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Govt Raises Agri Credit Target to ₹28 Lakh Cr, But Efficiency Concerns Remain
Business, Equities, Markets - January 23, 2025

Agricultural sector in India anticipates enhancement of rural income in the upcoming Budget

Agricultural sector in India anticipates enhancement of rural income in the upcoming Budget

Overview
Every financial year, the Union budget gives a chance to make improvements in the rural areas of India. Its main purpose is to maintain agricultural productivity, increase the base of various income channels and also expand the overall productivity of rural regions in India.

According to the observations of the FMCG sector, the demand in rural areas is showing positive signs. It is partially because of factors such as sufficient reservoir levels, strong government aids, and also positive monsoon season.

Taking this matter into consideration, the Union Budget 2025 can certainly aim for strengthening of demand and income levels of hinterland areas in India.

Subsidies related to Fertilizers
Fertilizer is one of the important elements in agricultural production. The overuse of chemical fertilizers such as Urea can severely harm the agricultural land as well as its production. The government of India aims at implementation of balanced fertilization of land to enhance productivity in agriculture. To achieve this goal, it has implemented a subsidy known as Nutrient-based Subsidy. This scheme gives incentives to fertilizers which do not use urea as a component. It helps farmers to buy fertilizers at affordable prices. However, recently the amount of funds given for subsidy under this scheme has declined due to the hike in cost incurred on making these fertilizers.

Despite this concerning situation, the government aims to have balanced use of various nutrients in the agricultural land and not completely depend on Urea as fertilizer. It indicates that the government of India will have increased allocation of funds for nutrient-based subsidy in the upcoming budget. Apart from this, the government of India will take more schemes such as Soil Health Card for farmers. It gives info of soil health of farmer’s land and which nutrients are required for the land. It helps to balance use of various nutrients and not completely depend on Urea as fertilizer.

Investors can observe performance of companies such as Paradeep Phosphates and Coromandel International.

The government of India is expected to enhance use of advanced types of fertilizers such as organic and nano fertilizers. The reason for this is to contract the use of chemical fertilizers, enhancement of production, reducing import levels of fertilizers as well as improvement in budget allocated for subsidies.

National Mission on Natural Farming
Under this programme, the government of India decided to encourage about 1 crore farmers into natural farming in a period of two years. It will help in enhancing the health of agricultural land, reduce use of fertilisers and improve agricultural production. It implements this scheme by giving certification and branding to farmers who integrate natural farming.

Increase in production of coarse grains and oil seeds
In the previous years, the government of India focused on making India self-sufficient in terms of production of oilseeds like sesame, sunflower, soybean, mustard, and groundnut. The government has taken initiatives such as providing welfare schemes and minimum support price for encouraging expansion of production of oilseeds and non-wheat products. It is expected that in this year as well, the government will take actions towards expansion of production of these crops.

Other channels of income
The latest NABARD’s report shows that a compounded annual growth rate (CAGR) of about 9.5 percent is recorded as the average monthly income of rural households for the duration of financial year 2017 and financial year 2022. In aggregate terms, the growth in income levels of rural households is around 57 percent. Though it seems good, it is quite below the target set by the government of India of making farmers’ income twice in the same period of time.

In this situation, to improve income levels of rural households, the government needs to focus on other channels of income.

In the past few years, several actions have been taken by the government of India such as white revolution, honeybee-keeping, and blue revolution to improve income levels of farmers. The budget allocated for fisheries increased by a CAGR of 24 percent and allocations of funds for dairy increased by a CAGR of about 20 percent. The initiatives were taken to aid shrimp farming in India by creation of Nucleus Breeding Centres in the previous year.

If the government again takes steps towards enhancement of these segments, then it will possibly have influence on companies such as Apex frozen foods, Avanti and many more.

Enhancement of supply chain of agriculture
The supply chain of agriculture includes logistics, crop insurance, cold storage chains, and agricultural producer markets. The improvement in these components of the supply chain will certainly lead to development of the agricultural sector and rural areas of India. Also, the strong agricultural supply chain aids in mitigating the rise in food inflation recorded in the past few years.

In conclusion, there is a possibility that the government of India will again focus on its previous year plan of bringing resilience and productivity in agricultural sector in India.

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Impact of Trump 2.0 on Indian Equity Market

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Transforming ₹1 Lakh into ₹1.8 Crore: The Unbelievable Journey of Two Stocks
Business, Equities, Markets - January 17, 2025

Market Volatility Surges Amid Global Yield Spikes and Policy Shifts

Market Volatility Surges Amid Global Yield Spikes and Policy Shifts

Overview
The easy-money period following the epidemic gave stock markets a boost that persisted for years. The complacency brought on by the upward trend remained unaffected. The much-anticipated “soft landing” kept investor spirits high despite the world’s extreme inflation and central banks’ aggressive monetary tightening policies.

