Rating Agency Moody's Puts A Dampener On India And The RBI's Growth Numbers
Explore key developments in India's economy with Moody's lower growth prediction, the impact of the S&P 500's bull run, the challenge of rising heatwaves, Maruti's entry into the MPV segment, and new rules on advance tax for overseas credit card spends.
- <01:00> Rating agency Moody's puts a dampener on India and the RBI's growth numbers, elsewhere the S&P500 enters bull territory.
- <04:18> India is sweating it out as heatwaves increase, how businesses can better prepare for extreme weather and climate change.
- <14:16> Toyota Innova ruled the Indian MPV segment for close to two decades, that will change as Maruti steps in.
- <16:38> More clarifications on advance tax for overseas spends by Indian credit card holders coming. Deadline is 1 July.
TRANSCRIPT
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
Good morning it's Monday, the 12th of June and I'm Govindraj Ethiraj based out of Mumbai.
Our top weekend developments
Rating agency Moody's put a dampener on India and the RBI's growth numbers, elsewhere the S&P500 enters bull territory.India is sweating it out as heatwaves increase, how businesses can better prepare for extreme weather and climate change.
Toyota Innova ruled the Indian MPV segment for close to two decades, that will change as Maruti steps in.
More clarifications on advance tax for overseas spends by Indian credit card holders coming. Deadline is 1 July.
Moody's comes with a lower growth estimate than RBI, US Stocks start new bull run
The Indian economy is expected to clock a 6-6.3% growth in the June quarter, global rating agency Moody's said on Sunday even as it flagged risks of fiscal slippage arising from weaker-than-expected government revenues in the current fiscal.
Significantly, Moody's growth estimate is lower than the 8% projection for the same or first quarter made by the Reserve Bank last week.
The Managing Director of Moody's Investors Service Associate, Gene Fang told a wire agency on Sunday that India's general government debt is relatively high at around 81.8% of GDP for FY23. This is higher than the Baa-rated median of approximately 56%.
Fang highlighted the risks of fiscal slippage stemming from lower than estimated government revenues, and projects the domestic growth rates at 6.1% and 6.3% for FY24 and FY25, respectively, according to reports.
Last month, Moody's had said that India's GDP had crossed $3.5 trillion in 2022 and will be the fastest-growing G-20 economy over the next few years, but reform and policy barriers could hamper investment.
Moody's has a 'Baa3' sovereign credit rating on India with a stable outlook.
Elsewhere, the Standard & Poors 500 index last week Thursday exited the longest bear market, since, believe it or not 1948. Yes, it is possible, you did not even know there was a bear market.
The S&P 500 had been in bear-market territory for 248 trading days, the longest since the 484 trading days ended in May 15, 1948.
Broadly, a 20% rise from a recent low signals the start of a bull market while a 20% fall signals the start of a bear market. I must admit here that there is nothing very definitive about bull and bear markets and people use different definitions. This one i would say works for now.
So the current bull run began on October 13, 2022 when the S&P500 started rising around 3,577 and is now up 20% to around 4,299 on Friday last week.
U.S. stocks rose Thursday, ending the S&P 500's longest bear market since the 1940s and marking the start of a new bull run.
The broad index powered higher over the past few months, in large part because of a handful of companies posting outsize gains.
Many of those same stocks, including Amazon.com, Tesla and chip maker Nvidia, led the market's advance Thursday.
So what does this mean for Indian markets ? Well, in general, bullish I suppose. Indian markets have been flirting with all time highs in the last week. And could extend further.
The market thas been rallying for two months now. If you want some bullish advice here it is. Jefferies Financial Group said last month it is a matter of time until the Sensex hit the 100,000 level.
Over the last 123 years, the Indian stock market has delivered a real return of 6.6 per cent, which is higher than the returns delivered by US and China markets as well as the world equity markets, according to the Netra June 2023 report released by DSP Asset Managers titled ‘Early Signals Through Charts'.
Preparing For Climate Change
The rains have arrived late in some places in India but most parts of the country are still sweating it out in abnormally high temperatures.
We are seeing more and more days with heat waves. The Indian Meteorological Department defines heat wave as a condition of air temperature which becomes fatal to the human body when exposed.
Overall, if the temperature crosses 40 C in the plains and 30 C in the hilly regions, it is considered a heat wave.
