Author: Sarita Jena

B Prasanna, the Group Head of Global Markets at ICICI Bank, spoke about the recent GDP numbers, which came as a surprise to many. He believes the economy has hit its lowest point and will start improving in the second half of the year. Although ICICI Bank predicts a decent GDP growth of around 6.5% in the second half and 6.3% for the whole year (FY25), these numbers are lower than what everyone expected, including the Reserve Bank of India (RBI), which had anticipated over 7% growth earlier this year.

Prasanna mentioned that a cut in the Cash Reserve Ratio (CRR)—the money banks are required to hold with the RBI—would be crucial to encourage banks to lend more, especially to small and medium businesses. He doesn’t expect the RBI to cut interest rates in the December meeting but anticipates a 50-basis point reduction in CRR, possibly in two steps of 25 basis points each, accompanied by a more relaxed talk about future rate cuts.

He acknowledged that the recent GDP growth of 5.4% was unexpected and significantly below predictions, mainly due to slower government spending and reduced manufacturing output. Factors such as heavy rainfall and tighter liquidity in the market have contributed to this slowdown.

He believes that while the government aims to increase spending, it may be challenging due to the need to meet budget targets, especially with ongoing elections affecting their plans. However, he expects government spending to rise in the coming months.

While infrastructure projects and real estate revival are helping the economy, there are concerns about slowing consumer spending and the private sector not stepping up as expected. Overall, Prasanna feels that the worst is likely over, but the recovery will not be quick enough to make up for earlier losses.

Regarding the RBI’s next steps, Prasanna thinks they will prioritize managing both inflation and growth moving forward. He mentions that lowering expectations of inflation could allow for more flexibility in monetary policy. Therefore, while a big rate cut isn’t expected just yet, a CRR cut seems on the horizon to improve lending conditions, particularly for small businesses which need it the most.

In November this year, India made a big leap in coal production! It produced 90.62 million tonnes (MT) of coal, up from 84.52 MT last year. That’s a fantastic increase of 7.20%!

Captive and other companies contributed significantly, producing 17.13 MT in November 2024, which is a whopping 37.69% more than the 12.44 MT last November.

So far this year (from April to November), India has produced 628.03 MT of coal, an increase from 591.32 MT during the same time last year. That’s a 6.21% growth!

Coal dispatches (the coal sent out for use) also improved. In November 2024, dispatches reached 85.22 MT, compared to 82.07 MT last year—a rise of 3.85%. Dispatches from captive and other sources jumped to 16.58 MT from 13.19 MT, marking a 25.73% increase.

For the fiscal year 2024-25, so far, total dispatches reached 657.75 MT, up from 623.78 MT last year, a growth of 5.45%.

The Ministry of Coal pointed out that coal imports for blending purposes dropped to 9.79 MT this year, down from 10.70 MT last year, which is an 8.5% decline. This shows India’s commitment to becoming more self-sufficient in coal production and relying less on imports. Yet, India still needs some imports, especially for coking coal and high-grade thermal coal, which are not enough in domestic reserves. These imports are crucial for important industries like steel.