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<ul><li>The <keyword id="24185102" type="General" weightage="20" keywordseo="Honda-Activa-e" source="keywords">Honda Activa e</keyword> and QC1 electric scooters have been unveiled in India.</li><li>The scooters will go on sale in 2025, with bookings set to open on January 1.</li><li>Here’s everything you need to know about the first electric scooters from the company in India.</li></ul> Honda Motorcycle &amp; Scooter India (HMSI) has introduced its first electric scooters, the Activa e: and QC1, marking the brand’s foray into India’s electric vehicle (EV) market. The launch event took place in Bengaluru, with bookings set to open on January 1, 2025, ahead of deliveries scheduled later in the year. The company has said that the prices for its electric scooters will be announced in January 2025. The company plans on establishing <keyword id="24185739" type="General" weightage="20" keywordseo="battery-swap-stations" source="keywords">battery swap stations</keyword> in major cities, emphasizing battery reuse and reducing range anxiety. The company has established 84 battery swap stations across Bengaluru as part of its infrastructure rollout, with plans to expand into major cities such as New Delhi and Mumbai. Customers will get three free services during the first year and a standard warranty covering up to 50,000 km or three years. <h2>Honda Activa e specifications</h2>The Honda Activa e is identical to its popular ICE counterpart, offering the same body and frame. However, the design is completely different, offering a more modern look and feel. It features a TFT digital instrument cluster with Bluetooth connectivity. It features a swappable battery setup, with the scooter featuring two 1.5 kWh batteries. The scooter is claimed to offer a range of up to 102 km on a single charge with the two batteries. The scooter will offer three riding modes – Economy, Standard and Sport. It is powered by a wheel-side motor with a maximum output of 6 kW, providing a top speed of 80 kmph. <h2>Honda QC1 specifications</h2>The Honda QC1 will be a more affordable option, designed for shorter rides. The QC1 features a similar design while offering a smaller LCD display to keep the costs down. It is equipped with a fixed 1.5 kWh battery, offering a range of up to 80 km on a single charge. The scooter is equipped with an in-wheel motor which generates between 1.2 kW and 1.8 kW power. It comes equipped with a 5-inch LCD instrument panel, under-seat storage, and a USB Type-C socket for convenience. We should know more about the electric scooters from the company in the coming weeks. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/indias-pc-market-reaches-new-high-with-4-49-million-shipments-in-q3-2024/articleshow/115719599.cms">India’s PC market reaches new high with 4.49 million shipments in Q3 2024</a> <a href="https://www.businessinsider.in/tech/mobile/news/realme-gt-7-pro-with-snapdragon-8-elite-chipset-launched-starting-at-59999/articleshow/115689685.cms">Realme GT 7 Pro with Snapdragon 8 Elite chipset launched starting at ₹59,999</a> <a href="https://www.businessinsider.in/business/telecom/news/jio-airtel-and-vi-lost-nearly-11-million-subscribers-in-september-2024/articleshow/115565541.cms">Jio, Airtel and Vi lost nearly 11 million subscribers in September 2024</a>

Honda Activa e and QC1 electric scooters unveiled in India, to go on sale in 2025

<ul class="summary-list"><li><keyword id="19910265" type="General" weightage="20" keywordseo="gold-prices" source="keywords">Gold prices</keyword> have hit record highs, thanks to global uncertainties and expectations of central bank rate cuts.</li><li>China's consumers and its central bank are snapping up gold, even as a falling <keyword id="20283765" type="General" weightage="20" keywordseo="yuan" source="keywords">yuan</keyword> makes the metal pricier.</li></ul>China's economy isn't in a great place and its currency is floundering. The tumult is sending prices of gold, considered a safe-haven asset, skyrocketing. <a target="_blank" href="https://markets.businessinsider.com/commodities/realtime-chart/gold-price">Spot gold prices</a> have recently hit record highs — above $2,400 an ounce — thanks to global demand on the back of economic and geopolitical uncertainties. Expectations of <a target="_blank" href="https://markets.businessinsider.com/news/commodities/gold-price-record-high-pce-inflation-hedge-data-rate-cuts-2024-4">central bank interest rate cuts</a> also boost gold's appeal, since the yields on fixed-income assets like bonds typically fall as rates go down. In China, consumers are dealing with an <a target="_blank" href="https://www.businessinsider.com/china-economy-first-quarter-gdp-growth-but-pain-not-over-2024-4">economy</a> that is struggling to recover post-pandemic and a weak yuan that has fallen about 5% against the US dollar over the last year. This makes gold — which, like most internationally-traded commodities, is denominated in the US dollar on the global market — even more expensive for the Chinese consumer. But consumers and China's central bank can't get enough gold. Even Gen Z investors in China are getting into the trend as they buy up tiny bottles of "gold beans," Bloomberg <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-03-16/what-little-gold-beans-are-teaching-young-chinese-about-alternative-savings">reported last month</a>. They're looking for alternatives to China's <a target="_blank" href="https://www.businessinsider.com/china-hong-kong-stock-market-slump-confused-beijing-economy-signals-2024-1">stock markets,</a> which have been flailing over the last few years. China's central bank has also been buying up gold, in much larger quantities than Gen Z's few grams of beans. The People's Bank of China, or PBOC, has been snapping up gold for 17 straight months,with its holdings of the precious metal rising 16% over this period, according to a report from the international trade association <a target="_blank" href="https://www.gold.org/goldhub/gold-focus/2024/04/chinas-gold-market-march-official-gold-reserves-rose-further-wholesale#:~:text=China's%20central%20bank%20announced%20its%2017th%20consecutive%20purchase&amp;text=China's%20gold%20reserves%20rose%20by,17%20months%20(Chart%208).">World Gold Council.</a> This buying spree coincides with a trend among central banks globally to <a target="_blank" href="https://markets.businessinsider.com/news/commodities/gold-price-china-economy-dollar-yuan-central-bank-dedollarization-commodities-2024-3">diversify their holdings</a> to reduce their reliance on the US dollar. In 2023, China's central bank bought 225 tons of gold, per the World Gold Council. Last month, China's gold reserve rose by 5 tons, taking the country's total stash to 2,262 tons. <h2>China has overtaken India as the world's <keyword id="21389468" type="General" weightage="20" keywordseo="largest-gold-buyer" source="Orion">largest gold buyer</keyword></h2>Since China is now home to swarms of gold bugs, the country has decidedly overtaken India as the world's largest buyer of the commodity. The two economies have been jostled in the top spots for years, but China's buying spree last year put India behind. Last year, China's demand for gold jewelry rose 10%, to 630 tons acquired, while India's purchases fell 6%, to 562 tons, according to the <a target="_blank" href="https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023">World Gold Council.</a> US consumers were a far third place, buying just 136 tons of gold jewelry in 2023. It's not just China. <a target="_blank" href="https://www.gold.org/goldhub/data/gold-reserves-by-country">World Gold Council data</a> shows other central banks,includingPoland and Singapore, have also been snapping up gold to hedge against global economic uncertainties. India's central bank bought 16.2 tons of gold last year. The US did not add any gold to its reserves. However, the US already has the world's largest gold holdings, with about 8,134 tons of the precious metal — far more than second-place Germany, which holds 3,352 tons of the commodity. Despite the gold rush, Georgette Boele, an economist at Dutch bank ABN AMRO, warned about going all-in on the commodity amid record-high prices in an <a target="_blank" href="https://www.abnamro.com/research/en/our-research/gold-watch-the-sky-seems-the-limit-for-gold-prices">April 15 note.</a> "The trend in gold prices is positive and the sky seems to be the limit. However we remain cautious," wrote Boele. She highlighted a seeming paradox in the market: High US interest rates would typically keep gold prices muted, but the opposite is happening. "Even though these changes have occurred in the past, they tend to be temporary in nature meaning that they could last around three to six months," wrote Boele. Lofty gold prices now doesn't mean there's a supply crunch, she wrote. "The amount of central bank buying is not justifying gold prices at current levels," she wrote. Based on that assessment, she said she's keeping her forecast of $2,000 per ounce of gold at the end of 2024, below the current going rate around $2,400.

