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Affordable housing to take a hit in the upcoming Budget
Business, Equities, Markets, Real Estate - January 16, 2025

Affordable housing to take a hit in the upcoming Budget

Affordable housing to take a hit in the upcoming Budget

By 2030, the Indian real estate market is expected to reach the $1 trillion mark. The government established a strong foundation for the nation’s real estate industry by allocating Rs 11.11 lakh crore for infrastructure development in the Union Budget 2024. India’s real estate industry anticipates a more growth-oriented and inclusive approach from the government in the 2025 budget. On February 1, Finance Minister Nirmala Sitharaman will deliver the Union Budget 2025–2026.

However, there are differing opinions in the housing industry. Due to increased demand over the past two to three years, the upmarket segment, which includes premium and luxury residences, has seen a strong upturn in sentiment. Nonetheless, the Modi government’s goal of providing inexpensive homes is turning out to be problematic.

Affordable home sales have been declining sharply and consistently over the years, according to recent statistics from real estate research firm ANAROCK Property Consultants. The percentage of this group in total housing sales has decreased from 40% in the calendar year 2018 to 20% in 2024 among the seven largest cities from which data was gathered. Now, all eyes will be on the annual Union Budget 2025, which will include tax reductions and incentives related to the housing sector, such as interest subvention schemes or subsidies.

Some suggestions from the housing segment
The industry’s recommendations include a much-needed reinterpretation of what “affordable housing” is. There is an urgent need to update the current definitions of affordable housing, which are based on factors like size, cost, and buyer income. Most people agree that the 60 square meter carpet area needed to be eligible for incentives is reasonable, however, the INR 45 lakh price restriction is unachievable. Land prices have skyrocketed due to the increased demand for housing.

Additionally, experts believe that there is a transition from low to mid-income housing, especially among the paid class. According to the ANAROCK document, in order to reflect market realities, the cap should be increased to at least INR 85 lakh in Mumbai and INR 60–65 lakh in other major cities. The range of projects and purchasers who can take advantage of reduced goods and services taxes and other incentives will increase as a result.

Boosting Housing in Rural Regions
Implementing initiatives like first-time buyer incentives or even loans that allow people to transform “kaccha” homes into “pucca” ones is essential to increasing housing in rural areas.

In 2022, the PMAY’s CLSS for Low-Income Groups (LIG) and Economically Weaker Sections (EWS) came to an end. In order to encourage first-time homebuyers, experts are advocating for its restoration. Adding basic amenities like kitchens and bathrooms to existing homes or expanding incentives to loans for new development are other ideas. Subsidies could assist in transforming temporary dwellings into permanent constructions under PMAY (Rural), which would benefit a larger segment of the population.

Market Commentary on Budget Expectation
Elan Group’s Executive Director of Finance and Group CFO, Sandeep Agarwal, is hopeful that the next budget will offer a chance to address some of the industry’s most urgent issues. He asserts that in order to restore confidence among homeowners, the long-standing problem of stalled projects needs to be addressed first. reducing the impact of ineligible GST inputs on residential developments, redefining the criteria for affordable housing, and fixing discrepancies in the GST input credit for commercial buildings. Operational efficiency would be greatly increased by implementing a single window-clearing system for regulatory approvals within a specified timeframe.

According to Aman Sharma, Managing Director of Aarize Group, incentives and streamlined rules are anticipated to boost India’s economic trajectory and draw in foreign investors in the commercial real estate (CRE) sector. Measures like lower stamp duties and more tax breaks would be extremely beneficial to the luxury housing market, which is driven by changing lifestyles and expectations. With their expanding potential, Tier-2 cities need to strategically prioritize industrial and infrastructure development in order to open up new doors for investors and developers.

As stated by Saurabh Runwal, Director of Runwal Realty, it is imperative to implement legislative measures that improve liquidity, such as lowering long-term capital gains taxes, simplifying REIT rules, and raising interest rebates for home loans. With the luxury market experiencing a 51% increase in demand, these reforms will encourage both local and foreign investments, giving developers more competitive access to money and allowing homebuyers to fulfill their aspirations of becoming property owners.

Lower loan interest rates are necessary to make homes affordable for low- and middle-income households, according to BRIC-X INFRA founder Vijay Kamboj.

To maintain the sector’s pace, Mohit Goel, Managing Director of Omaxe Limited, argued for more funding under PMAY as well as financial incentives for both developers and customers.

Conclusion
Critics believe that with the real estate cycle in its upswing, rising land prices, and high interest rates, it may be difficult to meet the affordable criterion on the value of the dwelling units and the income profile of buyers. However, some industry experts believe that a tax holiday for developers of affordable housing may be beneficial.

