India remains fastest growing major economy:

  • A stronger-than-expected fourth quarter lifted India’s GDP growth to 7.2% in FY23, exceeding the 7% cited in the second advance estimates released in February.
  • This means that India remains fastest growing major economy for the second year in a row after posting 9.10% growth in FY22.
  • The government’s capital spending boosted gross fixed capital formation by 8.9% in the quarter, lifting its share in GDP to an all-time high of 35.3%, but private consumption was sluggish with a 2.9% rise.
  • India’s manufacturing sector saw a sluggish slowdown in growth to 1.3% in FY23 v/s 11.1% in FY22. Financial, real estate and professional services recorded a growth of 7.1% v/s 4.7% in FY22.
  • In nominal terms, without adjusting for inflation, GDP rose 16.1% in FY23 compared with 18.4% expansion in the preceding year.
  • India’s economic recovery post Covid-19 is remarkable in light of global turbulences and slowdown considering that China grew at just 3% in FY22 while advanced economies are faring even poorer.
  • However, the way forward for India is still tricky due to global economies slowing down and Indian manufacturing sector growing lethargically.
  • The Goods and Services Tax (GST) revenue surpassed Rs 1.57 lakh Crore in May, marking the fifth time it has achieved this feat since the inception of GST.

Withdrawal of Rs. 2,000 Currency Notes:

  • On 19th May, 2023 stating that Rs 2,000 note is not commonly used for transactions, RBI announced to withdraw Rs 2000 notes from circulation. Though notes will continue to remain as legal tender.

Funding winter:

  • PE/VC funding to Indian start-ups have fallen around 80% from $15.7 Bn in Jan-May 2022 to $3.3 Bn Jan-May 2023 as per data by Venture Intelligence. From 2022, Startups across the world have found it increasingly difficult to raise funds and the trend has continued in 2023.
  • During pandemic peak, the investors were holding record capital and marked by fear of missing out (FOMO), resulting into easy funding to start ups with attractive and at times inflated valuations.
  • However, investors are becoming cautious in their approach as they are witnessing drying of liquidity, lackluster consumer growth, market volatility, lackluster IPOs and even governance issues in some cases.
  • The valuations of startups have also been impacted in this scenario; some of the unicorn and decacorn startups like Swiggy, PharmEasy, Ola, Oyo and Byju’s have been marked down by 30%-60% by their investors. E.g. Invesco marked down Swiggy’s valuation from $10.7 billion to $5.5 Billion while Janus Henderson cut PharmEasy’s valuation to half.
  • Funding winter is likely to continue in short term and at least late-stage startups will find it difficult to raise funds. Some of the late-stage startups which planned to raise funds through IPO will also have to put the plans on back burner as IPOs have dried down due to negative market sentiments.
  • The start-ups which will need to raise capital now may be expected to go through down rounds. Down round is when pre money valuation of subsequent round is lesser than post money valuation of last round. In down round the startup’s per share value decreases and founders end up diluting more. Generally, the investor’s interest will be protected in down rounds due to anti-dilution provisions, and in that case the dilution of the founders will be even more pronounced.
  • Start-ups would try hard to delay fund raising at present to avoid the down rounds. The focus will be on various cost cutting measures to conserve capital and at least for the time being a shift from growth to profitability. Next six months will also likely see a lot of consolidation in start-up space.


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This material has been prepared by the personnel in Vora Corporate Finance which is Investment Banking arm of Vora Management Consultancy Private Limited and looks after Mergers & Acquisitions (M&A), Private Equity (PE), Fund Raising, Debt syndication and Valuations and is based out of Ahmedabad, Gujarat, India. Any views or opinions expressed herein are solely that of individual authors and may differ from view of Vora Management Consultancy Private Limited. This material is proprietary to Vora Management Consultancy Private Limited and is for your personal use only. Any distribution, copy, reprints or forward to others is strictly prohibited.

This material captures the information based on information available in the public domain, public announcements and sources believed to be reliable. Analysis contained herein is based on publicly available information and appropriate assumptions. This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute strategic, investment, legal or tax advice. In no event Vora Management Consultancy Private Limited be liable for any use by any party or for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you for evaluating any transaction. 

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