People in China continue to buy gold even as the currency remains weak!

On September 18, 2024, the US <keyword id="19900043" type="General" weightage="20" keywordseo="fed" source="keywords">Fed</keyword> delivered a jumbo-sized surprise to the global economy. Not only did they trim their interest rates by a massive 50 basis points to bring their yields down to 5%, but also hinted at further rate cuts in the upcoming months. This move from the fed and several other central banks globally had pushed expectations high for a similar rate slash closer home, from the <keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword> this month. But governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword>, in a “picture abhi baaki hai” moment, decided to hold the repo rates here steady, leaving them unchanged at 6.5% for the record 10th straight time. Although, he did tinker with the policy stand, changing it from “rate cuts are absolutely off the table” to a more accommodating “we’re okay with bringing down the rates, if needed”. This, rather neutral, stance from India’s financial custodian sparked hopes for a rate cut in December this year. However, the stubborn inflation levels in September have again dented such hopes. As consumers, you may be wondering what all the hullabaloo this is about, since it hardly makes a difference to your regular financial routine. Well, the majority of both economic growth and inflation is closely connected to this policy stance from the central bank and it does have a rather indirect effect on both our earnings and spending. But more directly, it would have clear implications for those looking to own a house. Even the slightest modification of interest rates, or the lack of it, influences the <keyword id="19916018" type="General" weightage="20" keywordseo="emi" source="keywords">EMI</keyword> you pay significantly. So, all aspiring homebuyers, is this the right time to take out a loan and buy a house? Can you expect a rate cut anytime soon, and what will that mean for your home-owning dreams? We lay it out. <h2>What’s the connection?</h2>You see, buying a house is no small feat, at least financially. The task becomes even more herculean if you are scouting for your own roof in cities like Delhi, Noida, Bangalore or Mumbai where, as Circuit from Munnabhai says, “room shuru hote hi khatam ho jata hai”. Naturally, you’ll have to take a <keyword id="6354730" type="General" weightage="100" keywordseo="home-loan" source="Orion">home loan</keyword> from the bank. Don’t be mistaken, the bank won't give you a loan that covers 100% of the value of the property you want to own. Rather, your loan amount will be equivalent to a certain percentage of the property’s total value. RBI’s guidelines on this are pretty clear: <ul><li>If your loan amount is up to Rs 30 lakh, you can get a loan worth 90% of the property’s value.</li></ul><ul><li>If the loan amount is between Rs 30 lakh and Rs 75 lakh, you are eligible for a loan worth 80% of the property’s value.</li><li>If you are taking a loan of more than Rs 75 lakh, your loan amount will be equivalent to 70% of the property’s value.</li></ul>Now assuming that you have the money, it's all about paying back the principal amount, but not without a little (read hefty) interest added on top. See, when you’re taking a home loan, you are actually signing up for a long-term, even multi-decadal financial commitment, which will unfailingly present itself to your bank accounts and finances every single month, in the form of EMIs, or equated monthly instalments). When you take a home loan, you can choose to pay the interest in two ways (talk about choices!). One is that you decide to keep a fixed rate of interest throughout the tenure of your home loan. So, if you opt for a 25-year fixed-rate home loan at the rate of 8.8% p.a., you’ll have to pay interest at this rate for the next 25 years, till your entire loan is paid off. Yes, you can go backsies and switch to a floating-rate home loan by paying a fee. Floating, as the name suggests, means that your interest rate is not set in stone. But starting October 2019, when it comes to a floating interest rate home loan, your payable interest and EMIs are directly impacted by any changes in <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword>, which were left unchanged by RBI this time around. Why are these two so chummy, you might ask. Well, home loan interest rates are a sum of two things: <ol><li>Repo Rate (the rate at which RBI lends money to banks)</li><li>Operational cost + margins</li></ol>Any plus or minus in this equation would send your home loan interests tanking, or skyrocketing. Vivek Iyer, Partner, Grant Thornton Bharat explains that any change in the repo rates impacts the cost of funds and thereby the home loan interest rates. “When the interest rates are expected to reduce, the corresponding impact will be in the form of a reduced EMI. Home loan borrowers should always try to borrow at a floating rate when interest rates are expected to reduce and at a fixed rate when the interest rates are expected to increase. This minimizes the outflow in the form of EMIs that the home loan borrowers will experience”, he continues. So, no change in repo rates means no change in your home loan interest payout and no financial relief whatsoever. A rate cut, which most experts are anticipating will start this December, would mean your EMI payments come down, and your wallet might save a little more. But there’s also a chance of an UNO reverse happening. In case RBI is in the mood to hike the interest, your home loan EMIs might end up taking more from your pockets. Consider this. You took a floating interest rate home loan worth Rs 50 lakh in January 2022 at 8% p.a., for a period of 20 years. This brings your total monthly EMI to Rs Rs 41,822. But, as luck would (or won't) have it, RBI raised the interest rate by 250 basis points between May 2022 and February 2023, bringing it to its current status of 6.5%. Some back-of-the-envelope calculations suggest that now, your home loan interest payout will also rise by a hefty 2.5%, taking the total to 10.5%. In other words, you’ll have to dish out Rs 49,919 per month as EMI. Now, won't you heave a sigh of relief if the RBI were to bring down the interest rate by say, even 50 basis points, or 0.5%? Agreed, your EMI will come down just marginally, to Rs 48,251. But look at this over a 20-year period, and you’ll see how big the difference is. <h2>Are rates set to change anytime soon?</h2>Generally, RBI hikes the repo rates if it sees inflation spiralling out of control. Then, in a bid to reduce consumer spending, it raises interest rates to make borrowing expensive. But when the apex bank sees sluggish consumption in the economy, inflation in control and wants to boost spending, it slashes down on interest rates, making it more lucrative for people to borrow. As of now, most experts are not anticipating any changes in the interest rates anytime soon. This means home loans are not getting cheaper anytime soon. The CPI data, which came out yesterday, saw inflation rise to 5.49% in September, compared to 3.65% last month. Food and beverage prices jumped to a four-month high of 8.36% in September, as opposed to a 5.3% rise in August. So a rate cut seems a no-go at the moment! Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities explains that the RBI had probably expected a hardening of inflation and that's why it chose to hold on to the rates in the monetary policy announcement last week. “Now, it seems that RBI will take a cautious stance going ahead and will not be in a hurry into rate cuts like its global peers”, he added. In all this, one thing is clear, in the grand movie of the Indian economy, the RBI has chosen stability over drama. And just like in every good Bollywood film, we're left wondering what twist the sequel will bring. Until then, it might be “The End" for rate cuts, but the show must go on for the Indian economy!