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Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

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Solid reason for GST reduction on two-wheelers
Autos, Business, Equities, Markets - January 16, 2025

Solid reason for GST reduction on two-wheelers

Solid reason for GST reduction on two-wheelers

CEO of Hero MotoCorp company, Niranjan Gupta stated that there is a solid reason for reduction of Goods and Services Tax (GST) on two-wheelers with engines of about 125 cc or less. These vehicles are not identified as luxury or harmful commodities. In contrast to this, these vehicles are considered as a means of transport for many people in the country. He further states that the government of India should focus in the direction of economic stability, investments and also long-term economic growth.

Although, GST is not the topic of the Union Budget discussion, he believes that lowering of GST to 18 percent in the two-wheeler’s vehicles with an engine of 125 cc or less compared to its current GST of 28 percent (for all two-wheelers) should be considered. The reason for this is these two-wheelers are most affordable and popular among the Indian population. Hero MotoCorp is considered as the largest manufacturer of two-wheelers in India. The company is not worried about the weakening demand in the urban auto market. It believes that this market’s consumption level has been unbalanced since Covid-19 pandemic.

Reasons
Reduction in GST will help two wheelers with engines of up to 125 cc to increase its demand in the market. This will be aided by the recovery of sales observed in the entry-level vehicles segment after a long period of slow demand.

The two-wheelers with engine less than or equal to 125 cc are not only non-sin and affordable goods but also creates employment. It plays a great role in creating indirect as well direct employment levels.

Gupta further states that policies of incentives or subsidies undertaken by the government should take into consideration the long-term perspective of growth. This will give business adequate time to adjust with the changes taking place in the economy due to implementation of government policies. He also states that the government’s focus on expanding employment generation projects should remain ongoing. This will help to create more employment opportunities for the population in the nation.

Shares of urban and rural consumption
After the pandemic, urban consumption played a significant role in taking the responsibility of growth in various segments. While rural demand was low back then. In recent times, rural demand has picked up the pace and is now in the returning phase. It has resulted in growth in consumption level between rural and urban areas more towards rural consumption. Due to this, there is a belief that urban consumption is weakening. It is important to understand that the urban area has played a major role in the proportion of consumption level till now.

The sales of Hero vehicles in urban areas had declined to 47 percent in the initial nine months of the current financial year compared to the 60 percent in the previous financial year.

The rural market consumption is able to exceed urban market consumption in recent months. This situation was particularly observed from the time of the festive season. Gupta stated that the growth in the rural market will act as an addition to the total growth in the two-wheeler industry of India. He further stated that the growth in rural consumption will be supported for the upcoming 6 to 8 quarters by factors such as good monsoons, high minimum support prices and also better kharif harvest season.

Gupta further states that rural consumption has taken some time to recover and it will lead to a positive impact on both the rural and urban market. Also, the economic growth will be observed at a range of 6 to 7 percent and supported by increasing capital expenditure. He thinks that overall growth will hike up in the near future.

Launch Plans of Hero MotoCorp
The company has decided to have a number of launches in the entry-level as well as premium two-wheeler segment to strengthen its position in the market. Along with this, the company is planning to launch its third EV scooter in the quarter of June.

To have success in sales and market share in the electric vehicle segment, one has to lead in terms of efficient cost structure. The company is working on its cost structure regarding electric vehicles and functioning without subsidies. As the company has considered the potential action of termination of subsidies for EV in the next few years.

The Hero Motocorp is focused on export as well as local sales. It is taking steps towards creating products which are customised according to the different needs of various markets. The company will also invest its funds in the top 10 global markets in the world. Gupta states that international business is one of the growth factors. Today, the company has its presence in around 48 countries in the world.

The company announced its entry in Brazil and is making efforts to establish their presence. It has also started its work in the Philippines and it is considered as the company’s entry in the Southeast Asian market. The company is also making progress in countries such Bangladesh, Mexico, and Colombia. Overall, this expansion has led to an increase in growth close to 40 percent in the international business. This growth is recorded in the initial nine months of the current financial year, along with a rise in the market share.

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Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

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 Road to Progress: Union Budget 2025 to Accelerate India's Infrastructure Growth
Business, Equities, Markets - January 16, 2025

Road to Progress: Union Budget 2025 to Accelerate India's Infrastructure Growth

Road to Progress: Union Budget 2025 to Accelerate India’s Infrastructure Growth

India’s road infrastructure continues to be a cornerstone of its economic development, with the network expanding 59% over the past five years to over 6.7 million kilometers, making it the second-largest globally after the United States. As the Union Budget 2025 approaches, expectations are high for a substantial increase in road sector allocations, a move consistent with the National Democratic Alliance (NDA) government’s emphasis on infrastructure development.

