destinations where tourists can go.

The real consumption trends are shaped by multifaceted factors. After working 10 hours in the office and spending 4 hours in traffic for 5 days a week, people are looking for some solace. So short trips are rising. It's also being driven by a ‘live in the moment mindset, among other external factors. So, I feel, this narrative of heightened activity must be seen with nuance, not assumption.

2024: A year of transition

This year was dominated by elections. In the New Year, we will see the impact of elections. Elections, even won in thumping majority, have their own impact. Look at Maharashtra, it has taken so long to allocate the ministries, and yet discontent lingers. I pored through more than a dozen reports on 2025 outlook in the last few days, and broadly there are a few themes that I came across. AI top the list, geopolitical tensions will continue and markets will remain volatile. For India, foreign inv estors are expected to maintain their focus, yet much hinges on the upcoming Budget. With FDI down 60%, the policy direction will be critical.

Finance in 2025

The finance sector will see focus on collaboration as FinTechs consolidate amidst stricter compliance and funding constraints. l see a lot of action in NBFCs, with foreign investors eyeing opportunities and many local players wanting to move out.


Banks will face continued pressure on deposits, though retail lending is likely to perform well. Corporate capex, which will primarily focus on greenfield projects, is expected to pick up in the latter half of the year. While there’s a high chance that the new RBI governor will reduce interest rates, inflationary pressures will remain.

Being cautious for 2025

Be ready for a higher cautious approach as inflation is expected to be higher for at least the first half of the year. At the same time, rupee depreciation will also worsen inflation as products with imported components would become expensive.

Global tensions persist, with fears of conflict and the return of Trump-era policies casting long shadows. In sum, the first half of the new year is likely to witness heightened inflation, exacerbated by rupee depreciation, which will make import-heavy goods more expensive.


After a rapid digitalisation of the last few years, our focus in the next year is going to be on AI.

From the beaches of Puri to the pilgrim hub of Badrinath, QR scan codes are visible everywhere.

I often wonder how life is changing, barcode and QR scan codes have become an integral part of our routine. With the use of mobile apps, digital seems to be an extension of our lives. But despite having all these facilities, much is lacking. India is still far from being on the list of happiest countries. I am not even comparing with Denmark which practices the Hygge concept -- a feeling of cosiness, contentment, and well-being, to be happy.

Let there be quality

Something is missing specifically with the middle class which is the backbone of the economy.

Already burdened by education loans, a young professional today has to face gruelling work hours, exorbitant urban rents, and chaotic traffic. When I look at the men and women decked in professional attire standing in the auto queues for hours, I have my sympathy for them. While we are flaunting the consumption story, let’s not forget half of it is being financed by banks. The working class has no respite from the suffering. Remember this year we lost a young CA Anna Sebastian who had a brigh t future.


We supposedly live in a digital world but we are dealing with problems with higher pollution, congested roads. Sadly, no matter how much you pay, there is not much quality of life.

The pursuit of quality

A French entrepreneur I met recently shared that while his peers readily embrace markets like Singapore or Hong Kong, India often fails to inspire the same confidence. It’s a telling reflection on the urgent need to elevate our living standards.

As we bid farewell to 2024, let us focus on the moments that truly mattered. What was the best moment of yours? What are your goals for the year ahead? Do write back to me whenever it's convenient for you.

May our paths cross and we meet soon. May you live in the best of times in 2025.

Click here for ETBFSI coverage of 2024

Click here for ETBFSI coverage of 2025 outlook

As usual, I am adding here the top 5 stories of the week, trust you will find them meaningful.

1. India must leverage domestic demand, need strategic reforms to capitalise on China +1: Economists
2. How curbs on bancassurance channel can impact insurance companies
3. What is the growth outlook for NBFCs in 2025?
4. India's GDP growth may fall below 6% in FY25, inflation may defy estimates
5. What will be the rupee level by March 2025?

Happy Reading.
Amol Dethe,
Editor,
ETBFSI.

(Editor's note is a column written by Amol Dethe, Editor, ETBFSI. Click here to read more of his articles exploring several buzzing topics)

We'd love to hear your feedback on this new newsletter.

To become an ETBFSI newsletter subscriber and to access newsletter archive, click here.