AS FOOD PRICES REMAIN ON THE BOIL IN OCT

Retail Inflationat
6.2% Dims Early
RateCut Hopes
Feeling the Pinch Infation V-o-Y, in %)
Inflation higher in rural Retail Food
(6.7%) than urban areas (5.6%) 12

10states Onion 10
record a o51.8% 8 6.5
higher Potato 6
inflation r64.9% SOurce:
MoSPI
rate than 4
national Vegetable Garlic:
o82.5% 2 6.2
average prices up
Tomato 0 Jan '23
52.2% 161.3% Oct 24

market, which fell 1% on Tuesday. The

Our Bureau
RBI Monetary Policy Committee (MPC)
is scheduled to mneet December 4-6.
New Delhi: India's retail inflation unex "With inflation breaching the 6% mark
pectedly surged to a 14-month high of in October and expected to exceed the
6.2% in October, up from 5.5% in Septem- MPC's estimate for Q3FY25 by at least 60
ber, further delaying the prospect of mo 70 bps,a rate cut in the December policy
netary easing by the Reserve Bank of In review appears ruled out," said Aditi Na
dia (RBI) amid the economy showing yar, chief economist and head of rese
signs of slowing. arch and outreach at ICRA.
An increase in vegetable, fruit and Rating agency Crisil expects the
edible oil prices was the primary dri- MPC to only cut rates toward the end
ver of the spike, official data released of the fiscal year.
Tuesday showed. Ind-Ra and CareEdge see the rate-set
The rate breached the outer bounds of ting
the central bank's inflation committee maintaining the status
target 4%
with a two percentage point tolerance "We asquo, do others,
band on either side - for the first time rate are now less hopeful of a February
cut,"
since August 2023. The higher print could believe theSBIResearch said in anote. "We
act as a further drag on the slidingstock first rate cut is now effectively
pushed back beyond February 2025."
THE ECONOMIC TIMES I PUNE IMONDAY I 28 OCTOBER 2024 [Link]

ET GRAPHICS|

Decoding Demand Trends

in Ruraland Urban India
Urban markets, which were the driving force for consumer goods companies for the last
several quarters, have significantly slowed down in the July-September period and become a
big worry, as per Hindustan Unilever, Nestle, Tata Consumer Products and Dabur. In contrast.
rural demand, which was languishing, is showing definitive signs of a recovery. This see-saw
demand trend is mirroring the automobile industry where two-wheeler sales are improving
in rural india while car sales in cities have become a key concern. Of coUrse, there is a large
base effect in urban markets wherea small impact in aquarter can get magnified. But chief
executives think there's more to it. ET decodes what's impacting urban demand based on
views of top chief executives and economists.
Text: WRITANKARMUKHERJEE, SAGAR MALVIYA& ANOUSHKA SAWHNEY
Food Inflation
Retail inflation Vegetable prices up
in Sept at
9-month high 36%yoy in sept INFLATION
(Y-0-Y, IN %)
(Surge in prices is).. a concern because
this will lead to increase of prices if they
get unmanageable for organisations
SURESH NARAYANAN 2024 India
Chairman, Nestle India Urban Rural
Jan 5.1 4.9 5.3
Feb 5.1 4.8 5.3
Elections &Govt Spending Mar
Apr
4.9
4.8
4.1 5.5
Pollpause on govt spending 4.1 5.4
impacted employment generation May4.8
Jun 5.1
4.2 5.3
Alarge part of the GDP growth was 4.4 5.7
Jul 3.6 3.0
driven by government capex and 4.1
spending. And given the elections, Ithink AUg 3.7 3.1 4.2
there was a bit of a pause on that Sep 5.5 | 5.1 5.9
SUNIL D'SOUZA
CEO, Tata Consumer Products

Employment &Income
Macroeconomic conditions impacted by real
wages, inflation, employment levels: HUL
There could be macro factors that
are impacting the near-term trend
rate of the urban markets
ROHIT JAWA
MD, HUL