Increased Budgetary Focus Expected
Over the past two years, road sector allocations saw tepid growth due to heightened social spending in the lead-up to the general elections. However, analysts anticipate a year-on-year budgetary increase of 8-10% for FY2026, as the government seeks to revitalize road execution. This allocation is expected to focus on expanding the national highway network while encouraging private sector participation, particularly through the Build-Operate-Transfer (BOT) model.

Addressing NHAI’s Debt Constraints
The National Highways Authority of India (NHAI), tasked with spearheading highway development, faces significant debt constraints. Its outstanding debt has surged to ₹3.2 lakh crore as of August 2024 from ₹1.8 lakh crore in FY2019, limiting its ability to borrow further. Consequently, the Budget is likely to maintain a zero-borrowing strategy for NHAI, shifting the focus to private investment and innovative funding mechanisms.

Reviving Private Sector Participation
The government has introduced several measures to stimulate private sector interest in road projects. These include:

Revised Model Concession Agreement: Enhanced terms for toll projects to attract developers.
Mandatory BOT Mode: Projects above ₹500 crore to be awarded under the BOT framework.
Streamlined Dispute Resolution: Faster resolution mechanisms to reduce project delays.
These amendments are expected to boost the share of BOT toll projects in the road infrastructure mix, offering a lower-capex alternative to the Hybrid Annuity Model (HAM) and fostering confidence among private players.

Challenges to Execution
Despite favorable policies, sluggish execution and low tendering activity remain concerns. By November FY2024-25, only 55% of the allocated funds had been utilized, signaling inefficiencies that must be addressed to ensure timely project delivery. Additionally, delays and cost overruns in the ambitious Bharatmala Pariyojana continue to draw criticism.

Rural Connectivity: A Key Priority
Rural road development is likely to gain prominence in this year’s Budget, as improved connectivity can significantly impact rural economies. However, successful implementation will depend on effective project structuring, attractive returns for developers, and streamlined clearances for long-gestation projects.

Accelerating Asset Monetization
Innovative financing models such as Toll-Operate-Transfer (TOT) and Infrastructure Investment Trusts (InvITs) need to be accelerated to unlock capital for new projects. These measures can help mitigate funding constraints and support the timely completion of critical infrastructure targets.

Economic Multiplier Effect
The road sector continues to command the largest allocation among infrastructure segments, given its significant multiplier effect on economic growth. Projections indicate a 9.5% compounded annual growth rate (CAGR) in road infrastructure from FY2025 to FY2032, driven by urbanization and rising demand for efficient transportation.

Conclusion
The Union Budget 2025 is poised to reinforce India’s road infrastructure growth trajectory, with a balanced approach that combines government funding and private sector participation. While challenges such as fiscal constraints, project delays, and execution inefficiencies persist, a strategic focus on policy enhancements and asset monetization can ensure sustainable development. For investors, the sector offers attractive opportunities, underpinned by robust growth prospects and government commitment to long-term infrastructure expansion.

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Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

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Banking, Business, Equities, Markets - January 16, 2025

Infrastructure Expectation in Budget 2025-26

Infrastructure Expectation in Budget 2025-26

Overview and Current Scenario
India’s economic development in FY25 was hindered by limited public capital expenditure (capex), which was mostly caused by limitations associated with the election. Project execution was hampered by the Model Code of Conduct’s implementation during the state and parliamentary elections, especially in the first half of FY25, when total government capital expenditures fell 12.7% year over year.

In Q1 of FY25, the central government’s capital expenditures fell 35 percent year over year. In Q2, they recovered moderately, rising 10.3 percent year over year. Furthermore, state governments’ emphasis on populist welfare programs, which sparked discussions about fiscal discipline, also reduced the amount of money available for infrastructure projects. With just a few state elections scheduled for 2025, public capital expenditures are expected to pick up steam again, propelling advancements in areas like ports, roads, defense, and electricity.

Capex Trend
Infrastructure is still a priority even though capital spending (capex) has decreased by 12.3 percent year-to-date from April to November of FY25. Only 42% of the allocated capital expenditures had been used by November, down from 51% in FY24. This suggests a large backload of spending that is anticipated to occur in the second half of the fiscal year.