Boom or bust — how RBI’s decision to leave rates unchanged affects homebuyers

<ul><li>Economies around the world are focusing on attaining growth and taming inflation by increasing borrowing rates. </li><li>The rising borrowing rate environment has made fixed-income products far more attractive compared with equity investments that are facing risks of high valuation and macro headwinds. </li><li>Analysts say that this is a good time to look at fixed-income products because the rate hike cycle has almost peaked. </li></ul>After a long time, fixed income products have emerged as an attractive investment opportunity, especially for retail investors. This is because economies are focusing on attaining growth and taming inflation by increasing borrowing rates. Due to high inflation, the US central bank has taken measures to stop its economic stimulus – also known as quantitative easing – that began as inflation rates shot up. The US Federal Reserve has raised interest rates by 450 basis points since March 2022. Its current benchmark interest rate is the highest since October 2007. The idea behind rising interest rates is that it will make borrowing costs higher, which can then cool off demand and slow down inflation. On the bright side, the rising borrowing rate environment has made fixed-income products far more attractive for Indian investors compared with equity investments that are facing risks of high valuation and macro headwinds. Investments into good old fixed deposits of banks have regained prominence with the rising rate cycle, as banks offer returns of about 7% on such products. Some bank with their revised <keyword id="35480" type="General" weightage="20" keywordseo="fixed-deposit-rates" source="Orion">fixed deposit rates</keyword> as on Feb 21 <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Banks </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FD rates for 2-3 years </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FD rates for 3-5 years </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Axis Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">State Bank of India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Punjab National Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.50% </td></tr></tbody></table> Source: Axis Bank, HDFC Bank, SBI, PNB websites Other fixed income instruments like non-convertible debentures (NCDs) are also offering higher yields to investors. For instance, redeemable NCDs issued by Avanse Financial Services recently offer a yield of 9.25% with a minimum ticket size of ₹1 lakh for a tenor of 36 months. Equities turn volatile A rise in the US interest rates does not bode well for the Indian equity markets, as it can lead to foreign investors pulling their money out from emerging markets like India to deploy it back in the safe and secure markets of the US or other more lucrative markets. As a result, foreign institutional investors (FIIs) have been selling consistently in India since December and moving their <a href="https://www.businessinsider.in/stock-market/news/foreign-investors-continue-to-pull-out-of-indian-stocks-sell-equities-worth-3431-crore-in-feb-so-far/articleshow/97698730.cms">investments from Indian markets to cheaper markets </a>like China, Hong Kong and South Korea, where valuations are attractive. In January, FIIs sold Indian equities worth ₹41,464 crore and in February, so far, they have sold ₹1,567 crore equities. Also, retail participation in equities dropped to a 34-month low in January due to a sharp fall in equities and a revival of fixed income in the <a href="https://economictimes.indiatimes.com/markets/stocks/news/retail-play-in-equity-continues-to-fall-hits-34-month-low/articleshow/98075535.cms">wake of rising interest rates</a>. “Equity and debt are two different asset classes. Nevertheless, asset allocation is very crucial for consistent long-term wealth creation. Having said that, looking at the current global and macroeconomic variables, fresh allocation to fixed-income products might be a wiser investment decision,” said Marzban Irani, chief investment officer – fixed income at LIC Mutual Fund. Irani says that this is a good time to look at fixed-income products because the rate hike cycle has almost peaked. Fixed-income products may remain attractive at least till 2024 Moreover, fixed-income products may continue to be attractive for investors till the Reserve Bank of India (RBI) does not cut interest rates. Since May 2022, India’s central bank has raised the repo rate – a key interest rate – by 250 basis points to 6.5%. “We do not expect any rate cuts this year in India and assign a low probability of rate cuts abroad also. In our view, the central banks may not be in a hurry to cut rates unless economic growth takes a severe downturn,” said Puneet Pal, head-fixed income at PGIM India Mutual Fund. Inflation print for January 2023 sprung a surprise with the consumer price index (CPI) rising to 6.52% while economists expected it to be between 6% to 6.2%. Economists expect inflation to cool down to 5% by April this year, comfortably below the upper tolerance limit of 6% set by the RBI. With inflation expected to cool down, analysts expect RBI to start cutting interest rates from next year. “The current yields present a good opportunity to invest in fixed income across the curve from a medium-term perspective as we expect RBI to start cutting rates from 2024 onwards. With inflation expected to soften towards 5% over the course of the next two quarters, the real yields will continue to be positive across the curve. Thus, we believe that it’s a good time to start constructing a fixed-income investment portfolio,” added Pal. For investors looking at a short-term investment horizon, Irani recommends funds in money market and liquid fund categories; and for those looking to invest beyond 3 years, he recommends medium-to-long-duration funds, banking &amp; PSU debt funds and gilt funds. SEE ALSO <a href="https://www.businessinsider.in/business/news/paytm-zomato-policybazaar-nykaa-companies-attain-spotlight-again-after-q3-performance/articleshow/98003305.cms">New age technology companies back in the spotlight after Q3 performance</a> <a href="https://www.businessinsider.in/stock-market/news/fiis-pump-in-6000-crore-in-5-sessions-as-emerging-markets-turn-attractive-again/articleshow/98017229.cms">FIIs pump in ₹6,000 crore in 5 sessions as emerging markets turn attractive again</a>