MONTH- WISE
Weather Raw Material Inflation GROSS GST
Some blamed Lot of commodity and input prices COLLECTIONS
(IN CRORE)
excessive rains are hardening: FMCG cos
for the slowness Rupee Nestle, Tata FY24 FY25
%Growth
in sales depreciation Consumer, HUL (YoY)
Challenges with may play hiking some April 1,87,035 2,10,267 12.4
excessive rainfall: spoilsport products' prices May 1,57,090 1,78,484 13.6
Varun Bev June 1,61,497 1,73,813 7.6
Cos hopeful
Heavy rains Outlook urban demand July 1,65,105 1,82,075 10.3
impacted Sudden softening may revive Aug 1,59,068 1,74,962 9.9
out-of-home . of urban demand SOoner or Sep 1,62,712 1,73,240 6.5
Consumption last has caught industry later, but no
quarter: Dabur Note:decimal
Numbers rounded off tilthe Source: MoSP!
off-guard forecastsS yet first rpoint:

BHAVIN G
THE ECONOMIC TIMES PUNE I MONDAY 11 NOVEMBER 2024 | [Link]

IT Hardware Cos Struggle to Meet

FY25 PLI Target
Cos unable expand capacity
to
on Lack ofOrders as PC cos push for imports insteadof local sourcing
Subhrojit Mallick ter revertingto an importautho
New Delhi: A majority of the 27
Long Road Ahead Despite the
PLI Scheme,
risation regime which was
extended till December 31, 2024,
Most companies according to a policy circular is
manufacturers - largely small have not yet started $8.4 billion in
and mid-sized entities - seeking IT hardware sued in September:. The govern
to avail production-linked in production or ment will issue fresh guidelines
invested significantly imports in FY24 in 2025 and brands will have to
centives (PLI) for IT hardware
are struggling to meet the tar WDN, Flextronics, Potential 25% US seek fresh authorisations.
gets for FY25 as major PC com and Micromax on tariff on Chinese "They (global PC brands) see
IT hardware comfort in the existing supply
panies are pushing direct im track to meet FY25
cOuld shift chains being so good. Because
ports, bypassing the local con targets
dermand to India
tentrequirement in the bargain. Global brands favour existing
establishing a new supply chain
Under the scheme that began Incentives up to 13% for local is definitely a herculean task.
in April, the majority of the 27 Supply chains, making local sourcing, aimed at overcoming When you are making volumes
companies enlisted as beneficia production challenging cost disadvantages in millions, a small aberration
ries are yet to even start produc can lead to a supply chain recall.
tion. Andthose who have star- HEMANTL
approved under the scheme. The tive quoted above said. "The IT said. It's a dangerous game," Gujral
ted, are producing volumes too companies include large multi- Hardware PLI sops are the most ger companiesHe added that big
small to have any significant re- nationals like Dell, HP, Flextro- competitive anmong nations, have an advantage in India
venue impact to meet the incre- nics, as well as local manufactu with in
mental targets. Some are yet to incentives
rers like Dixon Technologies, if you include going up to 13% this business as ma
make even initial investments VVDN and Sahasra Electronic which is over andlocal sourcing, king laptops is a 3,000
under the scheme.
Solutions. above the cost 4,000 crore business, si
In the first year of the scheme, disability
Some like Dixon have cornered But in making in India." milar to a mid-sized
only a handful of companies the top four IT hardware brands dia despite the PLI scheme, In company's turnover.
VVDN Technologies, Flextro- iin the country, capturing a part $8.4 imported IThardware worth Smaller companies
nics andBhagwati (Micromax) of their local demand, while billion compared with $8.7 under the scheme see
are on track to meet targets for billion in FY23, according to go tying up large scale
another is banking upon a single vernment data.
the first year. Dixon, which met
the target under the previous
large US customer to meet tar "Idon't think the top brands ha- brands as crucial to
PLIscheme, is set to open a large gets, executives said. ve issues on the quality of pro succeeding
scheme. But
under the
the IT
The indåstry now is banking duction
facility in Chennai in December on the US, under Donald Trump, They arecoming out of India. hardware industry, do
and will be missing the targets imposing a steep 25% tariff on they can trying to see whether minated by only 4-5
in its second year. For the majo- manoeuvre the system
rity, FY2026 is expected to be the laptops and smartphones im and not have a full base of manu brands driving high
first year of production, indust- ported from China, coming as a facturing in India," said J.S Guj- volumes, is projected
ry executives said. disruption to the existing supp ral, to remain stagnant
managing
They added that it is a lack of ly chain.
SGS, which is director,
China exports almost $30 bil- Hardware
Syrma
part of the IT
with single-digit
growth globally by
orders that is keeping back lion worth of IT hardware to the PLI but is yet to com market trackers.
most manufacturers from ex mit any
panding capacity and starting ciations. The significantrevenues un
US, according to industry asso der the scheme. The challenge here
is if you tie up Tier 2 or
production. pects 1.6 lakh government
ex
The IT Hardware PLI crore worth of Tier 3 vendors, their
scheme production over the six-year te IMPORTCURBS
was revised with an outlay of nure of the The government last year impo- volumes could be very
17,000 crore and notified in May scheme. sed a restriction on mass im- erratic, and then you
2023 with a total of 27 companies "India is in the best place to ports of laptops to curb zero-du- would be lumped with
capture that chunk," the execu- ty import of laptops and PCs, la- inventories," Gujral
sald.
 Said.