Q3 Results might lead to an increase in capex
Strong Q3 ordering activity points to a possible change in momentum as the fiscal year goes on. The government has made significant announcements about trains, defense, and power.
According to ICRA’s note, the significant projected shortfall in FY2025 (Rs 9.7 trillion) compared to the target (Rs 11.1 trillion) would allow for a 12–13 percent increase in FY2026 capital expenditures, or Rs 11 trillion, which would support growth in the upcoming fiscal year and crowd in private capital expenditures.

Sectoral Capex Increment in the Budget
In order to control inflation and the budgetary crisis, the government has been selectively prioritizing a small number of projects and sectors in order to reduce expenditure. Despite the bunching of a few orders in the remaining months of the current fiscal year, the government might still fall short of its initial capital expenditure targets given the current run rate. There are already rising expectations that the government will increase its capital expenditure budget for the upcoming year.

The Union Budget 2025–26 is anticipated to address these gaps with increased capex. The focus will likely be on sectors with high economic multiplier effects and a proven capacity for timely project execution, more so in the light of supporting economic growth. India’s GDP growth slowed to an estimated 6.4 percent in FY25, the weakest in four years, due to global headwinds and subdued private investment.

But in FY26, GDP growth is expected to rebound to 6.5–6.8 percent. For example, FICCI has suggested a 15% increase in capital expenditures for FY26 in order to sustain economic momentum, with a focus on investments in productive infrastructure that create long-term growth and jobs. It is anticipated that significant financial investment will be made in the fields of highways, railroads, defense, and renewable energy, just as in the past. Additionally, in anticipation the federal government will keep pushing states to undertake important infrastructure projects by allocating funds.

Ernst & Young Report on Infrastructure Sector Expectation from the Budget
According to EY, the shortfall will need to be made up in FY26 because the capital expenditure was significantly lower in FY24 due to the election. India’s goal of becoming a $7 trillion economy by 2030 is predicted to require $2.2 trillion in infrastructure investment, underscoring the necessity of enacting strong fiscal policies. Spending on infrastructure also frequently has a multiplier effect, with each rupee spent having a threefold effect on GDP. Public-private partnerships (PPP) in major projects involving ports, airports, roads, etc., require a renewed focus and innovative policy. This can be achieved through enhanced measures for viability gap funding (or “VGF”) and supportive policies and regulations.

Tax measures to boost infrastructure
Some of the tax measures to be implemented to support infrastructure include establishing a framework for fiscal consolidation for intragroup Special Purpose Vehicles (SPVs) that permits the offset of losses from one SPV against gains from other SPVs; reduced tax rates under a special and simplified tax regime for green energy and infrastructure projects; encourage business involvement in large-scale space initiatives through tax breaks; introducing a favorable tax framework for carbon credits; offshore wind projects were the focus of the VGF, but this would not be feasible without the importation of foreign cash, technology, and expertise. It would be beneficial to simplify the tax code for these kinds of initiatives.

Conclusion
It is highly anticipated that Budget 2025 would introduce a number of programs to accelerate the development of infrastructure. Private participants would be encouraged to plan their involvement if ambitious asset monetization programs received additional advice.

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India plans to divestment of 5 public sector banks

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Microfinance sector recorded surge in NPAs to Rs. 50000 crore
Banking, Business, Equities, Markets - January 16, 2025

SFBs to face high NPAs and slow credit growth in the financial year 2025

SFBs to face high NPAs and slow credit growth in the financial year 2025

The Small Finance Banks (SFBs) in India are expected to see an increase in Non-performing Assets in the financial year 2025, as per the information given by ICRA, a credit rating agency. The rating agency further stated that the asset (credit) growth will observe a weak growth. This weakening growth is expected to be around 18 to 20 percent compared to the 24 percent growth in the financial year 2025. Previously, it has experienced a thriving growth in the last two financial years.

Increase in Gross NPAs ratio
The Small finance banks’ gross non-performing assets ratio surged to 2.8 in the month of September compared to the previous ratio of 0.5 percent. The reason for this increasing indebtedness is problems in the microfinance sector. It has affected the asset quality of the SFBs badly. ICRA underlines that these SFBs will face issues while maintaining their asset (loan) quality.

The microfinance sector in India is facing a number of challenges such as increase in overdue loans, operational challenges, and regulatory issues. Most of the small finance banks are active in the microfinance segment only. The growing concerns in the microfinance segment is also considered as the reason for the slow growth in credit creation in the small finance banks.

Diversification of asset class
For many years, the small finance banks segment has been working on diversifying their various services offerings. Currently, these products consist of many retail asset (loan) types such as business loans, gold loans, and loans against property. housing loans, and auto loans. This increase in the secured asset class has led to a fall in share of unsecured loans in the total asset class of these banks.