Fixed-income products attractive again as markets take a breather

<keyword id="2573" type="General" weightage="100" keywordseo="air-india" source="Orion">Air India</keyword> will be introducing <keyword id="4458030" type="General" weightage="20" keywordseo="premium-economy-class" source="Orion">premium economy class</keyword> in some of its long haul international flights next month, its chief <keyword id="5863894" type="General" weightage="50" keywordseo="campbell-wilson" source="Orion">Campbell Wilson</keyword> said on Saturday as the Tata group-owned airline works on ways to expand its market share as well as the global network. Addressing an event organised by JRD Tata Memorial Trust here, Wilson also said opportunities are there for <keyword id="3658" type="General" weightage="80" keywordseo="india" source="Orion">India</keyword> and Air India to become major players in world aviation within the next decade. Wilson, who is the managing director and chief executive officer of Air India, said the airline will increase its market share to at least 30 per cent in domestic and international routes. Air India is implementing a long-term revival plan and over the next five years, it aims to grow its wide-body and narrow-body fleet as well as expand the global network, he added. "The short-term actions have been to replace carpets, curtains, seat cushions and covers. To fix defective seats and inflight entertainment systems as fast as supply chains will allow. And where parts are no longer available in the market, to work with the likes of Tata Technologies to design and manufacture parts ourselves. "We've recently completely revamped the domestic inflight menu, and will be doing likewise, as well as launching premium economy on certain long haul international flights next month," he said. According to Wilson, the airline has restored nearly 20 aircraft that had been grounded for years due to lack of parts and money. Leaving aside cabin interiors, this has required procuring over 30,000 parts that had been cannibalised over the years to keep other aircraft flying, he added. In addition to restoring long-grounded aircraft, he said the airline has finalised leases for 30 additional aircraft being delivered over the next 12 months, starting next week, with more in the final stages of negotiation. "Beyond these short-term additions, we are in deep discussion with Boeing, <keyword id="6356166" type="General" weightage="50" keywordseo="airbus" source="Orion">Airbus</keyword> and engine manufacturers for a historic order of the latest-generation aircraft that will power Air India's medium and long-term growth. At the risk of gross understatement, the investment will be substantial," he said. Noting that Air India's transformation journey will be in phases, Wilson said over the next six months it will be taxiing, fixing the basics and readying itself for growth. "For the subsequent year we'll start the take off run, building for excellence and attracting those who may not have considered Air India before, and by April 2024 or thereabouts, we will leverage the work done in the earlier phases to climb rapidly, so that by 2027 we have scaled the heights of our aspiration," he added. Air India has expanded both domestically and internationally, the latter including more flights to Vancouver, Sydney and Melbourne. "We now operate non-stop to London from seven Indian cities," he said, and added that from Mumbai, the airline will be adding new non-stop service to San Francisco, New York and Newark starting in a few weeks. According to him, Air India has received more than 62,000 applications for cabin crew positions. Emphasising that the airline no longer has financial or any other constraints, he said "turning around Air India and restoring it to glory is a test match, not a T20. It will require patience, fortitude and partnerships. Though there will be the occasional six and four, it'll mostly be the steady accumulation of singles and doubles." The rapid development of new Indian airports and the government's regional air connectivity scheme UDAN to support developmental domestic routes will only strengthen the network effect that will power further growth, he stated. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/india-on-course-to-become-worlds-second-largest-economy-by-2050-says-gautam-adani/articleshow/95622223.cms">India on course to become world’s second largest economy by 2050, says Gautam Adani</a> <a href="https://www.businessinsider.in/entertainment/article/festive-releases-fail-at-the-box-office-but-theatres-pin-hopes-on-big-ticket-releases-to-return-to-pre-covid-glory/articleshow/95608276.cms">Festive releases fail at the box-office, but theatres pin hopes on big-ticket releases to return to pre-Covid glory</a> <a href="https://www.businessinsider.in/stock-market/news/all-is-not-that-well-say-market-experts-even-as-stocks-chase-new-highs/articleshow/95599973.cms">‘All is not that well’, say market experts even as stocks chase new highs</a>

Air India to introduce premium economy class in certain long haul flights next month

<ul><li>The Indian economy is expected to grow at over 7% rate in upcoming years</li><li>Fiscal deficit down to 6.4% of <keyword id="19904293" type="General" weightage="20" keywordseo="GDP" source="keywords">GDP</keyword> in FY24</li><li>Current Account Deficit (CAD) down to 0.7% of GDP </li></ul>With the <keyword id="19908389" type="General" weightage="20" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> 2024 to be presented tomorrow, Finance Minister <keyword id="19916618" type="General" weightage="20" keywordseo="Nirmala-Sitharaman" source="keywords">Nirmala Sitharaman</keyword> is presenting the <keyword id="20613906" type="General" weightage="100" keywordseo="Economic-Survey" source="keywords">Economic Survey</keyword> in the parliament today. Think of the <keyword id="6354872" type="General" weightage="20" keywordseo="economic-survey" source="Orion">Economic Survey</keyword> as a report card of the country's economic performance over the past year, along with inputs and outlook for the coming fiscal year. Here are some crucial highlights from the Economic Survey 2023-24: <h2>Macro-economic indicators</h2>Per the World Economic Outlook in April, the <keyword id="19948494" type="General" weightage="20" keywordseo="global-economic-growth" source="keywords">global economic growth</keyword> was pegged at 3.2% in 2023. In contrast, <keyword id="19895063" type="General" weightage="20" keywordseo="India" source="keywords">India</keyword>'s real GDP grew by 8.2% in FY24, staying above the 8% mark for 3 out of 4 quarters in FY24. Gross Fixed Capital Formation, or investments in long-term, value-generating fixed assets increased by 9% real terms in 2023-24. The government trimmed down fiscal deficit trimmed down from 6.4% of GDP in FY23 to 5.6% of GDP in FY24.The current account deficit, which indicates that the country is a net importer rather than being an exporter, came down to 0.7% of GDP in FY24, as opposed to 2% of GDP in FY23. While retail inflation averaged at 6.7% in FY23, it dropped down to 5.4% in FY24 During FY24, primary markets saw capital formation, or facilitated raising funds worth Rs 10.9 lakh crore, which makes up for around 29% of the gross fixed capital formation. India's market capitalization to GDP ratio is the fifth largest in the world. <h2>Inflationary Trends </h2>Core inflation eased down to 9-year lows, while core goods inflation came down to a 4-year low. However, food inflation continued to stay high, inching up to 7.5% in FY24, as opposed to 6.6% in FY23. This was largely because of adverse weather conditions, which caused a spike in onion and tomato prices and impacted kharif crop production. Going ahead, RBI's short-term outlook remains positive. Assuming a normal monsoon and no extraordinary policy or geopolitical shocks, the inflation is estimated to drop to 4.5% in FY25, and further down to 4.1% in FY26. These are in line with IMF's inflation forecasts, which stand at 4.6% for 2024 and 4.2% for 2025. <h2>Export-Import trends</h2>India's service exports jumped by 4.9% to $341.1 billion in FY24, driven mainly by IT and software services. Apart from being the top remittance recipient globally, with remittances worth $120 billion in 2023, the country also witnessed investment inflows from foreign investors. As of March 2024, India's forex reserves were sufficient to cover over 10 months of projected imports in FY25, and about 98% of all its external debt. The country's external debt to GDP ratio has been largely consistent over the years, standing at 18.7% of the GDP as of March 2024. <h2>Key growth areas to look out for in FY25 </h2>Essential to adopt bottom-up reform approach, with special short to medium term emphasis on structural changes, job and skill creation, addressing challenges faced by MSMEs, managing India's transition towards a green, clean economy, deepening the country's nascent bond market and laying greater stress on tackling quality of health, especially amongst young Indians. Deliberate focus needed on boosting private investment, expanding India's MSMEs, tapping into the potential of India's agriculture sector, manage India's green transition, urgently bridge the employment-education gap and build capacity of states to sustain and complement India's growth. In the medium term, the country's economy is expected to grow at a rate of over 7%.