However, the market decline has jolted investors after years of complacency, and since the end of September last year, sentiment has shifted sharply to the negative. This is especially valid for developing markets like India. Since its high, the broad Nifty 50 index has experienced a correction of over 10%.

Factors affecting the volatility of Indian markets
China, the world’s greatest producer and consumer of commodities, raised expectations for an economic revival in September 2024 when it unveiled stimulus measures. The emergence of rising commodity prices was the backdrop for inflation to reappear. Trump won the US presidential election within a month of this, and inflation expectations skyrocketed in anticipation of more tariffs, tax breaks, and immigration restrictions. More recently, Brent crude prices have risen above $80/barrel due to the extensive restrictions placed on Russian crude. Despite high interest rates, inflation has increased globally due to several causes. The G7 countries’ average inflation rate has increased from 2.2% in September to 2.6% in November and has continued to rise ever since.

Central banks’ response globally
Paradoxically, at this time, central banks all over the world have been relaxing their monetary policy restrictions. However, markets have continued to brace for monetary tightening due to growing inflation and, more significantly, the uncertainty around future inflation. Furthermore, US rates have increased further due to expectations of a fiscal explosion under the next US president. Thus, yields have increased in the majority of large economies in spite of rate reduction. Despite the policy rate being between 4.25 and 4.5%, 10-year US Treasury yields are approaching 5%, German yields have increased to 2.6% despite their faltering economy, and British yields are at their highest levels since 2008.

Rising yields in the U.S.
At the time this piece was written, US yields were 4.3%, up from 3.6% in September. Strangely, this increase is similar to the “higher for longer” era, when US rates increased from 3.5% to 4.3% in a single month in September 2022 before reaching a peak of about 5% in October 2023. Emerging market assets typically lose appeal to foreign investors as a result of tighter gaps against emerging market yields caused by rising US yields. FIIs promptly sold off around Rs 40,000 crore worth of Indian stocks between August 2022 and October 2023. However, Indian stock markets managed to hold their ground with the help of domestic institutions and individual investors; during this time, the Nifty 50 index increased by 13%.

This time, the increase in yields has caused FIIs to lose interest in Indian stocks. However, the quantum has never been seen before. The broad market index has corrected by about 11% in less than 4 months, and FIIs have sold off Indian stocks valued at an astounding Rs 2.2 lakh crore.

Yield Spikes witnessed in 2022-23
The wave of yield spikes this time around appears to be unique eyeing the state of the Indian economy. Due to strong government capital expenditures, the Indian economy was the major economy with the quickest rate of growth in 2022–2023. However, this time around, India’s halo is somewhat vanishing due to decreasing government capital expenditures and declining consumer demand. In light of this, the RBI must lower interest rates quickly in order to boost the economy and further reduce yield spreads.

Furthermore, the USD has been strengthening in the wake of US policy uncertainties. The dollar returns received by US investors in India have been further squeezed by the ensuing more than 3% depreciation of the Indian rupee, which has reached all-time lows of 86+. In actuality, the INR is expected to weaken even further as India’s imports of crude oil increase in response to Russian sanctions and the RBI progressively reduces its involvement in the currency markets. The real effective exchange rate of INR shows an 8% overvaluation, suggesting that the returns received by US investors in Indian stocks will continue to decline. Therefore, in contrast to 2022–2023, the bubbly Indian stock markets have fallen victim to the most recent round of yield rises.

What lies in the future?
Trump is scheduled to take office early next week, which is expected to open the door for erratic and possibly extreme immigration, business, and trade policies. In light of Trump’s potentially inflationary intentions, the US Fed’s policy decision at the end of this month will be widely scrutinized for indications of incremental hawkishness.

At home, we have three major events in the first few days of February: the Union Budget, which faces the challenge of boosting India’s slowing economy; the RBI’s monetary policy review, which is anticipated to result in the first rate cut after a year of holding rates higher for longer; and the results of the Delhi assembly election.

With so many important events planned for the next weeks, investors shouldn’t expect any respite from the stock market’s volatility.