ICRA’s head for the financial sector rating, Manushree Saggar stated that the matter of concern in the microfinance industry indicates that the possible growth drivers in the financial year 2026 will be secured asset classes as many SFBs are moving towards diversification of portfolios. The SFBs are taking measures towards reducing their dependency on unsecured asset classes.

Issues with CASA
A significant proportion of current and savings account deposits (CASA) in banks is important in terms of banks’ financial health as well as its ability to generate credit availability. Currently, the share of CASA of the small finance banks recorded 28 percent of growth by the month of September, 2024. Despite this, the growth in CASAs of SFBs is considerably smaller compared to the CASA proportion of universal banks.

The small finance banks in India face the issue of increasing the share of low-cost CASA. In the month of September 2024, the credit-deposit ratio of SFBs fell to around 89 percent compared to the credit-deposit ratio of 97 percent in the month of March 2023. This challenge is expected to carry on in the upcoming term as well.

The rating agency also anticipates that the small finance banks will face the issue of increasing competition in deposit levels. This will lead to a shift of small finance banks in the direction of term deposits, which have high interest rates. This shift will lead to a hike in funding expenses.

Other issues of SFBs
The small finance banks are suffering from the issue of rising operating expenses. The reasons for higher operational cost is expansion of branches, increase in staff costs, and also the increasing measures taken for tackling the NPA debtors. These issues are largely leading to hikes in operations expenses of these banks.

Adverse impact on Profitability
The hike in asset cost is anticipated to slow down the total profitability ratio of the small finance banks in the financial year 2025. At the industry level, the ratio of return on assets is expected to fall at a range of 1.4 percent to 1.6 percent in the financial year 2025 compared to the return on asset ratio of 2.1 percent in the financial year 2024. Overall, these challenges will impact the margins of small finance banks adversely.

The future prospects for the small finance banks highlights an adjustment period. It has to go through these challenges of credit creation, high NPA, and operational costs. At the same time, the SFBs has to find better growth opportunities through the process of increasing the proportion of secured assets and also diversification of its portfolio.

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India plans to divestment of 5 public sector banks

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Business, Equities, Markets - January 15, 2025

Addition of 2 more payment methods for Rooftop Solar Installation

Addition of 2 more payment methods for Rooftop Solar Installation

The Indian Ministry of New and Renewable Energy Ministry of India has announced new guidelines in terms of payment methods for installation of solar panels on rooftop projects. The new guidelines approve two more payment methods. These guidelines are approved in context of PM Surya Ghar: Muft Bijli Yojana

PM Surya Ghar: Muft Bijli Yojana
On 19th February, 2024, the scheme was approved in the Union Cabinet. The goal of the scheme was to install solar panels on rooftops in one crore households all over India and provide about 300 units of free electricity per month. Its aim is to protect the environment by reducing 720 million tonnes of CO2 emissions in the next 25 years. Its objective is to add around 30 GW of solar capacity throughout India.

New Guidelines
To guarantee payment security in the transaction process, two more payment methods were added. It is also to ensure that the subsidy is granted to the households opting for payments through Utility-led aggregation (ULA) models and Renewable Energy Service Company.

The renewable ministry’s guidelines under the PM-Surya Ghar: Muft Bijli Yojana is to implement components such as Central Financial Assistance and Payment Security Mechanism. These components are going to be implemented to ensure smooth function of RESCO models or the utility-led aggregation models. Its purpose is to ensure that benefits from subsidies are reaching individuals. It also undertakes the responsibility of the safe installation process of solar panels.

At present, around 100 crore are reserved for the payment security mechanism purpose. It is to ensure that investments in the RESCO-model will be safe and more secure. Apart from Rs. 100 crore of funds, more funds and grants will be approved for the investment in the RESCO model in the future to support investment in this model.

About the RESCO and ULA model
The RESCO model refers to third party firms making investments in the installation of rooftop solar systems. In this model, consumers of electricity usage have to only pay for the electricity consumed by his household and not have to pay for other charges associated with the installments. The consumer pays charges to the RESCO which is lower compared to conventional electricity charges.

The ULA model refers to the power utility firms or state designated firms who install rooftop solar systems in place of individual households.

Purpose
Both ULA and RESCO models give households an opportunity to install solar systems with no cost. Its primary aim is to provide homeowners access to clean electricity as well as make it affordable for them. It also aims to achieve broader elimination of financial barriers.

The renewable ministry further cleared that these new guidelines are the supplement to the existing model. The consumer can use the existing method known as capex mode for installation of rooftop solar systems. The consumers can use the existing method by visiting the national portal for applying and managing installment of rooftop solar systems.

