Economic Update:
- The Indian economy grew by 8.4% during the October-December quarter of the current financial year 2023-24, outshining all forecasts.
- India’s economic growth during the December quarter has emerged as a surprise for economists who were expecting a contraction in its growth due to a nominal decline in government spending, slow growth of the industrial output, and an uneven monsoon in the third quarter.
- However, the remarkable growth in Q3 was achieved due to strong growth in the manufacturing sector at 11.6% and construction sector at 9.5%. Numbers also revealed that while government consumption contracted, the private consumption rose in Q3.
- Agriculture sector posted weakest growth and contracted due to poor monsoon conditions. Both imports and exports declined marginally in Q3 as a percentage of GDP.
- CRISIL rating agency in its Indian Outlook said that the Indian Economy will take support of domestic structural reforms and cyclical levers and predicted India to become third largest economy and an upper-middle income country by 2031.
- Earlier in Feb, Monetary Policy Committee, kept policy repo rate unchanged at 6.50% and decided to continue withdrawal of accommodation by majority voting.
PayTM Crisis:
- RBI directed PayTM bank Ltd. to halt all deposits and credit transactions by 29th Feb (extended to 15th March) by citing persistent non-compliances and continued material supervisory concerns.
- This has severely impacted company’s business and left it in an existential crisis as investors pulled out millions of rupees. Company’s share prices have fallen to around Rs. 400 at present – which is at over 80% discount to its listing price.
- PayTM, launched in 2010, rose to fame after demonetization and has around 20 million merchants and 300 million users on its platform.
Acknowledgements:
RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)
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