AMANUFACTURING RISE
Five states continue to dominate Gross
while others have shown faster output Value
growth
Added share
TOP STATES IN OUTPUT ( lakh)
ET GRAPHICS

2018-19 and 2022-23 as the country's between

witnessed a rise cOupled with manufacturing output
according to the data released increase in employment,
by the Ministry of Statistics 18742
and Programme
Implementation (MoSPI). 1523 25
ANOUSHKA SAWHNEY takes alook: Jharkhand CUjarat

99.1 lakh India

.COUPLED WITH RISE IN WAGES
Wages per worker (compound annual yowth
rate between 2018-19 and 2022-23,in %)
Sikkim 8.8
Andhra Pradesh 7.7
Manipur7,7
Kerala 7.3
Tripura 7.1
All India 5.0
BEATING THE NATIONAL FIVE STATES CONTRIBUTED OVER Odisha 4.2
AVERAGE.. HALF OF INDIA'S GVA IN 2022-23 Chhattisgarh 3.1
Output of 11 states grew faster (lakh cr)
than the national avrage between Arunachal Pradesh 2.9
2018-19 and 2022-23 Maharashtra 3.6 Goa 2.4
GVA Gujarat
3.2 Nagaland0.3
(compound annual growth rate Tamil Nadu 2.3 13 STATES RECORDED AHIGHER
between 2018-19 &2022-23, in %)
Karnataka 1.5 22.0
Bihar 21.7 Uttar Pradesh 1.3
lakh cr INCREASE THAN INDIA IN THE
Arunachal Pradesh 19.1 India LAST FIVE YEARS
Andhra Pradesh16.6 AS OUTPUT PER WORKER TOP-PAYING STATES IN 2022-23
Punjab 15 TOUCHES DECADAL HIGH R lakh)
Output per worker (in lakh)
Assam 14 100 99.1
AllIndia 9.3 90
Manipur 4.3
80
Goa 2.4 r62.8
Uttarakhand 14 70

Sikkim 1.3 60S

-8.2 Nagaland 3.2 2.9 2.7 2.1
50
2013-14 2022-23
Jharkhand Sikkim Odisha India
Sources MoSPI

