Winning Bizness Economic Desk

Credit card spends in India increased 18 per cent Year-on-Year (YoY) to Rs 1.84-trillion in April. However, spending was down 8.7 per cent Month-on-Month (MoM) on a high base effect, the Reserve Bank of India (RBI) data showed.

The highlight here is that in March, the spends had climbed northward to a four-month high of Rs 2.01-trillion.

While spends by HDFC Bank rose 26.47 per cent YoY to Rs 51,724-crore, SBI Cards clocked a 19.6 per cent increase YoY at Rs 29,415-crore.

HDFC Bank is the country’s largest credit card issuer. Another private sector lender, ICICI Bank’s spends also rose 19.30 per cent YoY to Rs 35,079-crore, while Axis Bank registered a 14.68 per cent YoY climb to Rs 21,201-crore.

An important point to note here is that credit card spends are expected to remain stable in FY 26, backed by growth in consumption.

However, net card additions are expected to remain range-bound as lenders are focused on credit quality and cross-selling to existing customers rather than pursuing aggressive acquisition strategies.

According to the Reserve Bank data, credit card issuance climbed up by 7.67 per cent YoY in April to 110.4-million and were up 0.5 per cent MoM.

The net card additions in the month stood at 5,51,315. In March of this year, there was an addition of 5,69,330 cards while the additions stood at 4,42,172 cards and 8,17,279 cards in February and January, respectively.

In April, HDFC Bank added 1,60,504 cards. Amongst other card issuers, SBI Cards had added 1,59,044 cards, ICICI Bank added 91,412 cards and Axis Bank added 55,656 cards during the month.

After Operation Sindoor, India’s Military Likely to get Rs 50,000-cr Boost

The country’s defence budget is likely to receive an injection of Rs 50,000-crore post the successful military operation—Operation Sindoor.

This additional budget is likely to be provided through the supplementary budget and if done so, will take the overall defence allocation beyond Rs 7-lakh-crore.

The increased budget will likely be used for R&D and the purchase of weapons, ammunition and other necessary equipment, a media report quoting government sources said.

Here, a point to note is that a record of Rs 6.81-lakh-crore had been set aside for the armed forces in the 2025-26 budget presented by the Union Finance Minister Mrs Nirmala Sitharaman in February of this year.

This year’s allocation, it must be highlighted here, is already a significant 9.2 per cent increase from the Rs 6.22-lakh-crore in 2024-25.

The approval for the increased budget is likely to be sought during the Winter Session of Parliament.

For the Mr Narendra Modi-led government (since 2014), defence has been a priority area. The Defence Ministry has been given Rs 2.29-lakh-crore in 2014-15, the first year of the Modi government.

It must be pointed out here that the current allocation is the highest of all ministries and is 13 per cent of the total budget.

The likely upping of the country’s defence spending comes in the backdrop of Operation Sindoor, launched after the April 22 Pahalgam terror attack and followed by India attacking and destroying terrorist camps and even some Pakistani military installations.

Bangladesh Cancels Rs 180-cr Defence Contract with Indian Company

India’s neighbouring country Bangladesh has cancelled a defence contract of Rs 180.25-crore with a Kolkata-based public sector company even as diplomatic relations between the two countries are worsening.

The Kolkata-based company is a ship-builder named Garden Reach Shipbuilders & Engineers Limited (GRSE). It operates under the country’s Ministry of Defence and the company has notified the stock exchange last week of the cancellation of the contract.

The cancelled deal involved the construction of an advanced ocean-going tug for Bangladesh, a specialised vessel intended for long-distance towing and salvage operations in open seas.

This cancelled deal is widely seen as a retaliatory action to the country’s recent decision to revoke trans-shipment facilities for Bangladeshi cargo exports to third countries.

What needs highlighting here is that India has imposed some restrictions on imports of Bangladeshi goods, including ready-made garments and processed foods.

This move follows the deteriorating relations between the two countries in recent times.

Here, it is important to point out that as per a Directorate-General of Foreign Trade (DGFT) notification, no ready-made garments for Bangladesh will be allowed into the country through Integrated Check Posts (ICPs) in the north-east—a move that mirrors similar trade curbs imposed by Bangladesh last month.

India’s Forex Reserves Slide USD 4.9-bn on Decline in Gold Holdings

The country’s foreign exchange reserves slid by USD 4.9-billion in the week ended May 16 of this year. This decline is primarily because of a slide in gold reserves.

It is important to highlight here that gold reserves alone slid southward by USD 5.1-billion during the week.

The total reserves stood at USD 685.7-billion as of May 16. In the preceding week, however, the reserves had moved northward by USD 4.5-billion to USD 690-billion.

The country’s foreign exchange reserves had touched an all-time high of USD 705-billion in the last week of September 2024.

The decline in reserves is attributed to re-evaluation losses following a decline in global gold prices.

Gold prices dropped 3.6 per cent to USD 3,203 per ounce during the week.

The Foreign Currency Assets (FCAs) rose by USD 279-million in the reporting week.

The Special Drawing Rights (SDRs) declined by USD 43-million to USD 18.4-billion.

The country’s reserve position with the International Monetary Fund (IMF) was also lower by USD 3-million at USD 43-billion in the reporting week.

Morgan Stanley Ups FY 26 GDP Growth Forecast to 6.2 pc

Morgan Stanley, the global financial services firm, has revised upward India’s GDP growth forecast to 6.2 per cent for this fiscal (FY 26) and to 6.5 per cent for the next fiscal (FY 27).

The two estimates are based on the back of a strong domestic demand being the key driver of economic momentum amid the on-going external uncertainties.

“We expect growth to remain resilient, supported by strength in domestic demand amidst uncertainty from external factors”, the brokerage stated in a note.

The earlier growth forecasts were 6.1 per cent for FY 26 and 6.3 per cent for FY 27.

“Policy support is likely to continue through easier monetary policy while fiscal policy prioritises capex. The macro-stability is expected to be in comfort zone with robust buffers,” it added.

Within domestic demand, the brokerage expects consumption recovery to become more broad-based with urban demand improving and rural consumption levels already robust.

“Within investments, we see household and public capex driving growth while we expect private corporate capex to recover gradually,” the brokerage firm noted.

Morgan Stanley expects headline inflation to remain subdued on account of a lower food inflation; this range-bound trend in core inflation is also expected to continue.

“As such, we expect inflation to remain decisively below the four per cent mark over the next few months and average four per cent (on-year) in FY 26 and 4.1 per cent in FY 2027,” the note stated.

The India Meteorological Department (IMD)’s forecast of an above-normal monsoon for 2025 is likely to support the cropping season, which, in addition to helping to build healthy buffer stocks, is likely to ensure that food prices remain benign, the note stated.’

According to the globally-renowned firm, risks to growth outlook remain evenly balanced amidst an improving outlook for cross-country trade deals.

On the upside, an acceleration in US growth along with faster resolution of trade and tariff-related uncertainty could improve investor sentiment and the capex cycle.