Around the market.

Accelerating market growth with stable interest rates

The central bank's decision to keep the repo rate unchanged could encourage potential buyers of houses, cars and durables, sources at top companies said. RBI's monetary policy announcement will give a good boost to industry confidence. Top Maruti Suzuki India sources said, revisions on GDP growth rate, holding repo rate and maintaining inflation outlook will strengthen confidence in the ecosystem for the coming year. According to the Federation of Automobile Dealers Association, November saw the highest ever vehicle sales in the history of the Indian automotive industry. Consumers across various segments and categories purchased a total of 28.54 lakh units, surpassing the previous record of 25.69 lakh units set in March 2020. The same is true for consumer durables, which have had a good festive season this year. The Consumer Electronics and Appliance Manufacturers Association said a stable interest rate environment would help the market grow.

The Digital India Act is unlikely to be implemented before the general elections

The government will not implement the Digital India Act before the next general elections as there is not much time left for a comprehensive discussion on it, said Minister of State for Information Technology Rajeev Chandrasekhar.

The purpose of implementing this Act is to replace the 23-year-old IT Act, 2000. The Digital Personal Data Protection Act rules will be tabled for discussion later this month. This is expected to be notified by the end of December or early January. The successor law is called the Digital India Act, which is still in the works. We have a draft ready and a lot of work has been done on it. But there is a doubt that we will not be able to legislate this before the next election. We need to think broadly about every digital law. So, I don't think we have enough time for that. The proposed Digital India Act has given more attention to online platforms.

Confidence of foreign investors increased

The Indian stock market has achieved a valuation of 4 lakh crore due to BJP's victory in the recently concluded five state assembly elections. Seeing all these developments, foreign investors are now eager to invest money in the Indian stock market. For the first time since September, foreign investors with net 'long' positions in index futures are betting on gains in the Indian stock market.

Several stocks hit new record highs last week due to positive local election results. Global investors have also resumed buying Indian stocks in the cash market. On a net basis, they bought more than $4 billion from the end of October to December 5.

Limits required on small personal loans

Recently, the Reserve Bank of India has taken a tough stance on banks and non-banking finance companies after cracking down on unsecured loans. The Reserve Bank has asked its fintech partners to reduce small personal loans. The first step after the RBI decision was One97 Communication Ltd-owned Paytm announced a cut in disbursement of loans below Rs 50,000. We do not intend to completely reduce the funding we provide to fintech partners at this time, although we have seen them withdrawing small-ticket personal loans,” said another banker at a private sector bank. It is estimated that the industry's overall loan growth will decline to between 12 and 14 percent from the current 15 percent.

R&D expenditure needs to be tripled

India needs to triple research and development (R&D) spending to three percent of GDP from the current 0.7 percent, said Infosys co-founder Chris Gopalakrishnan. In addition, the private sector is required to contribute 1.5 percent of the total research and development expenditure. India has doubled its expenditure on research and development during 2020-21 to approximately Rs. 1,27,380 crore, which in the year 2010-11 is about Rs. 60,000 crores. However, as a percentage of GDP, this expenditure is only 0.7 percent, which needs to increase manifold. The number of patent applications in India increased by 31.6 percent in 2022, the highest in the world. In recent times India has also seen an increase in Global Centers of Competence. Many GCCs across the country are transforming themselves into research and development hubs. In addition, many multinational companies have their second or third largest research and development centers globally in India.

Uncertainty in food prices is a challenging issue

The Reserve Bank has kept the repo rate at 6.5 percent for the fifth consecutive time in its recent review meeting. However, it has not clarified when the rate hike cycle will end. Although the monetary review did not change policy rates, its main attraction was the increase in gross domestic product (GDP) growth estimates for the current fiscal year. The GDP growth estimate for FY 2024 has been increased to 7 percent from the previous 6.5 percent. Das said the road ahead could be difficult due to uncertainty in food prices and the retail inflation figures for November could remain high. He said that inflation cannot be controlled automatically. It requires constant practice.

Calculation of Ethanol Blend Target Achieving

Banning sugarcane juice in ethanol production will not affect its blending objective. Ethanol Supply The government's target for ethanol blending in the year 2025-26 is 20 percent. The government has directed all sugar mills not to use sugarcane juice or molasses for ethanol production this year. The sugar season started in October 2023-24 while the ethanol supply year started in November. However, production of ethanol from B heavy and C heavy molasses is permitted. Sugar mills will be encouraged to produce from C heavy molasses. However, the recent order for B-heavy molasses will continue. Sugar production has decreased in the last one and a half months. It is expected to decrease further during the year 2023-24. He stressed the need for a monthly review system to monitor the situation.