Weekly News 8 - 12 April 2024
Monday, 8 April 2024 (Business Standard) In sittwe, govt secures 2nd overseas port
India has secured approval from the Ministry of External Affairs to operate the Sittwe port in Myanmar through its company, India Ports Global (IPGL). This move marks India's strategic expansion in the Indian Ocean region amid growing competition with China for economic influence. The port, located in Myanmar's Rakhine state, offers significant connectivity advantages for cargo from India to reach northeastern states, bypassing Bangladesh. IPGL will manage the port with full rights, similar to domestic Indian ports, and aims to encourage transactions in the Indian rupee among traders. This long-term agreement, renewable every three years, will facilitate the development of the port, enhancing trade between India and Myanmar.
The Sittwe port deal underscores India's efforts to bolster its presence in the region, particularly in Southeast Asia, amidst China's aggressive port investment strategy. By gaining operational control of Sittwe, India aims to strengthen its economic ties with Myanmar and improve connectivity to its northeastern states. The agreement with IPGL signals India's commitment to overseas port development initiatives, potentially extending to other countries like Tanzania, which have expressed interest in India's port development expertise. This strategic move aligns with India's broader geopolitical interests and underscores its determination to assert itself as a key player in the Indian Ocean region.
Tuesday, 9 April 2024 (The Economic Times) After Japan, Hudco Looks to Tap Singapore, Taiwan for Funds
HUDCO, the state-run housing finance company, is eyeing East Asian countries like Singapore and Taiwan for fundraising this fiscal year, following a successful endeavour in Japan. Chairman Sanjay Kulshrestha highlighted the favourable arbitrage, with funds obtained at around 6.5%, 80-100 bps lower than domestic rates. HUDCO initially aimed to raise $100 million from Japan but is now confident of doubling that amount, considering potential fundraising from the US market after expected Fed rate cuts. In addition to international markets, HUDCO is exploring fundraising opportunities within India and plans asset monetization, including its own properties and land parcels, followed by collaborations with PSUs like MTNL, BSNL, railways, and defence.
HUDCO's strategy to diversify fundraising sources and explore asset monetization reflects its ambitious goal of nearly doubling its loan book to about 1.5 lakh crore by FY26 from the current 80,000 crore. The company aims to surpass a 21 lakh crore loan book this fiscal while focusing on reducing its cost of funds. Additionally, HUDCO seeks to transition from a housing finance company to an infrastructure finance company pending approval from the Reserve Bank of India, a move expected to broaden its market reach and enhance fundraising capabilities.
Wednesday, 10 April 2024 (The Economic Times) India plans to Raise Steel Production Capacity 3-fold by ‘47
India is aiming to significantly increase its domestic steel production capacity to 500 million tonnes per annum by 2047 while reducing emission intensity to 2.25 tonnes of CO2 per tonne of crude steel production by FY29, with further reductions in the long term. These targets surpass the goals set under India's Nationally Determined Contributions for the steel sector, with an ambitious plan to increase steel-making capacity from around 161 million tonnes currently. The initiative aligns with the New Steel Policy of 2017, aiming for 300 million tonnes of steel-making capacity by 2030, requiring substantial investment.
To support these goals, measures include boosting domestic iron ore availability, expected to increase from 226 million tonnes to 318 million tonnes by 2047, and implementing key reforms in the metals and mining sector to enhance exploration and data assessment. Sectoral groups of secretaries are finalizing these targets and action plans, including increasing funds allocated to the National Mineral Exploration Trust. Additionally, officials are considering rule changes to allow surveys in forest areas while ensuring ecological balance and may organize hackathons to study geological data. Despite these efforts, vehicle scrapping is projected to remain a minor source of feedstock for steelmaking.
Thursday, 11 April 2024 (Financial Express) India in pole position but rate cuts may have to wait a little longer
The Reserve Bank of India (RBI) opted to maintain its pause on key policy rates in its April policy, aligning with market expectations. Despite robust growth momentum fueled by sustainable manufacturing growth and rising capacity utilization, the Monetary Policy Committee (MPC) remained cautious, with credit growth indicating early signs of private capital expenditure. Strong services sector growth and optimism surrounding rural consumption, supported by expectations of a normal monsoon and good rabi harvest, further buoyed the economic outlook.
On the inflation front, despite headline volatility, the decline in core inflation in recent months provided policymakers with some cushion, suggesting sustainable moderation. The stability of food inflation is expected to be bolstered by a good rabi season and the transition from El-Nino to La-Nino, which is anticipated to bring a normal monsoon. India's robust forex reserves, covering over 10.9 months of imports and more than 100% of total external debt, have contributed to minimizing rupee volatility and ensuring smooth foreign portfolio investment inflows, although rising commodity prices remain a concern.
Friday, 12 April 2024 (The Economic Times) India’s economic performance good, efforts needed to sustain it: EAC-PM member Sanjeev Sanyal
India's economic growth performance has been described as "good" by the Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal, who emphasized the need to sustain this momentum amid concerns about the unsettled external environment. With favourable weather conditions and a promising monsoon, Sanyal anticipates that food prices will moderate, providing conducive conditions for sustaining a growth momentum of around 7 per cent even amidst uncertain global situations. While India's economy expanded by a better-than-expected 8.4 per cent in the final quarter of 2023, concerns persist regarding weak exports and recent spikes in oil prices due to tensions in the Middle East and other geopolitical factors.
Sanyal highlighted the storage issue as a key factor contributing to high food prices, stressing the need for investment in storage infrastructure to stabilize prices and strengthen private markets in agriculture. Despite a slowdown in foreign direct investment (FDI), Sanyal remains optimistic about the underlying momentum of FDI, emphasizing India's efforts to attract investment and diversify its manufacturing base through initiatives like the China-plus one strategy. Addressing unemployment concerns, Sanyal underscored the importance of sustained economic growth in generating jobs, expressing confidence that growth ultimately leads to job creation, particularly for India's youth, as highlighted by recent International Labour Organization (ILO) data.
