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“You are listening to the Expresso Business Update. Here is the latest news from the world of Indian and International business brought to you by The Indian Express and The Financial Express.
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Let’s start with the markets – Indian benchmark indices are likely to open in green, hinted SGX Nifty. On the Singapore Exchange, Nifty futures were trading 20 pts or 0.11% up, signalling a flat to positive start for domestic equities. In the previous session, frontline indices snapped an eight-day rally to end in red. BSE Sensex fell 415 pts, while NSE Nifty closed below 18700. Ajit Mishra, VP – Technical Research at Religare Broking Ltd said that indications are in the favour of further consolidation in the index but the tone would remain positive till Nifty upholds 18,300. And, since all the sectors are participating in the move, traders should utilize this phase to add quality names on dips.
Moving on – Despite robust growth in tax revenues and release of capex loans by the Centre, state government’s capital expenditure by state governments saw flat growth in the first seven months of the current financial year. The combined capex of eighteen states whose finances were reviewed by FE was up just 1% on year at Rs 1.96 trillion in April-October of the current fiscal. The annual growth was 81% in the year-ago period albiet on a favourable base. These states have budgeted a capex of Rs 6.32 trillion for FY23, an increase of 39% over the FY22 actuals. The state governments have slowed down their capital expenditure vis-a-vis budget targets is indicative of their concerns about elevated debt levels, which prompted them to curb borrowings.
In another development – A much reduced impact of monsoon rains on food grain and horticulture production and rapid expansion of livestock and fisheries sectors have sustained India’s growth in the agricultural and allied sector in the last decade. This is despite patchy and uneven performance of monsoon rains over the years. The “agriculture and allied activities” clocked a robust growth in gross value added of 4.6% at constant prices during the July-September period of 2022-23, which was even better than many analysts estimated, given the delayed monsoon and kharif sowing activities. The sector had grown at strong rate of 4.5% in the previous quarter too. The high farm GVA growth was largely driven by better performance of “allied sectors” particularly livestock and fisheries. According to official data, the livestock sector grew at a compound annual growth rate of 8.15% over the five years ending 2019-20. In contrast, the production of rice, wheat and coarse cereals expanded at CAGRs of 2.7%, 2.9% and 4.8% respectively between 2015-16 to 2020-21.
Meanwhile – The Union Budget is likely to allocate around Rs 15,500 crore for the implementation of Pradhan Mantri Fasal Bima Yojana for next financial year same as the budget estimate for 2022-23, despite a spike in expenses. Sources said the anticipated expenses for the centre for implementation of PMFBY in current fiscal would be around Rs 19,000 crore against the budget estimate of Rs 15,500 crore, while there are around Rs 6000 crore of ‘unspent balance’ in the corpus of the scheme from the previous year. The premium to be paid by farmers under the crop insurance scheme is fixed at just 1.5% of the sum insured for rabi crops and 2% for kharif crops, while it is 5% for cash crops.
In other developments – Notwithstanding the current headwinds and concerns over growth, the Centre is likely to remain fairly optimistic about economic prospects in the fiscal year 2023-24. According to initial projections being discussed by the finance ministry, the Centre could target a nominal GDP growth of about 11-12% in FY24 and expect gross tax collections to rise by 14-16% over FY23 Budget estimates. The projections, once finalised, will be part of the FY24 Budget. The Budget had projected nominal GDP growth in FY23 at 11.1%, but given the elevated inflation, it is expected to be significantly higher at around 16-17%. The Reserve Bank of India has forecast retail inflation at 5.2% in FY24, down from the 6.7% predicted for the current fiscal. Most agencies expect the country’s real GDP growth to fall in FY24 from the FY23 level.
Lastly – There’s a post-festive hangover across the consumer durables and staples space. Sales were expected to be less brisk after October, but the numbers are more subdued than anticipated. Analysts said the growth in the smart television market has slowed in the October-December quarter owing to higher inventory in channels and weakening demand post the festive season sales. They have pegged their growth estimates for the December quarter at only 8-9% year-on-year compared with 38% in the September quarter. Other dealers in household appliances that FE spoke to said fewer customers were seen in stores post Diwali.
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