Govt Takes Second Shot KOLKATA MUNICIPAL CORPORATION e-TENDER

at Hardselling EV Policy ABRIDGED NIT
The Director General, TP&DD, Kolkata Municipal
(KMC) invites online e-tender on Turnkey basis Corporation
from experienced
Twesh M0shra firms/companies/individual contractors/Joint
successfully completed the work of
Ventures, who have
similar nature of works within last 5
(five) years from the date of publication
New Delhi: The government is planning to hold of this NIT in any Govt/Semi
electric vehicle companies looking to import workshops for
Govt./Govt. Undertakings/Autonomous Bodies (constituted under the
high-end electric
cars at concessional tariffs in a renewed bid to elicit State/Central statute Statutory Bodies and Local Bodies is eligitble for
feedback on the under mentioned work :
the much-hyped scheme.
The scheme, launched with much fanfare, had NIT No.: KMCID.G.(TPDD)/C/111/2024-25
automaker Tesla would foray into the [Link] hopes that
It has, however,
Name of Work : Installation of Barrage with
Point of River Ganga and Tolly's Nullah, P.S. Confluence
at
elicited lukewarmresponse so far prompting the need for delibe | Tender amount to be quoted by Estimated Value
rationsto ascertain whether more sops wereneeded to be offered. the bidder; Earnest Money
Feedback received during this workshop INR 10,00,000.00 (Rupees Ten lakh only),
will be considered 36 (Thirty Six) Months for CapltalWNorks and Period of Completion
while framingrules governing this scheme, which 5 years
Bid submission Mandatory
nalised. This would be the second round of are yet to
befi Operation & Maintenance period;
The Heavy Industries Ministry had in consultations. (Online) 30.11.2024 (11.30
on start date
Scheme to Promote Manufacturingof Electric March rolled out the 21.11.2024 (12.00 P.M.) [PlaceA.M.). Pre Bid Meeting (Date &Time)
of Meeting: Office of the Director
India (SPMEPCI), permitting Passenger Cars in General (TP&DD), KMC, 19, Nellle Sengupta Sarani,
The scheme had met a key concessionalbyimport of green cars. 7000871: Last Date and Time of submission of Bid: Kolkata
ray -reduced tariffs. demandplaced Tesla for its India fo 05.00P.M.: The bid forms and other details are 27.12.2024 at
14.11.2024 (11:30 A.M.)from the website available on and fro
[Link] in
High CDR at Indian banks signals tighter credit growth, unfetter foreign banks to bridge the gap