Based on departure from the normal temperature a normal heat wave occurs is 4.5 C to 6 C and severe heat wave happens when the departure is greater than 6.4 C
If above criteria met at least in 2 stations in a Meteorological sub-division for at least two consecutive days and it declared on the second day.
Meanwhile, the World Bank in November last year said that keeping spaces cool and innovative energy efficient technologies could create a $1.6 trillion investment opportunity by 2040, reduce greenhouse gas emissions and create 3.7 million jobs.The World Bank also said that in 7 years time, over 160 - 200 million Indians will be exposed to lethal heat waves, some 34 million would face job losses due to heat stress related productivity decline and current food loss due to heat during transportation is close to $13 billion annually.
In roughly 15 years, demand for cooling will be 8 times more than current levels, or a new air conditioner every 15 seconds, leading to a an over 435% increase in annual greenhouse gas emissions in 20 years.
Meanwhile, India's daily peak power demand touched a new high of 223 GW on Thursday last week. The previous high was 220GW on May 17. India has around 417,000 MW of power generation capacity and our plants are currently running at around 66% for the coal and lignite plants which in turn are around 51% of capacity. By the way, India's renewable energy generation is around 43%, or 179,322 MW, higher than you would expect.
So while temperatures rise, the demand for cooling will place greater strain on energy of which we are currently hitting new peaks everyday.
If you are a business, how can you better prepare for this world and where specifically should they focus their energies on and what is the data they should be using to inform their decisions.
To discuss this, I caught up with Dr Arunabha Ghosh, Founder CEO of the Council for Energy, Environment and Water or CEEW. Dr Ghosh is currently co chair of the energy, environment and climate change track for India's science, technology and innovation policy and also co-chair of the T20 task force on climate and energy for the G20 presidencies let by Indonesia in 2022 and india in 2023. I began by asking him to define climate change in the current context.
And the MPV race begins
For almost two decades now Toyota has had a vice like grip in the multi purpose vehicle or MPV market with it's Innova which in itself has gone through many iterations and face lifts.
The latest version is the Hycross which is a hybrid and runs on petrol as opposed to diesel all these years and succeeded the Crysta.
That is changing. Maruti Suzuki has announced a 7-seater MPV launching next month on July 5 and the model is believed to be based on the Toyota Innova Hycross, going by sneak pictures it has shared and the interpretations of various auto experts and gyanis I could see.
The engine configurations are similar, likely to be a 2.0 litre engine and paired with a self charging electric motor.
The hybrid powertrain is believed to give an mouth watering mileage of 21.1kmpl, it will be sold via Maruti's Nexa-chain and may be priced between ₹18.55 lakh to ₹29.99 lakh (ex-showroom).
The resemblance to Toyota's Innova is not accidental nor is a copy cat attempt.
Suzuki and Toyota have been in a global partnership for 7 years now and have launched several models jointly. The partnership is increasingly becoming visible in the Indian market for domestic markets. Both companies announced last year that they would deepen collaboration for development and production in India.
An official announcement from both said since 2017 the two companies have been bringing together Toyota's strength in electrification technologies and Suzuki's strength in technologies for compact vehicles for joint collaboration in production and in the widespread popularization of electrified vehicles.
The latest collaborative models from the partnership are the Toyota Hyryder and Maruti Suzuki Grand Vitara hybrid SUVs.
On the other side, Toyota sells two Maruti Suzuki models, the Glanza and Urban Cruiser which are the Baleno and the Vitara Brezza.
How this partnership between the two giants will evolve, it is difficult to say at this point but if you are in the market for a SUV or MPV, you could literally decide which one to buy depending on whose service network you trust more or brand you like better.
PRESUMPTIVE TAX
Finally, for those of you who have been tearing their hair apart on the new presumptive or advance tax you will pay on credit cards when you travel overseas, the FInance Ministry will apparently issue a FAQ document on the applicability of 20% tax collected at source, news reports said.
The new rules kick in around two weeks time or July 1.
Raman Chopra, joint secretary at the revenue department, said at a CII event that they would certainly release a FAQ that would clarify beyond any reasonable doubt what and how and in what manner TCS is to be collected and not.
He was responding to a specific question on distinguishing between corporate travel and personal travel spends.
He did not apparently provide a date but presumably or rather hopefully the FAQ would come before July 1.