These two additional payment models will work alongside the existing method to give more options for the consumers in terms of affordability as well as security.

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Railway Sector’s Budget Allocation and Stock Performance: Insights for Investors

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India plans to divestment of 5 public sector banks

India plans to divestment of 5 public sector banks

The Indian government might allow divestments of state-banks through the process of stake sales or the lenders selling their own shares to large investors. It will help banks to meet requirements of minimum public holding.

The Indian government could possibly allow public sector banks such as the Central Bank of India, Punjab and Sind, Bank of Maharashtra, UCO Bank, and Indian Overseas Bank to lower ownership stake through share sales under the authority of Department of Investment and Public Asset Management (DIPAM). The second option is banks selling their shares to large investors.

Purpose of divestment
The aim of the divestment is to decrease the government’s holding in these state-run banks to lower than 75 percent. It will improve banks’ cash flows and financial stability. It helps in increasing liquidity of these lenders. These banks’ ability to lend can increase due to this. It will ultimately support in increasing the liquidity and credit creation capacity in the midst of economic uncertainty. According to the analysts, the asset quality of the banking sector has reached its high in the midst of the slowdown in economic growth.

Current government holdings
According to the data of the December 2024 quarter, the government’ stake is about 79.6 percent in the Bank of Maharashtra. While, the government holdings in the Central Bank of India and UCO bank is about 93.1 percent and 95.4 percent, respectively. The government ownership in PSU banks such as Punjab and Sind Bank and Indian Overseas Bank is about 98.3 percent and 96.4 percent, respectively. The total excessive government ownership in these following five state-run banks is close to Rs. 50,000 crore on the basis of the current share price.

Shares of State-run Bank’s Performance
When the news was circulated about the possibility of stake sale of five PSU banks, it led to the shares of the PSU banks surged to 20 percent. While the stocks of Indian Overseas Bank rise to about 19.24 percent. Also, the stock of UCO Bank surged to around 20 percent since October, 2003.

In the previous year, bank stocks observed an indifferent trend. Despite this, investors showed their interest in public sector stocks. The Nifty PSU bank index increased close to 4 percent in the previous twelve months compared to the fall in the NSE Nifty Private Bank index to around 3.6 percent.

According to the price-to-book metric, shares of these five state-run banks are not inexpensive compared to its other bigger peers. Price-to-book is a common financial metric used for comparing a company’s market value with its book value for the purpose of the valuation of the company.

The largest state-run bank of India is State Bank of India (SBI), which accounts to a price-to-book value of 1.44 times. As per the data of Bloomberg, the range of book value is 1.43 to 3.62 times for the five selected state-run banks – Bank of Maharashtra, Indian Overseas Bank, Punjab and Sind Bank, Central Bank of India, and UCO Bank.

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Railway Sector’s Budget Allocation and Stock Performance: Insights for Investors

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Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

Due to strong consumer sentiment that supported the strong demand for two-wheelers, automobile dispatches from firms to dealers increased by 12% last year compared to 2023, the industry group Society of Indian Automobile Manufacturers (SIAM) said on Tuesday. In 2024, total wholesales across all categories increased by 11.6% to 2,54,98,763 units from 2,28,39,130 units in 2023.

2024 has been a rather excellent year for the auto sector, according to a statement from Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM). He added that the macroeconomic stability of the nation and favorable consumer attitudes contributed to the sector’s reasonable development across all vehicle segments.

Two-wheeler segment was the growth driver
According to SIAM, the two-wheeler segment was the main driver of last year’s growth, increasing by 14.5 percent in 2024 compared to the previous year. When compared to previous year’s dispatch of scooter, bike, and model figures, 2024 witnessed a hike of about 14.5% in 2024. Previously the figure dwelled at 1,70,75,432 units in 2023 but now has improved significantly to 1,95,43,093 units. Further, scooter sales have improved and increased to a healthy 20% year on year in 2023. Coming to motorcycle dispatches, there is a 12% bump year on year when compared to the previous year figures.

Passenger vehicle and three-wheeler segment saw a significant hike in sales
With sales of almost 43 lakh units, passenger cars increased by 4% in 2024 over 2023, as per the SIAM report. In a similar vein, three-wheelers saw a 7% increase in 2024, selling 7.3 lakh units. Though there are indications of improvement in the third quarter of 2024–2025, commercial vehicles saw a minor decline of 3% in 2024 compared to the previous year, with sales of 9.5 lakh units. When compared to last year’s figures, passenger car dispatches to dealers saw a significant uptick of about 10% in December of last year, compared to 2,86,390 units in December of 2023.