No Sweat Over Interest IRates tions. Many constraints on foreign

banks in India, including norms
such as limiting accounts to within a
certain distance from a branch, sho
uld be revisited. This would ensre
that foreign banks, with tremendous
pools of low-cost capital and limited
Ajit Pai avenues to deploy this capital, can di
rect it to the fastest-growing large
economy and help support India's ri
smarkets ponder whether se in per capita GDP in synergy with
RBI willreduce ormaintain their oWn.
interest rates in the next Concentration risk from any geog
MPC meeting, the case for raphy disproportionately impacting
maintaining rates is beco the Indian banking system can be
ming stronger This is not just a func managed by setting a target thres
tion of the recent inflation spike, dri hold that limits assets from any sing
ven largely by food (comprises about le jurisdiction to no more than 3% of
half of CPI weight and is far more all banking assets deployed in India.
sensitive to supply dynamics than de Currently, the largest foreign bank
mand) and thus not as sensitive to in assets in India come from Britain
terest rates as the broader economy. (Standard Chartered and HSBC), in
The more pressing issue is Indian dicatinga clear opportunity forsigni
banks' credit-deposit ratio (CDR) re ficant growth in assets from US, Eu
aching multi-year highs, with many Let them descend ropean, Japanese, South Korean, So
top banks surpassing 90%
and some even hitting 100%.recently,
utheast Asian and Swiss banks. As
The ra While some may suggest that India's trade ties with the
pid rise in CDR has set off alarm of the drop in credit growth maypartbe
centage of bank
The growth of Se regions become increa
bells, and credit growth has decelera driven by a shift in the capital gains assets without
ted in recent weeks fromabout 20% material risks foreign bank assets Singly prioritised, banks
tax policies of the post-election bud- tothe Indian sy in India will n these areas seek to
year-on-year until June 2024 to low get, clearly CDR is indicative of loan
double digits just before the impor- supply side restrictions being a key stem. complement and allgn theirassets with glo
tant festive season,typically marked if notthe primary drive, of the rapid There SUpplement other bal GDP contributions
by a seasonal boost in inventory and FDI and FPI and overweight faster
Consumption. This will lead to signi deceleration in loan growth rates. If are 45 fo
reign efforts to growing markets with
RBI reduces interest rates, it will
ficantly slower economic growth ely worsen the situation,as lik- banks accelerate Srong tinancial discipli
and delay the onset of the private ca bank de- and only the Indian ne and stability.
pex cycle by a year, as capacity utili posits would become even less attrac The growth of foreign
tive to savers compared to other in- about 300 growth story bank
sation in 2024 is unlikely to reach the foreign
vestments with higher returns, furt. bank bran assets in India will
80% trigger threshold.
her slowing bank credit to ment other complement and supple
Private credit the operating, compa red to farches mo celerate the FDI and FPl efforts to ac
growth was accelera economy. re than those numbers in ec0 growth will Indian growth story. This
ting rapidly until the Can India afford nomies double that also help narrow the cre
June quarter, driven this unnecessary and taken in India has recently over- dit gap
by the formalisation avoidable slowdown terms of economic size. between creditworthy borro
wers and the credit
If exportsare to being deployed by
of the
economy, im WIthout assuming ex- cant driver of the become Indian
a signifi- banks in India.
CDR constraints are
proved loan underwri Cessive or unnecessa economy, likely to
then leveraging experienced fore remain or incumbent
ting capabilities and ryrisks? banks.
ign banks to support trade
significantly
bank balancestronger
sheets. The time may be will reduce trade frictions finance Meanwhile, Indian capital mar.
This virtuous cycle
right o relax Some vide Indian banks with bestand pro kets are attracting capital that could
will halt if constraints on fore ces to emulate. T'his approachpracti have become bank deposits if inter.
credit growthnominal position lndia as the epitome ofcould
Ign banks growing est rates were higher.
slows to
or falls below nominal fexports are to
become
their asSsets in ndia.
practices for trade facilitation, best constraints on foreign bankReducing
GDP growth rates. a significant driver of Forejen bank assets
the as ring the most competitive offe India would be timely It wouldassets
be
in
wel
a terms to
shifting from being a economy, then leveraging percentage of
bank assets exporters.
comed by
consumers
contributor to a drag foreign banks to Support overall
are in the Foreign banks supporting MNCs
in accelerating creditandenterprises
growth rather
on economic growth. trade finance will reduce digits midsingle in India would also be than simply raising interest rates.
trade frictions and could more required to
than double as a per- help those MNCs become globally The writer is forner head of
competitive in their Indian opera economics &
finance, NITIAayog
 Investing THE ECONOMIC TIMES I PUN

Minister says growth needs an impetus; central banktakes a holisticview, says RBI governor N