Economic Survey 2024: GDP grew by 8.2%, to sustain 7%+ growth momentum, fiscal deficit down to 6.4% of GDP

<ul><li>The aspect of adequacy of forex reserves is always kept in mind while <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> intervenes in the forex market, says RBI governor. </li><li>The Indian rupee has depreciated by 7.4 % against the US dollar but performed better than other Asian peers. </li><li>Das said a stable exchange rate is a beacon of financial and overall macroeconomic stability and market confidence.</li></ul> The <keyword id="6354335" type="General" weightage="50" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) does not have any fixed dollar: rupee exchange rate and its market interventions are to curb excessive volatility, said Governor <keyword id="6359111" type="General" weightage="50" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword>. He also said the aspect of adequacy of forex reserves is always kept in mind while RBI intervenes in the forex market. The umbrella continues to be strong. Announcing the Monetary Policy statement on <keyword id="15127776" type="General" weightage="50" keywordseo="friday-das" source="Orion">Friday Das</keyword> said during the current financial year (up to September 28), the US dollar has appreciated by 14.5 %against a basket of major currencies. This has caused turmoil in currency markets globally. The Indian rupee movement has been orderly as compared to the currencies of most other nations, Das said. He said the Indian rupee has depreciated by 7.4 % against the US dollar during the same period - faring much better than several reserve currencies as well as many of its emerging market economies and Asian peers. Das said a stable exchange rate is a beacon of financial and overall macroeconomic stability and market confidence. Citing the divergent views on the exchange rate of the rupee and the adequacy of our forex reserves Das said the rupee is a freely floating currency and its exchange rate is market determined. "Second, the RBI does not have any fixed exchange rate in mind. It intervenes in the market to curb excessive volatility and anchor expectations. The overarching focus is on maintaining macroeconomic stability and market confidence," he said. According to him, RBI's actions helped in engendering investor confidence as reflected in the return of capital inflows since July. "Over the medium term, the primacy of price stability embedded in our flexible inflation targeting (<keyword id="19671" type="General" weightage="50" keywordseo="fit" source="Orion">FIT</keyword>) framework provides the anchor for exchange rate stability," he remarked. The RBI's interventions in the forex market are based on continuous assessment of the prevailing and evolving situation. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/here-is-how-much-your-emi-will-go-up-after-the-recent-repo-rate-hike/articleshow/94552904.cms">Here is how much your EMI will go up after the recent repo rate hike</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/presidential-commission-recommends-stamping-of-h-1b-visas-inside-us/articleshow/94551768.cms">Presidential commission recommends stamping of H-1B visas inside US</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rbi-hikes-repo-rate-by-50-bps-taking-it-to-a-three-year-high-of-5-9-das-says-inflation-at-alarmingly-high-levels/articleshow/94550429.cms">RBI hikes repo rate by 50 bps, taking it to a three-year high of 5.9% – Das says inflation at ‘alarmingly high levels’ across jurisdictions</a>