Further, dispatches of three-wheelers increased from 50,947 units in December 2023 to 52,733 units last month. According to SIAM Director General Rajesh Menon, passenger cars, commercial vehicles, and three-wheelers recorded their highest-ever sales in the October–December quarter. According to him, passenger car sales in the third quarter of 2024–2025 increased by 4.5% to 1.06 million units, up from the previous year.

Additionally, two-wheeler dispatches increased by 3% in the third quarter of 2024–25 compared to the same period last year, registering sales of 4.9 million units, while three-wheeler sales increased somewhat, reaching 1.89 lakh units. Finally commenting on commercial vehicle sales in this quarter, Menon added that the sales of commercial vehicles increased slightly by 1% when compared to the same period last year.

Major Trends in the automobile industry
With 2.5 crore cars sold last year (four-fifths of which were two-wheelers) and a comfortable growth rate of 11.6%, the Indian auto industry appears to be unaware of the economy’s problems or even the EV juggernaut. In fact, the number of sports utility vehicles (SUVs), the most aspirational category, has increased by about 17%, from 23.5 lakh to 27.5 lakh.

Nevertheless, the fall has greater consequences for the automakers than the rise. Perhaps more intriguing than the rise in SUV sales is the segment at which this surge has occurred: sedans. Traditionally, the auto industry’s poster boys, the standard sedan and small vehicles (hatchbacks), have suffered the most since SUVs have become the preferred choice for consumers. As a result, the number of passenger automobiles sold fell from 16 lakh in 2023 to just 13.7 lakh last year, a 14.4% decrease.

Motorcycles are another traditional category that is struggling with change. Although it ended the year with an 11.9% rise, it is far less than the nearly 20% growth scooters achieved in the same time frame. In reality, motorcycle sales actually decreased by about 2% during last year’s holiday October–December quarter, which is typically the time with the highest sales, while scooter sales increased by 13.6%, from over 15 lakh to 17 lakh.

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Sky Gold Strengthens Growth Prospects by Onboarding Aditya Birla Jewellery

Sky Gold Strengthens Growth Prospects by Onboarding Aditya Birla Jewellery

Key Announcement
Sky Gold Ltd. has achieved a major milestone by onboarding Aditya Birla Jewellery, operating under the luxury brand Indriya. Known for its fusion of traditional Indian craftsmanship and modern design, Indriya’s association with Sky Gold is a strategic step to enhance market share and strengthen its foothold in the premium jewellery segment.

This onboarding aligns with Sky Gold’s ambition to become one of India’s top jewellery retailers within the next five years, supported by the anticipated expansion of over 500 jewellery stores across the country during the same period.

Management Insights
Mangesh Chauhan, Managing Director and CFO of Sky Gold Ltd., expressed confidence in the transformative potential of this onboarding. He highlighted that the collaboration with Indriya reinforces the company’s reputation for innovation and quality. Chauhan also pointed out the company’s proactive diversification into high-growth segments such as 18K gold and lab-grown diamonds, demonstrating its adaptability to evolving consumer trends.

Strategic Benefits of the Onboarding
Enhanced Brand Positioning: Onboarding a premium brand like Indriya will boost Sky Gold’s brand equity and help penetrate the lucrative luxury jewellery market.
Market Expansion: With the jewellery retail sector poised for significant growth, this onboarding positions Sky Gold to capitalize on the growing demand for high-quality, innovative jewellery.
Diversification: The company’s focus on 18K gold and lab-grown diamonds showcases its ability to align with modern consumer preferences for sustainable and fashionable jewellery.

Growth Potential and Strategic Impact
This strategic onboarding is expected to drive both topline growth and margin expansion for Sky Gold Ltd. The company’s focus on innovation, combined with its strong understanding of retail partnerships and customer preferences, will likely solidify its position in the competitive jewellery market.

Outlook
Sky Gold’s onboarding of Aditya Birla Jewellery is a promising step that underscores its growth-oriented approach. The luxury jewellery market offers significant opportunities, and the company appears well-positioned to capitalize on them. Investors should keep an eye on the progress of this onboarding and the company’s execution of its diversification strategy to gauge long-term value creation.

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Budget 2025-26: A Plan to Address Key Gaps in the Renewable Energy Ecosystem

Budget 2025-26: A Plan to Address Key Gaps in the Renewable Energy Ecosystem

Overview and Current Scenario
The renewable energy sector is at a pivotal point as India prepares for the Union Budget FY25–26. Industry experts have expressed their expectations for additional funding, legislative actions, and support systems to hasten India’s shift to clean energy. The government’s dedication to sustainability was demonstrated by the 2024–25 budget’s significant rise in the renewable energy provision, which went from the previous year’s revised estimate of Rs 7,848 crore to Rs 19,100 crore.