Food Prices have Nothing to do with

Managing Inflation, Ct Rates: Goyal
Our Bureau
Norms for ECL,
Mumbai: Commerce Minister Pi
yush Goyal on Thursday urged the
Climate Risk Soon
Reserve Bank of India to cut rates MUMBAI The RBIhas proposed to
to boost growth, stoking the debate 0ssue a draft circular on the
that the central bank should focus
on core inflation (which excludes implementation of Expected
food and fuel) instead of headline PIYUSH GOYAL SHAKTIKANTA DAS Credit Loss (ECL), Governor
inflation to decide on policy rates. Union Commerce Minister Governor, Reserve Bank of India Shaktikanta Das said. He also said
Goyal, speaking at an event here sa that RBI is working on climate
id "Food inflation has nothing to do
with managing inflation" while ad
Food inflation has not Our prime focus has been risksand their impact on the
ding that "policymakers and mone hingto do with managing tomaintain financial stabi financial sector and willshortly
issue guidelines on the Dis
tary policy authorities should jointly
decide whether food inflation needs inflation..Icertainly be- lity, which breeds growth closure Frameworkon Climate
related Financial Risks. The
to be partof headline inflation."
He added that it's an "absolutely fla lieve they (RB) should and [Link] central bank is working on Mu
wed theory" to consider food infla
tion while deciding policy rates. "I
C¯t interest rates stability is apublic good adoptingrevised Basel lll stan less
certainly believe they (RBI) should which touched a 14-month high of The Governor said that during the dards in a phased manner, liqui Se

dity coverage ratio (LCR), and Wit

cut interest rates. Growth needs a 6.2% in October led by a spike in ve
pandemic, RBI prioritised growth
further impetus," he said, pointing getable prices. This is above the RB>'s and prudential framework for finan ins
liquidity infusion. Later it shif to 1
out thata similar suggestion was ma mandate of 4% with a tolerance band ted the focus to inflation. "Our prime cing project loans. -Our Bureau pro
de by the chief economic adviser V of 2 percentage points on either side.
focus has been to maintain financial
In the October policy statement, the pre
Anantha Nageswaran in his Econo stability, which breeds growth and Das reiterated that the central bank fror
mic Srrvey earlier in the year. RBI shifted the policy stance from prosperity" Das said. Referring to a does not target a level or band of the In
RBI has projected 7.2% growth for 'withdrawal of accommodation' to
FY25. 'neutral' past comment,he added: "Financial exchange rate. "The forex interven
opening the doors for a 10,0
stability is a public good. We do not tions are carried out to ensure an or 20
Soon after Goyal's speech, RBI Go potential rate cut, but several econo walt for the house to catch fine pru- derly movementof the exchange rate der
vernor Shaktikanta Das said in his mists sajd the high inflation print dence is our guiding
address that the central bank is ai dashed hopes of it in the December philosophy"
Das said that inflation is
and to crb undue volatility anchor
vDected
So f
mingat a "holistic" view of stability,
policy RBI has maintained a policy market expectations, andensureove pas
tomoderate despite periodichumns" rall financial stability" he said. mot
which encompasses "price stability rate of 6.5% since Februay 2023. while adding that the Indian econo "If the Indian rupee has remai Ev
financial stability and sustained Goyal's comments are in sharp my has sailed very well evan as the ned relatively stable despite severe ted
growth". The relative stability of the contrast to the RBI's viewthat food global economy was hit verv hard by external shocks, including the lar shar
Indian rupee despite several exter inflation pressures cannot be igno-
nal shocks reflects the "inherent red. In August, Das said the public at
multiple shocks, but synchronised gest and steepest tightening by the first
policy action by centralhanlebolned (US) Fed in 2022 and 2023, it speaks 0.59
strength"' of the economy, Das added. large understands inflation more in ease the impact. He warned that the
le
Food inflation comprises 46% of terms of food inflation than the other volumes about the sea change in riod
"risk of inflation conmin nd Or macro fundamentals from the His
the Consumer Price Index (CPI), components of headline inflation. growth slowing down do remain". Taper Tantrumdays." boar
vesukueUut
nthe sellers. have been auoct"ii
to explain cegíants, those in the ter
ecut
The aim is to find out if the certain transactions and arran The issue dates from 2019, said a wnIciiSIn violation of regulations. WallStreet banker sa
Commerce companies were ex gements. "These documents are person linked to one of the com Investors, who are
Sugata Ghosh reports. ºº 12 more than S3 trillior