RBI does not have fixed dollar:rupee exchange rate: Shaktikanta Das

<ul class="summary-list"><li>In major cities around the world, housing is becoming less and less affordable.</li><li><keyword id="11894426" type="UNKNOWN" weightage="60" keywordseo="tokyo" source="Orion">Tokyo</keyword>, <keyword id="6355311" type="UNKNOWN" weightage="60" keywordseo="japan" source="Orion">Japan</keyword>, is a notable exception, with prices barely rising since 1995.</li><li>The US has restrictive, often absurd regulations, and should instead mirror Tokyo.</li><li>Jairaj Devadiga is an economist specializing in public policy and economic history.</li></ul>In major cities around the world, housing prices have spiraled out of control.In California's Bay Area, the median house price is <a href="https://www.sfchronicle.com/local/article/Bay-Area-home-prices-just-hit-a-record-high-Will-16186890.php">$1.3 million</a>. In Vancouver, the average household <a href="https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/housing-affordability.pdf">must save for 34 years</a> to make a down payment on a house, and put aside 85% of its pre-tax income for mortgage payments. In Sydney, a decrepit house without any toilet facilities <a href="https://www.businessinsider.in/policy/economy/news/an-uninhabitable-house-without-a-toilet-kitchen-or-power-sold-for-3-5-million-after-a-heated-bidding-war-in-australia-as-people-worldwide-scramble-to-buy-homes/articleshow/84038750.cms">sells for $3.5 million</a>.In this sea of craziness, Tokyo has been an island of sanity. Its housing prices have <a href="https://www.wsj.com/articles/what-housing-crisis-in-japan-home-prices-stay-flat-11554210002">barely risen since 1995</a>. This is not due to deflation either.While the population of Japan as a whole has been shrinking, Tokyo has been growing. Between 1995 and 2019, the population of Tokyo grew by 2.17 million, or just above 90,000 per year on average. To accommodate all these new people, lots of housing had to be built. Over the same time period, there was an average of 153,000 housing starts annually.A <a href="https://www.fraserinstitute.org/sites/default/files/job-creation-and-housing-starts-in-cdas-largest-metro-areas.pdf">study</a> by the Fraser Institute illustrates what happens when housing supply fails to keep up with demand. Between 2015 and 2019, 120,000 new jobs were created in Vancouver and Toronto. In the same time period, there were only 57,000 housing starts every year. Since demand was growing more than twice as fast as supply, prices skyrocketed. The same story played out in almost every major city. Lots of new jobs being created, lots of people wanting to move, and not enough homes being built for all of them.There are numerous bad policies which prevent the construction of more housing. Chief among them are restrictive zoning laws. In most cities with expensive housing, vast swathes of residential land are reserved exclusively for single family homes. Until very recently, the worst of the bunch was San Jose, with <a href="https://www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.htm">94% of the land being off limits for apartment buildings</a>. No wonder it is the <a href="https://www.mercurynews.com/2018/09/06/san-jose-tops-list-for-least-affordable-housing-in-u-s/">least affordable</a> city in America.Not only does this make housing costlier for middle and low income folks, but also <a href="https://marginalrevolution.com/marginalrevolution/2018/02/building-regulations-subsidize-mansions.html">subsidizes mansions for the rich</a>. The land on which a mansion sits would be worth a lot more if an apartment building could be built on it. The developer would make a profit even if they sold each apartment at an affordable price.However, because that's not allowed, developers won't bid for that land, thus driving down its price.While Tokyo does have low density zones, these do not prohibit multi-family buildings. Thus it is not uncommon to see a three story apartment building right next to a single family home.Apart from zoning, cities dictate <a href="https://www.forbes.com/sites/adammillsap/2019/05/08/minimum-lot-size-regulations-mean-less-housing/?sh=317e920c575b">minimum lot sizes</a> and maximum floor area ratios (how much of the plot is covered by the building itself), which further stifle construction. In <a href="https://www.bloombergquint.com/business/fsi-increased-for-residential-commercial-buildings-in-mumbai">much of Mumbai</a>, for instance, the floor area ratio was capped at 1.33 until 2018.This had the disastrous result of pushing poor people into slums, as they could not compete with affluent families for the limited housing. In 1971, 22% of Mumbai's population lived in slums. By 2010, this had <a href="https://www.hindustantimes.com/mumbai/62-of-mumbai-lives-in-slums-census/story-I3bUsll9w5f6ePEfuXJEbM.html">risen to 62%</a>. By contrast, Tokyo allows floor area ratios <a href="https://digitalcommons.calpoly.edu/cgi/viewcontent.cgi?referer=&amp;httpsredir=1&amp;article=1173&amp;context=crpspontext=crpsp">as high as 13</a>, and even higher with government permission.Another problem is cities <a href="https://www.sightline.org/2017/12/19/when-historic-preservation-clashes-with-housing-affordability/">wanting to preserve too many historical sites</a>. For instance, cities often declare old homes or commercial establishments to be historical monuments, <a href="https://www.latimes.com/opinion/story/2021-06-02/taix-preservation-housing">which prevents them</a> from being torn down and replaced with apartment buildings. In some cases, cities prevent development even when the historical monument itself would be untouched. For instance, last year, a historic preservation board in Seattle rejected a proposal for a 200-unit apartment building <a href="https://www.seattletimes.com/business/real-estate/miami-beach-on-elliott-bay-opponents-decry-proposed-12-story-pioneer-square-tower/">because it would be taller than nearby historical monuments</a>. While Tokyo has historic buildings, its criteria for preservation are much stricter and thus don't get in the way of <keyword id="11897453" type="UNKNOWN" weightage="60" keywordseo="affordable-housing" source="Orion">affordable housing</keyword>.Another important factor in raising housing prices is over-regulation. A <a href="https://www.nahb.org/-/media/NAHB/news-and-economics/docs/housing-economics-plus/special-studies/2021/special-study-government-regulation-in-the-price-of-a-new-home-may-2021.pdf">recent report</a> by the National Association of Home Builders estimates that regulations add almost $94,000 to the price of new homes. The vast majority of these regulations are purely aesthetic, such as mandating certain types of landscaping and architectural styles, or banning vinyl sidings. This is not exclusive to American cities. A <a href="https://timesofindia.indiatimes.com/city/ahmedabad/tweaking-building-regulation-can-reduce-housing-cost-by-34-study/articleshow/81299282.cms">study</a> on India's Ahmedabad shows that unnecessary regulations add 34% to the cost of housing. By contrast, Tokyo has very few common sense regulations; mainly to protect against the frequent earthquakes. As long as developers follow these and the very liberal zoning laws, they are free to build as they please.At this point, you might wonder why these restrictive rules persist if they are so obviously bad. Why is liberal city-planning the exception, rather than the norm? To answer this, we must examine the policy making process itself, to understand the motivations of all participants.Consider San Jose, with its 94% single-family zoning. The politicians in San Jose were catering to the wishes of their constituents; the people already living in San Jose. Those voters wanted high prices. To them, their house is an investment, which would lose value if more housing were built in their neighborhood. It would also result in new neighbors bringing in a different culture from what the residents are used to.People who wanted to move to San Jose, but couldn't due to high prices, would benefit from more liberal planning. They might live in different parts of California, or even in other states. Obviously they don't get to vote in San Jose elections, thus local politicians have no incentive to help them.The same process plays out across every city, resulting in sky-high prices.At the state or national level, though, the political calculus changes completely. People in a particular city might want to restrict housing development, but everyone else wants more. Thus state and national politicians have an incentive to liberalize.This is exactly what happened in Japan. It too had local governments choking the housing market, resulting in a<a href="https://en.wikipedia.org/wiki/Japanese_asset_price_bubble#Asset_prices"> massive housing bubble in the 1980s</a>. This prompted the national government to enact a series of reforms to rein in housing prices.The national government formulates building codes, zoning laws, and other city-planning regulations for the entire country, giving very little leeway to local governments.Recently, governor Gavin Newsom<a href="https://www.latimes.com/opinion/story/2021-09-17/newsom-housing-sb9"> did something similar in California</a>, by finally abolishing single-family zoning statewide, and also loosening some other restrictions.To win elections, local politicians must necessarily keep down the supply of new housing. It is up to state and national governments to deny them that power, and quickly. Otherwise, home-ownership will remain a pipe-dream for most people.

America's big cities are turning into housing catastrophes. If we want to fix this mess, we should try and copy Tokyo.

