The week in charts: Import shock, budget plans, tax trends

Gold rush

India’s trade deficit widened to a record high of $37.84 billion in November, primarily driven by a 331% year-on-year surge in gold imports, showed data from the commerce ministry. Gold imports rose on the back of festive and marriage-related demand and rising prices. As a result, merchandise imports grew 27% on-year to $69.95 billion last month. On the other hand, exports contracted 4.9% to $32.11 billion. The widening deficit is a concern amid slowing economic growth and a weakening currency.

Insuring insurers

The government is considering a capital infusion of ₹4,000-5,000 crore into its loss-making general insurers in 2025-26, Mint reported. The upcoming budget in February may allocate additional funds based on the insurers’ progress in financial performance in April-December. Three of the four state-owned general insurers—National Insurance, United Insurance, and Oriental Insurance—have negative solvency ratio currently, which means their total debt is greater than their equity. The capital infusion, however, would be contingent upon companies showing signs of consistent improvement in financial parameters and growth.

Mega buyout

₹9,861 crore: That’s the amount The Hinduja Group is expected to spend on acquiring Reliance Capital. According to chairman Ashok Hinduja, the acquisition is expected to be completed by January. The deal will come nearly a year after the National Company Law Tribunal (NCLT) approved the rescue plan for the bankrupt lender. Hinduja plans to go with the existing management of Reliance Capital to run businesses but may also divest 34 out of the company’s 39 subsidiaries.

Smartphone slump

India’s smartphone market is staring at a prolonged downturn. The past three years have witnessed a decline in annual smartphone shipments, with the 2024 volume projected to be 5% lower than the high seen in 2021, Mint reported. However, the average selling price has grown from $227 ( ₹17,500) in 2021 to $258 ( ₹22,000) this year, mainly due to demand for premium models. The lacklustre momentum has raised question marks over India’s aim of becoming a $500-billion electronics economy by 2030, from over $40 billion currently.

Retail rules

Indian retail investors invested nearly ₹1 trillion in the first eight months of the current fiscal year (April-November), surpassing their total investments in the previous two years, Mint reported. Around a third of this investment ( ₹29,594 crore out of ₹95,876 crore) occurred during the October market dip, indicating a growing comfort with volatility. While this strategy has yielded positive results with recent market recovery, analysts caution that volatility may persist.

PLI progress

₹1.46 trillion: This is the amount of investment realised from incremental production and sales until August across 14 sectors getting benefits under various production-linked incentive (PLI) schemes, the government said in a written reply to the Lok Sabha. The PLI schemes for the 14 key sectors, including electronics manufacturing, pharmaceuticals, and automobiles, were announced with an outlay of ₹1.97 trillion, with incremental production and sales of over ₹12.5 trillion and employment generation of over 950,000.

Modest needs

The Indian government’s first supplementary demands for grants, which seeks additional funds over and above the amounts authorised in the budget, was the lowest in the current financial year since 2021-22, a Mint analysis showed. This indicated improved fiscal management and fewer economic shocks, economists said. However, fertiliser subsidies remain an expenditure overhang. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) has not yet found a place in the demand for grants, possibly due to fewer requirements this year on the back of a robust agricultural season.

Chart of the week: Taxpayer trends

The number of individuals reporting zero taxable income in their income tax returns increased to 490,408 in 2022-23, recording a 6% rise from the previous year but less than the 549,288 individuals in 2020-21, the government told Rajya Sabha. In 2023-24, only 6.68% of the population filed income tax returns.

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