India Business News Wrap: A Brisk Start to the Fiscal Year

Key Economic Trends: Declining MGNREGS Demand, Rising Food Prices, Regulatory Reforms & Key Sector Updates

India's economic landscape is showing signs of improvement as demand for work under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has declined for the seventh consecutive month, signaling a positive start to the new financial year. Meanwhile, rising food prices, dynamic deal activities, regulatory reforms, and significant developments across various sectors, from finance to infrastructure, reflect the evolving contours of the country's economy.

Economy News

• Demand for work under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) decreased for the seventh consecutive month through May, indicating improved economic conditions. Approximately 37.46 million individuals sought work, a 12.1% decrease from the previous year, while 27.18 million households sought work, a 14.3% decline.
• The rising prices of potatoes, onions, and tomatoes led to an 8% year-over-year increase in the cost of vegetarian thali in May, according to a Crisil report. This was driven by lower arrivals of onions and adverse impacts on potato crops.
• Overall deal activity in India dropped by 3% to USD 5.023 billion in May. Mergers and acquisitions declined by 58% to USD 1.05 billion, while private equity deal values rose by 49% to USD 3.973 billion, mitigating the overall decrease.
• The Competition Commission of India (CCI) released draft regulations for engaging monitoring agencies to oversee settlements and commitments by companies, including Big Tech. These updates align with the latest amendments to the Competition Act passed in April 2023.

Finance News

• The Reserve Bank of India (RBI) corrected reporting errors in banks' Cash Reserve Ratio (CRR) maintenance data, ensuring accurate data presentation after previous discrepancies.
• Interest rate spreads for public sector banks (PSBs) reached a 10-year low of 2.25% in April 2024, down from 2.28% in March 2024, reflecting a consistent downward trend over the past year.
• The RBI repurchased Rs 7,287 crore worth of government bonds against a notified amount of Rs 30,000 crore, receiving bids worth Rs 8,631 crore at the auction.
• SEBI issued a new framework for penalties related to surveillance lapses by market infrastructure institutions (MIIs), with penalties ranging from ₹1 lakh to ₹25 lakh for first instances, increasing for subsequent lapses. The framework will be effective from July 1.
• The Insolvency and Bankruptcy Board of India (IBBI) released guidelines to streamline the appointment of insolvency professionals (IPs), effective from July 1, 2024, to reduce administrative delays.

Industry News

• The Consumer Electronics and Appliances Manufacturers Association (CEAMA) projects record annual sales of around 14 million air-conditioner units by the end of 2024 due to a significant heatwave, with May seeing record-breaking sales.
• Top smartwatch manufacturers like Noise, Boult, and Boat are focusing on premium buyers with enhanced hardware and aesthetics to boost average selling prices and profitability amid declining shipments and stiff competition.
• The Indian government is promoting the sale of par-boiled rice in southern states under the Bharat rice initiative, though sales have been lower than expected despite over one million tonnes being supplied.

Infrastructure News

• Domestic air passenger traffic grew by 5.1% year-on-year to approximately 138.9 million in May, surpassing pre-COVID levels by 14%. ICRA reports a stable outlook for the aviation industry.
• India's proptech sector attracted $4.6 billion in investments from FY2011 to FY2024, with a compound annual growth rate of 40%. Despite global uncertainties, the sector received $657 million in FY24, reflecting sustained investor interest.
• The Integral Coach Factory (ICF) has been tasked with manufacturing two standard-gauge bullet trains capable of speeds up to 250 kmph for the Mumbai-Ahmedabad High-Speed Rail corridor, marking India's first domestic production of high-speed trains.

Energy News 

• Investment in India's power sector will be driven by renewable energy and transmission projects, with a target of 500 GW of renewable energy capacity by 2030 requiring $190 billion to $215 billion in investments.
• Monthly natural gas volumes traded on the Indian Gas Exchange (IGX) surged by 480% to 4.92 million metric million British thermal units (mmBtu) in May, driven by rising gas prices and reduced gas-based power demand.
• India added over 1.8 GW of solar open access capacity in the first quarter of 2024, doubling from the previous quarter due to lower Chinese module prices and the suspension of the Approved List of Models and Manufacturers (ALMM) order.

Telecom News

• The Telecom Regulatory Authority of India (Trai) issued a consultation paper to revise the National Numbering Plan, aiming to create a sustainable pool of new phone numbers for the nearly 1.2 billion mobile phone connections.
• Trai is reviewing norms for inactive landline and mobile connections, seeking feedback on defining such inactivity and addressing potential constraints in numbering resources amid broadband network growth.

States News

• The Uttar Pradesh government plans to acquire nearly 760 hectares of land to develop exclusive Japanese and South Korean industrial enclaves in Noida, with the Yamuna Expressway Industrial Development Authority (YEIDA) overseeing the project.

Healthcare News

• The pharmaceutical industry has raised concerns over new Schedule M regulations, which propose a ban on manufacturing non-drug products in units licensed for drug production. The Federation of Pharma Enterprises (FoPE) seeks permission to produce cosmetics in areas dedicated to topical products.

External News

• India plans to sign clean economy and fair economy agreements under the Indo-Pacific Economic Framework for Prosperity (IPEF) after the formation of the new government. While 13 member nations have signed, India has deferred its commitment.

As India navigates through these economic shifts, the country's resilience and adaptive strategies become increasingly evident. From regulatory reforms and investment influx in renewable energy to advancements in infrastructure and sector-specific growth, India is poised for a transformative phase. With ongoing initiatives and robust policy frameworks, the nation continues to stride towards a more prosperous and stable economic future.