Real gross domestic product (GDP) increased at an annual rate of 2.9 per cent in the fourth quarter of 2022. In the third quarter, <keyword id="16265152" type="General" weightage="20" keywordseo="real-gdp-increased" source="Orion">real GDP increased</keyword> 3.2 per cent, according to the "advance" estimate released by the Bureau of Economic Analysis. The increase in real GDP reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and non-residential fixed investment that were partly offset by decreases in residential fixed investment and exports, according to <keyword id="126668" type="General" weightage="20" keywordseo="us-department-of-commerce" source="Orion">US Department of Commerce</keyword>. Imports, which are a subtraction in the calculation of GDP, decreased. "The increase in private inventory investment was led by manufacturing (mainly petroleum and coal products as well as chemicals) as well as mining, utilities, and construction industries (led by utilities)," US Department of Commerce said. The increase in consumer spending reflected increases in both services and goods, according to the Bureau of Economic Analysis. "The news couldn't have been any better," US President Joe Biden said of Thursday's GDP report. "We're moving in the right direction. Now, we've got to protect those gains." The US President was making a speech on PBS, an American public broadcast service. Within services, the increase was led by health care, housing and utilities, and "other" services (notably, personal care services). Within goods, the leading contributor was motor vehicles and parts. Within federal government spending, the increase was led by non-defence spending, according to US Department of Commerce. "The increase in state and local government spending primarily reflected an increase in compensation of state and local government employees. Within non-residential fixed investment, an increase in intellectual property products was partly offset by a decrease in equipment," the Bureau of Economic Analysis said in the Thursday report. The US Commerce Department said, "Compared to the third quarter, the deceleration in real GDP in the fourth quarter primarily reflected a downturn in exports and decelerations in non-residential fixed investment, state and local government spending, and consumer spending." These movements were partly offset by an upturn in private inventory investment, an acceleration in federal government spending, and a smaller decrease in residential fixed investment. Imports decreased less in the fourth quarter than in the third quarter, the US Commerce Department said. Current-dollar GDP increased 6.5 per cent at an annual rate, or USD 408.6 billion, in the fourth quarter to a level of USD 26.13 trillion. In the third quarter, GDP increased 7.7 per cent, or USD 475.4 billion, the Bureau of Economic Analysis said. Non-residential fixed investment is often considered the sector most critical to sustaining an economic expansion, as well as contributing to the longer-term growth of the economy. There are three major components of non-residential fixed investment: structures, equipment, and intellectual property products. "The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The 'second' estimate for the fourth quarter, based on more complete data, will be released on February 23, 2023," the report from the Bureau of Economic Analysis said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/news/air-indias-progress-has-been-nothing-short-of-stunning-ceo-campbell-wilson/articleshow/97364472.cms" style="">Air India's progress has been 'nothing short of stunning': CEO Campbell Wilson</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/article/equal-weight-index-for-diversified-investments-with-low-volatility/articleshow/97338206.cms" style="">Equal-weight index: For diversified investments with low volatility</a>

US economy expands 2.9 per cent in December quarter

<ul class="summary-list"><li>Russia's taxes on its oil and gas industry will hamper long-term growth, a G7 analysis found.</li><li>The tax mechanism was changed in April to help the government regain lost revenue.</li></ul>Russia's energy producers, already battered by Western sanctions, may become further impeded from long-term growth as the Kremlin tries to squeeze more tax revenue from the sector.That's according to an analysis by a member of the G7-led coalition that was seen by the <a href="https://www.ft.com/content/f4b89276-efcf-4731-9ed3-7afea3be4c27" target="_blank" rel="noopener">Financial Times</a>."It is definitely destructive to their industry," an official told the FT, adding that the tax changes will "undercut the future production capacity of the Russian oil and gas industry by taking away revenues that could otherwise be used to invest in equipment, exploration and existing fields."The price of Russian crude has suffered since the G7 and European Union imposed a cap of <a href="https://www.insider.com/researchers-say-oil-price-cap-imposed-russia-didnt-exactly-work-2023-2">$60 per barrel</a> in December. That coincided with the EU's ban on seaborne Russian oil imports.The Kremlin's tax receipts took a hit. So in order to cover government funding shortfalls, President Vladimir Putin changed the way oil and gas firms are taxed in April.Instead of basing the tax rate on the price of Urals, which is a grade of Russian crude that commands lower prices, levies are now based on the Brent crude international benchmark, minus a fixed discount.This would allow Russia to gain around $8 billion in revenue, making up for losses caused by Western sanctions that have helped keep Russian crude prices low. Nearly half of Russia's budget depends on oil and gas revenue, which fell by 45% in the first quarter.The G7 views the tax change as an acknowledgement from the Kremlin that it will have to continue selling its oil at a discount for some time.Meanwhile, Russia continues to export oil at <a href="https://finance.yahoo.com/news/russia-may-cheating-own-pledge-213312836.html" target="_blank" rel="noopener">higher-than-expected levels</a>, as China and India snap up barrels at discounts. Their purchases are helping Russian <a href="https://markets.businessinsider.com/news/commodities/china-india-russian-oil-crude-moscow-war-ukraine-volumes-kpler-2023-4">crude exports return to pre-war volumes</a>.

Russia's tax hike on the oil and gas industry will be destructive to a key piece of its economy