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Solid reason for GST reduction on two-wheelers

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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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 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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India's Infrastructure Sector Calls for Policy Reforms to Boost Growth and Sustainability
Business, Equities, Market News, Markets - January 10, 2025

Infrastructure: Prioritizing Consistent Growth in Budget 2025-26 Overview

Infrastructure: Prioritizing Consistent Growth in Budget 2025-26
Overview

Overview
With the Indian economy flourishing, there are numerous investment opportunities in multitude of sectors. The growth potential is excellent, thanks to technological advancements in the dynamic industry, which are augmented by different legislative reforms. The Indian economy has so far been resilient to persistent downside threats. Despite the slight dip in expectation of growth at 6.5-7% in the fiscal year 2024-25 according to the Economic Survey 2023-24, there is a positive sentiment about global economic backdrop. Coming to infratruscture segment of the nation, it is believed that Finance Minister Nirmala Sitharaman is likely to increase capital expenditure (capex) in the infrastructure sector in the Union Budget 2025-26 in order to bolster and boost urban development. Sitharaman will deliver the budget for 2025 on February 1, 2025. According to Federation of Indian Chambers of Commerce & Industry (FICCI) regarding the upcoming budget, the focus of government in the last few years on capex has been contributing to support recovery and sustain the momentum of growth. During persistent headwinds from the global front, public capex, especially physical, social, and digital infrastructure, would be critically important for the maintenance of growth momentum.
In the previous Union Budget that is in 2024-25 maintained a strong commitment to balancing multiple objectives in order to achieve Viksit Bharat’s vision. Continuing and extending the reform program on the nine priorities established in the Union Budget 2024-25 will be critical to maintaining the economy’s resilience.

India’s Infrastructure
India’s landscape is fast changing as the Government of India spends extensively in infrastructure projects such as roads, railroads, and renewable energy. To stimulate domestic manufacturing and increasing demand for machinery and construction materials, the government has launched projects such as ‘Make in India’. The infrastructure sector was allocated ₹11.11 lakh crore in the Union Budget 2024, and is expected to increase to ₹18 lakh crore in the next Budget 2025. As a result of thse schemes, GDP figures are expected tom improve significantly at the same time boosting public-private partnerships.Other notable initiatives such Housing for All, National Infrastructure Pipeline (NIP), and PM Gati Shakti would support and aid in enhancement of the infrastructure sector in India.

Smart City Mission
Another major budget expectation for the infrastructure sector, would be Smart Cities Mission development and implementation. India’s urban development and overall landscape is bolstered by Smart Cities Mission. Launched in 2025, by PM Narendra Modi, the Smart City Mission aims at improving quality of life in 100 cities across in India by way of infrastructure, sustainable environment and effective essential services. Further, the solutions offered through this mission aim to promote economic growth, financial inclusion, sustainability in urban development, etc.

Mitu Mathur, Director of GPM Architects and Planners, told ETNOW.in that the 2019 budget will prioritize essential expenditures in India’s urban development, with a focus on safety, sustainability, and infrastructure. She stated that the primary focus should be on transit-oriented development, which has the potential to alleviate traffic congestion by up to 30% while increasing property prices near transit hubs by 20%. “This focus on TOD will contribute to more sustainable, connected cities with both environmental and economic benefits,” according to her.

Mathur added that the future budget must prioritize sustainable infrastructure as India’s urban population continues to grow. She emphasised that green initiatives could bring down energy consumption by up to 50% while at the same time, improved waste management could reduce 70% of urban waste going to landfills. Furthermore, in light of recent instances, women’s protection in metropolitan areas is projected to become a top focus. Beyond improved street lighting and monitoring, we anticipate financing for smart lighting systems that respond to pedestrian activity, as well as the creation of safe pathways with well-maintained paths and emergency stations,” she stated.

Goonmeet Singh Chauhan, Founding Partner of Design Forum International, anticipates that the 2025 budget would place a greater emphasis on blue-green infrastructure under the Smart Cities Development initiative. “Given the gravity of the AQI issue in most towns, a data-driven approach is required to create and improve urban green cover, tree biomass, and tree demography, as well as their relationship with habitation density. Ideas such as responsive green infrastructure, the integration of ‘city forests’ into urban fabrics, and the Federal Acquisition Regulation (FAR) of forest pockets must be adopted immediately. Expanding on ‘blue infrastructure,’ hydrological master plans for all future smart cities must be developed to capture the current nature of hydrological behavior, with a particular emphasis on drainage and aquifer studies” he emphsised.

Conclusion
India’s strong economic foundations and concentration on innovation and technology make it a prominent investment destination. The sectors mentioned above are at the heart of India’s growth story. Keeping a close eye on these industries and their potential will allow you to better capitalize on future chances.

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Tata Motors Stock Slump: Analyzing the Decline and Road Ahead

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