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In Mumbai, the Reserve Bank of India's proposal for a significant increase in lenders' provisioning for project loans has raised concerns about the impact on infrastructure developers' cost of debt. CareEdge Ratings has warned that the mandatory debt reduction of 20% could delay interest rate benefits for operational projects, despite improving credit profiles. The agency highlighted the potential challenges for under-construction and operational infrastructure projects if the RBI's draft guidelines on income recognition and asset classification are implemented. Projects with stable cash flows, like road annuities, are expected to see an improvement in credit profiles within a year of establishing payment track records. The increase in provisioning requirements could dampen bidding appetite in the medium term, particularly affecting availability-based projects like annuities and demand-based projects like toll roads. The move is seen as positive for demand-based projects, as it reduces risks associated with back-ended repayments and refinancing. 
The latest data from the Ministry of Statistics and Programme Implementation (MoSPI) reveals a concerning trend of decreased net financial savings in Indian households, dropping to a five-year low of ₹14.16 lakh crore in 2022-23. This decline, attributed to increased borrowing for investments in physical assets, saw a significant decrease from the previous fiscal year. However, economists urge against panic, noting that the rise in borrowing does not indicate financial distress. On a positive note, gross financial savings saw a surge, particularly in mutual funds, shares, and debentures. This trend reflects an increased financialisation of savings in the Indian economy, supported by a rise in demat accounts and funds parked in various financial assets. Despite the decrease in net financial savings, the overall picture shows a growth in gross financial savings, indicating a complex financial landscape in the country.
The Supreme Court has halted activities at the Doloo tea estate in Assam's Cachar district, where over 41 lakh tea bushes were uprooted for a proposed greenfield airport, citing a violation of the Environment Impact Assessment Notification, 2006. The court criticized the National Green Tribunal for neglecting its duty and emphasized compliance with environmental norms, directing that no activity be carried out in breach of the EIA notification. The tribunal had dismissed a plea against the airport construction on the grounds of prematurity, prompting the appeal to the Supreme Court. The court's decision highlights the importance of adhering to specific environmental clearance norms when carrying out activities, despite the ongoing debate over the airport's location as a matter of policy.
India's plastic exports saw a decline of 3.5% in the 2023-24 fiscal year, dropping to $11.55 billion from $11.97 billion the previous year, despite a surge in shipments between December 2023 and March 2024. The Plastic Export Promotion Council (Plexconcil) reported a 5.6% increase in plastic shipments in March 2024, reaching $1.11 billion compared to $1.05 billion in March 2023. Chairman Hemant Minocha highlighted record-high exports of fishing nets and growth in sectors like cordage and woven fabrics. While exports of various plastic products increased, others like consumer goods and stationery declined. Executive Director Sribash Dasmohapatra noted the resilience of the Indian plastics sector amidst global economic fluctuations and expressed optimism for continued growth in the current fiscal year, emphasizing India's diverse export portfolio and strengths in various segments.
The Apparel Export Promotion Council (AEPC) is aiming to boost India's readymade garment exports to $40 billion by 2030, with a focus on new markets like Saudi Arabia, Poland, Mexico, Brazil, South Africa, and Russia, in addition to traditional markets like the EU, US, and UK. AEPC Chairman Sudhir Sekhri highlighted India's advantage of minimal import dependence and a large workforce, particularly women, in the industry. Plans include participating in international fairs, organizing events to engage with foreign brands, and leveraging free trade agreements for growth. The recent success of Bharat Tex has led to plans for a second edition to further connect with global buyers, with hopes for a future FTA with the UK to boost exports.
The US Department of Agriculture's local India office has forecast a decrease in Indian coffee output for the 2024-25 marketing season due to deficit pre-monsoon showers, with arabica and robusta production estimated at 85,200 tonnes and 2,73,000 tonnes respectively. The prolonged dry spell and higher temperatures are expected to negatively impact the forthcoming crop, with growers and industry stakeholders expressing concerns. Despite the challenges, robusta crop yields remain above average, while arabica yields are expected to decrease. The export demand is projected to remain strong, with domestic consumption also set to rise. The Coffee Board's initial estimates for the 2023-24 output are yet to be confirmed, but farmgate prices for both arabica and robusta have increased due to tight global supplies.
In a significant development, Russian entities are now looking to invest their surplus rupee balances piling up in vostro accounts in India in a variety of avenues, including securities, bonds, equity, and loans, thanks to recent amendments by the RBI. This move comes as a relief for Russia, which had been struggling to repatriate the accumulating rupee balance due to increased exports to India. The investment options have been widened following amendments in FEMA regulations, allowing Russia to make full use of the funds. The investments are not expected to attract Western sanctions, as they are in rupees and not in dollars. India is also exploring potential projects for Russian entities to invest in, such as the Vande Bharat sleeper trains project. Russia has now become India's second largest import source, surpassing the UAE and the US, with a trade deficit of $57.18 billion in 2023-24.
Samunnati, an agri-value chain financier based in Chennai, has reported a significant turnaround in its financial performance for the fiscal year 2023-24, with a profit before tax of ₹21.8 crore compared to a loss of ₹129.7 crore in the previous year. The company attributed this success to higher disbursals to agri enterprises and farmer producer organisations, with disbursements up 27 per cent to ₹3,525.6 crore. Additionally, sales of Samunnati Agro rose by 31 per cent to ₹2,210 crore. Investors have shown strong support for Samunnati, with equity infusion and debt equity improving the company's net worth to ₹766.5 crore. Looking ahead, Samunnati aims to deepen its engagement in climate and sustainable agriculture, targeting a run-rate of ₹9,000 crore for the current financial year.
Germany has recently introduced new aviation taxes, effective from May 1, ranging from €15.53 to €70.83 per ticket based on the route distance. The International Air Transport Association (IATA) has criticized this move, highlighting its negative impact on Germany's competitiveness and economic recovery. The taxes are expected to affect passengers traveling to and from Germany, with potential implications for tourists, students, and the aviation industry. P Murugesan, from the Travel Agents Association Of India, expressed concerns about the impact on public travel via German airports, with many passengers rerouting their plans through other countries. IATA's Director General, Willie Walsh, emphasized the detrimental effects of these taxes on Germany's economy and urged the government to reconsider its tax regime, emphasizing the importance of prioritizing measures to improve Germany's competitive position and encouraging trade and travel instead of implementing short-term cash-grab policies.
In a bid to modernize food procurement and distribution processes, the Uttar Pradesh Food and Civil Supplies Department (UPFCSD) has partnered with Ingen Technologies to install GPS devices in 8,000 vehicles used for transporting foodgrains under the National Food Security Act. This move aims to enable real-time monitoring of vehicle movement, adherence to predefined routes, and prompt notification of any deviations or delays. The company's vehicle tracking system, SecuTrak, will be utilized for foodgrain procurement and automation of fair price shops, ensuring operational optimization, enhanced transparency, and timely delivery of essential goods. Ingen Tech's Co-Founder & CTO, Ashish Agarwal, expressed confidence in revolutionizing logistics management across various sectors and delivering tangible benefits to the people of Uttar Pradesh through efficient and transparent distribution of food grains.
