Winning Bizness Economic Desk
The United Nations (UN) has upped the country’s growth projection for 2024. The UN’s World Economic Situation and Prospects (WESP) report as of mid-2024 released earlier this month, has stated that the country’s economy is forecast to increase by 6.9 per cent in 2024 and 6.6 per cent in 2025.
India’s economy is likely to be propelled forward to healthy growths in both the years, mainly fuelled by strong public investment and resilient private consumption.
The report said that although subdued external demand would continue to weigh on merchandise export growth, pharmaceuticals and chemicals exports were expected to grow robustly.
Earlier in the year (in January), the United Nations had projected a growth rate of a much lower 6.2 per cent—this has now been revised northward. The 2025 projection, however, has been kept unchanged at 6.6 per cent.
The UN’s update also projected a deceleration of consumer price inflation from 5.6 per cent in 2023 to 4.5 per cent in 2024. This is in line with the Reserve Bank of India (RBI)’s 2-to-6 per cent medium-term target range.
The global organisation’s projection comes after another reputed international agency, Moody’s Ratings, pegged the Indian economy’s growth at 6.6 per cent in the current fiscal year which, however, is lower than the Reserve Bank’s and other agencies’ projections.
But it is at par with Deloitte’s which has also projected a growth rate of 6.6 per cent.
The Reserve Bank has projected a growth of seven per cent in the current fiscal, while S&P Global Ratings and Morgan Stanley projected a growth rate of 6.8 per cent.
Two other globally reputed organisations—the Asian Development Bank (ADB) and Fitch Ratings—have both also projected growth at seven per cent.
India’s Steel Production Rises in April
India has become the only country among the world’s top steel producing nations to clock a growth in the commodity’s production last month (April 2024).
According to figures compiled by the World Steel Association, India produced 12.1-million tonnes of steel which represented a 3.6 per cent increase over the same month of the previous year.
An important reason for the growth in India’s steel production is the higher level of economic activity taking place in its economy.
India is the second largest steel producer in the world after China.
Large infrastructure projects in the road, rail and ports sectors that are being implemented by the government use large quantities of steel as an input.
Similarly, the demand for products such as cars, two-wheelers and commercial vehicles that have been growing in the economy also leads to an increased demand for steel as a raw material.
The World Steel Association’s data shows that Japan produced 7.1-million tonnes of steel, down 2.5 per cent. The United States (US) produced 6.7-million tonnes, down 2.8 per cent while Russia is estimated to have produced 6.2-million tonnes, down 5.7 per cent. South Korea has produced 5.1-million tonnes, down 10.4 per cent.
China which has massive excess capacity in steel has clocked a seven per cent decline in production to 85.9-million tonnes.
Forex Reserves Hit New High of USD 648.7-bn
The country’s foreign exchange reserves climbed up USD 4.549-billion to a new all-time high of USD 648.7-billion for the week ended May 17, the Reserve Bank of India (RBI) said.
This is the third consecutive week of increase in the overall kitty which had increased by USD 2.561-billion to USD 644.151-billion in the previous reporting week.
For the week ended May 10, the foreign currency assets, a major component of the reserves, increased USD 3.361-billion to USD 569.009-billion, data from India’s apex bank showed.
Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the Euro, Pound and Yen held in the forex reserves.
Gold reserves rose USD 1.244-billion to USD 57.195-billion during the week, the Reserve Bank said.
The Special Drawing Rights (SDRs) were up USD 113-million to USD 18.168-billion, the apex bank said. India’s reserve position with the International Monetary Fund (IMF) was down USD 168-million to USD 4.327-billion in the reporting week, the apex bank data showed.
India’s Russian Oil Imports Rise To A 9-Month High In April
The country’s oil imports from Russia climbed to a nine-month high in April of this year after shipments on non-sanctioned tankers operated by Russia’s largest shipping company Sovcomflot re-commenced.
Refiners in India briefly stopped importing Russian oil in tankers belonging to Sovcomflot after the company’s ships, along with its fourteen tankers, were designated by the United States (US) in February as being in breach of Western sanctions.
The West has imposed sanctions against Russia since it invaded Ukraine in 2022 and has enacted price caps on oil and oil products loaded at Russian ports. This is to cut Russia’s oil revenue that funds its war against Ukraine.
A point to note here is that India is the top client for Russian sea-borne oil. India is presently the world’s third biggest oil importer and consumer.
Last month, Indian refiners shipped-in nearly 1.8-million barrels per day (bpd) of Russian oil, up about 8.2 per cent over the previous month, expanding Russia’s share in India to about 38 per cent from 32 per cent in the previous month, the data showed.
Overall, India imported 4.8-million barrels per day of oil in April, a slide of 6.5 per cent from the previous month and marginally higher than April of last year (2023).
The point that needs highlighting is that Russia continued to be the top oil supplier to India followed by Iraq and Saudi Arabia.
RBI Pays Highest-Ever Dividend to Union Govt
India’s apex bank, the Reserve Bank of India (RBI), has said that it will pay a dividend of Rs 2.11-lakh-crore to the union government for the financial year ended March 31, 2024 (2023-24).
This is the highest-ever dividend payout by the country’s central bank and a 141 per cent increase from the amount transferred to the union government in 2022-23.
This comes on the back of a higher interest earned on foreign exchange reserves.
Since the windfall will reflect in the current financial year (2024-25), it will provide the incoming government substantial headroom to ramp-up spending on welfare and infrastructure schemes, while keeping the budget deficit in check.
A point to highlight here is that the record dividend is 40 per cent higher than the total dividend of Rs 1.5-lakh-crore that the Centre expected from the Reserve Bank, state-owned financial institutions and non-financial public sector companies combined in 2024-25, according to the interim budget presented in February.
The transfer by the Reserve Bank to the union government was Rs 87,416-crore for 2022-23. The previous high was Rs 1.76-lakh-crore in 2018-19.
The dividend for 2023-24 was arrived at on the basis of the Economic Capital Framework (ECF) adopted by it in August 2019 as per the recommendations of the Bimal Jalan committee.
The committee had recommended that the risk provisioning under the CRB be maintained within a range of 6.5-5.5 per cent of the Reserve Bank’s balance-sheet.
Adani Ports To Enter Sensex From June 24
Adani Ports and Special Economic Zone Ltd (APSEZ) will replace IT major Wipro Ltd in the 30-stock S&P BSE Sensex from June 24.
The Bombay Stock Exchange (BSE) in its semi-annual rebalancing exercise included the country’s largest private port operator, making it the first Adani Group company to join the blue-chip Sensex from June 24.
The changes have been announced by Asia Index, a joint venture between S&P Dow Jones indices and the Bombay Stock Exchange (BSE).
“Effective at the open of Monday, June 24, 2024, the….changes will be made,” Asia Index said. The BSE also announced changes to its BSE 100, Sensex 50, Sensex Next 50, BSE Bankex and BSE 100 indices.
Page Industries, SBI Cards, ICICI Prudential Life Insurance, Jubilant FoodWorks and Zee Entertainment Enterprises will no longer be a part of the S&P BSE 100 index and will be replaced by REC Ltd, HDFC AMC, Canara Bank, Cummins India and Punjab National Bank (PNB).
A point to note here is that Trent Ltd, a Tata group company, will also make an entry in the Sensex 50 while Divi’s Laboratories Ltd will be dropped from the index.
AU Small Finance Bank and IDFC First Bank will no longer be a part of the BSE Bankex from June 24 and will be replaced by Yes Bank and Canara Bank.