India's economy is likely to shrink by 5.3 per cent this fiscal, the <keyword id="8057424" type="UNKNOWN" weightage="20" keywordseo="Lowest-GDP-growth">lowest GDP growth</keyword> in the Indian history and the sixth instance of economic contraction, India Ratings and Research said on Wednesday. "The disorder caused by the COVID-19 pandemic unfolded with such a speed and scale that the disruption in production, breakdown of supply chains/trade channels and total wash out of activities in aviation (some activities have started now), tourism, hotels and hospitality sectors will not allow the economic activity to return to normalcy throughout FY21," the rating agency said in a report. As a result, besides contracting for the whole year, GDP will contract in each quarter in FY21 (April 2020 to March 2021). However, the agency believes the GDP growth would bounce back in the range of 5-6 per cent in <keyword id="5027223" type="COMPANY" weightage="20" keywordseo="FY22">FY22</keyword> (April 2021 to March 2022), aided by base effect and return of gradual normalcy in the domestic as well as global economy. India Ratings (Ind-Ra) said India's gross domestic product (GDP) will contract 5.3 per cent in FY21. "This will be the lowest GDP growth in the Indian history (Indian GDP data is available from FY51) and sixth instance of economic contraction, others being in FY58, FY66, FY67, FY73 and FY80; the previous low was negative 5.2 per cent in FY80," it said. The government had announced an economic package of Rs 20.97 lakh crore (10 per cent of GDP) on May 12, 2020 to mitigate the adverse impact of COVID-19 and related lockdown. However, Ind-Ra's calculations, excluding the <keyword id="35025" type="PERSON" weightage="20" keywordseo="monetary-measures">monetary measures</keyword> and existing proposals in the union budget, show that the direct fiscal impact is only Rs 2.145 lakh crore (1.1 per cent of GDP). "The credit and liquidity enhancing measures announced in the economic package in combination with some of the earlier steps announced by the Reserve Bank of India (RBI) will certainly address the supply-side issues of the economy," it said. The Indian economy even before the COVID-19 related lockdown was suffering on the demand side, as all the demand drivers, except government final consumption expenditure (GFCE), namely private final consumption expenditure (PFCE), <keyword id="756316" type="PERSON" weightage="20" keywordseo="gross-fixed-capital-formation">gross fixed capital formation</keyword> (GFCF) and net exports were <keyword id="2258914" type="PERSON" weightage="20" keywordseo="Floundering">floundering</keyword>. The lockdown and its impact on the economy and livelihoods only aggravated the sagging consumption demand. "Ind-Ra believes the government is aware of it; but, the near absence of demand-side measures in the economic package indicates the hard budget constraint facing the government," the report said. Ind-Ra saw PFCE contracting 5.1 per cent in FY21 (FY20: 5.3 per cent yoy) to reach a level lower than FY19's. Even GFCF will contract 17.6 per cent in FY21 and the investment revival will now be pushed beyond FY22 due to a combination of excess capacity, weak demand, stretched balance sheet of Indian corporates and budget constraints leading to reduced government capex. "The external environment continues to be challenging due to COVID-19 related restrictions coupled with trade friction and protectionist policy pursued by many developed economies," it said. Ind-Ra expected merchandise exports to decline 9.4 per cent in FY21 (FY20: negative 4.9 per cent), as all major export commodities would clock negative growth. Merchandise imports are expected to decline 17.4 per cent in FY21 (FY20: negative 8.9 per cent). As a result, the trade deficit is estimated to decline to a four-year low of USD 97.7 billion (3.9 per cent of GDP) and current account deficit to USD 3.3 billion (0.1 per cent of GDP) in FY21. However, 1QFY21 may see a current account surplus. "From the supply side, agriculture is the only bright spot. Agricultural gross value added (GVA) is expected to grow 3.5 per cent in FY21," the rating agency said adding the Indian Meteorological Department has predicted the monsoon rainfall to be 102 per cent of long period average (1961-2010) in 2020. Ind-Ra expects the retail and wholesale inflation to come in at 3.6 per cent and 1.2 per cent, respectively, in FY21. "Fiscal deficit of the central government in FY21 is expected to more than double (7.6 per cent of GDP) the budgeted amount (3.5 per cent of GDP). The majority of the fiscal slippage will be from the revenue side," it added. SEE ALSO: <a href="https://www.businessinsider.in/india/news/karnataka-health-minister-hints-at-lockdown-in-covid-hit-bengaluru-again/articleshow/76542217.cms" data-type="tilCustomLink">Karnataka Health Minister hints at lockdown in Covid-hit Bengaluru again </a> <a href="https://www.businessinsider.in/business/news/mukesh-ambani-radhakishan-damani-and-shiv-nadar-took-over-10-years-to-become-a-billionaire/slidelist/76547186.cms" data-type="tilCustomLink">Indians took 17 years on an average to make their first billion— and it has gotten a lot faster recently</a>

India's GDP to contract by 5.3% due to coronavirus 'disorder', says India Ratings

<ul><li>The Monetary Policy Committee (<keyword id="19918491" type="General" weightage="20" keywordseo="mpc" source="keywords">MPC</keyword>) has decided to keep the repo rate unchanged at 6.5%. </li><li>Economists had expected the MPC to keep key rates unchanged due elevated inflation in December 2023.</li><li>A few experts hoped that it would change its stance to ‘neutral’ given the tight liquidity situation. </li></ul> The <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="rbi" source="keywords">RBI</keyword>)’s rate setting panel – the Monetary Policy Committee – decided to keep its key lending rate (repo rate) unchanged at 6.5% on Thursday. It also decided to remain focussed on the ‘withdrawal of accommodation’ stance. RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> said that both the decisions have been taken with five out of six members voting in favour. Governor Das said there was further room for transmission. “Taking into account this growth-inflation dynamics and the fact that transmission of the cumulative 250 bps policy rate hike is still underway, the MPC decided to keep the policy repo rate unchanged at 6.50%. The MPC will carefully monitor any signs of generalisation of food price pressures which can fritter away the gains in easing of core inflation,” he said. The MPC also raised the FY24 real GDP growth projection to 7.3% from 7%. It also set FY25’s real GDP growth projections at 7%. “The momentum in economic activity seen in FY24 is expected to continue in FY25 as well,” Das said. It also projected FY25’s Q1 GDP growth at 7.2%, Q2 to see 6.8% growth, Q3 at 7% and Q4 at 6.9%. The MPC also retained FY24’s retail inflation projections at 5.4%, but set FY25’s inflation projections at 4.5%. It sees inflation for Q1 of FY25 at 5%, Q2 at 4%, Q3 at 4.6% and Q4 at 4.7%. “Monetary policy was supported by pro-active supply-side measures by the government. That said, the job is not yet finished, and we need to be vigilant about new supply shocks that may undo the progress made so far,” Das said. Das said that elevated levels of public debt was raising serious concerns in many economies including advanced economies. “On one hand, the odds of soft landing in the global economy increased. But the other hand, wars and conflicts add uncertainties to the outlook,” the governor said. Experts have been expecting the monetary policy committee (MPC) to keep its key rates unchanged. India’s retail inflation for December 2023 came in at 5.7%, which is much higher than RBI’s comfort level of 4%. “We expect the RBI to continue the pause stance in the upcoming policy. Strong US non-farm payroll data and wages seem to have pushed back on market expectations for a quick pivot to rate cuts. First rate cut on table from June or August 2024 looks the best bet now,” said a report by SBI Ecowrap. Ajit Kabi, research analyst at LKP Securities said that the RBI is likely to support economic growth with a cautious stance on inflation. “Consequently, we expect the unchanged policy rate and possibility of a shift in stance to NEUTRAL. Additionally, RBI may take steps to improve liquidity conditions. We expect a policy rate cut by June 24,” he added. There has been a pressure of liquidity which made a few experts hope that it could change its stance from ‘withdrawal of accommodation’. “There is a strong case for the RBI to change its stance from ‘withdrawal of accommodation’ to ‘neutral’. Financial conditions have tightened a lot in the last few quarters. Real rates are reasonably high and likely to increase further as inflation is trending down,” said Pankaj Pathak, Fund Manager- Fixed Income, Quantum AMC. While growth in deposits is much higher than last year on YTD basis as of January 12, the increase in credit and investments at ₹22.25 lakh crore is higher than that of deposits at ₹18.2 lakh crore. In terms of growth rates on a year-to-date basis, says Bank of Baroda data. Liquidity condition has also tightened with banking system liquidity running in deficit of over ₹2 lakh crore on daily basis. “Under these conditions there is some part of the market segment that believes that a change in stance is possible, though we believe that this will not be the case. The fact that the corridor of call rates is being maintained at between repo and Marginal Standing Facility (MSF0 rate, is indicative of the fact that the withdrawal of liquidity position would continue,” said <keyword id="20102121" type="General" weightage="20" keywordseo="madan-sabnavis" source="keywords">Madan Sabnavis</keyword>, chief economist at Bank of Baroda.

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