Energy is pulsing through the most recent renewable energy report card. According to the latest report released by the Ministry of New and Renewable Energy, India’s total installed capacity witnessed a surge of about 15.84%, 209.44 GW in December 2024, from about 180 GW in the period last year. Compared to the 13.05 GW installed in 2023, the total capacity added in 2024 was 28.64 GW, a 119.46% increase year over year. Solar power led the rise in 2024 with the addition of 24.54 GW, but hydro used to be a significant contributor to the expansion of RE capacity. Its cumulative installed capacity increased from 73.32 GW in 2023 to 97.86 GW in 2024, a 33.47% increase. With an extra 3.42 GW added in 2024, the overall wind capacity increased to 48.16 GW, a 7.64% increase from 2023. Wind energy also played a role in this expansion.

Now, at about 210 GW, RE capacity has surpassed 42% of its 2030 objective of 500 GW. To meet the RE target set by Prime Minister Narendra Modi at the Glasgow climate summit in 2021, an additional 290 GW will need to be added over the course of the following six years. Even though last year’s yearly capacity gain was remarkable by historical standards, it is insufficient to reach 500 GW of RE capacity by 2030. To reach this goal, the yearly run rate will need to increase to around 50 GW.

Even while everyone involved in the RE sector is optimistic, it suggests that additional actions and policies are required to accelerate the development of RE capacity. The upcoming Union budget might provide the perfect opportunity to address some of the gaps preventing the quick integration of RE power.

Key Issues hindering the progress of the RE Sector

Rooftop Solar suffers from slower growth
For utility-scale projects, rooftop solar units are a convenient approach to rapidly increase RE capacity due to gestation time and other considerations. The PM – Surya Ghar: Mufti Bijli Yojana is a positive start in this area as it intends to employ rooftop solar units to illuminate one crore houses with an investment of Rs 75,000 crore.

However, the plan appears to be moving at a slower pace than estimated. According to estimates from industry specialists, over 6 lakh installations have been completed to date. This must rise quickly, and the target may have to be expanded in order to meet the desired capacity in the near future. According to sources, the national goal is to reach 40 GW of rooftop solar power by 2025, even if targets in the RE sector are always changing. Currently, the capacity of rooftop solar power in India has reached up to 13 GW (as of the latest reports updated in 2024). Nevertheless, the scheme appears to be moving slowly. According to estimates from industry specialists, over 6 lakh installations have been completed to date. This must rise quickly, and the target may have expanded. Further, the national goal is to reach 40 GW of rooftop solar power by 2025, even if targets in the RE sector are always changing. The capacity has reached 13 GW through the end of 2024.

Issues ranging from financial obstacles to legal restrictions and a lack of awareness are blamed for the sluggish growth. For the rooftop solar project to be successful, these issues must be addressed in the February Union budget.

Energy Storage acts as a barrier to RE sector development
Energy storage is another issue that frequently impedes the advancement of RE. India’s energy storage system has not kept up with the country’s increased RE generation. As a result, there is an imbalance between the supply and demand for energy, making the grid more susceptible to blackouts and inefficiencies. India is now obsessed with two forms of energy storage: pumped storage and batteries. These projects may not be able to meet the 60 GW of storage capacity required by 2030, based on their present and planned state.

India needs to take a multifaceted approach in order to get past this storage barrier and realize its full RE potential. This entails making investments in the development of novel battery technologies, broadening its range of energy storage products, and cultivating an environment that facilitates the quick implementation of storage solutions. Thus, by offering incentives to promote the creation of new storage technologies and their implementation, the February budget can start the process.

Smart Meters still in incubation?
Another weak link that prevents RE growth is grid infrastructure. The distribution companies in different states must be connected, and smart meters must be quickly deployed, in order to transition to a clean electricity system. Once more, there is a significant discrepancy between execution and target. Approximately 7.3 million smart prepayment meters have been installed nationwide thus far under the Revamped Distribution Sector Scheme (RDSS), according to statistics presented to Parliament in December of last year.

With an investment of Rs 3.3 lakh crore, the program, which was introduced in July 2021, aims to install over 250 million smart prepaid meters by March 2025. Thus, the lack of progress in smart meter development raises a legitimate question.

Conclusion
There is an opportunity to examine the problem and provide improvements in the Union budget for 2025–2026. While there are many opportunities in RE, there are also many challenges. It is clear that a yearly budget is insufficient to handle every problem. These yearly exercises, however, give the government a chance to address any current issues that could hinder the expansion of RE.

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