Economy
The week in charts: IT woes, growth forecast, Zomato’s fundraising
Summary
News and developments from the week gone by, through numbers and charts.
Every Friday, Plain Facts publishes a compilation of data-based insights, complete with easy-to-read charts, to help you delve deeper into the stories reported by Mint in the week gone by. The order books of India’s top information technology (IT) companies have shrunk in the first half, while the International Monetary Fund (IMF) has given the US a positive outlook. Meanwhile, Zomato plans to raise funds.
Deals dip
India's top four software service firms—Tata Consultancy Services, Infosys, HCL Technologies, and Wipro—saw order books shrink in the first half of the current financial year compared to the same period last year. This has raised concerns despite positive revenue guidance and increased hiring. TCS's total contract value (TCV) fell to $16.9 billion in April-September from $21.4 billion a year ago, while HCL's TCV dropped to $4.18 billion from $5.54 billion, Mint reported. TCS was hit by the absence of ‘mega deals’ worth more than $1 billion in H1FY25.
Growth projections
Amid fears of a recession, the IMF has upgraded its gross domestic product (GDP) growth forecast for the US to 2.8% for 2024 from the 2.6% projection given in July, mainly on account of wage growth reflecting productivity gains. This signals only a marginal slowdown from the 2.9% growth recorded last year. The IMF has kept India’s growth projection unchanged at 7.0% for 2024-25, but it was significantly lower than the 8.2% growth recorded in FY24.
Funding plans
₹8,500 crore: This is the proposed amount Zomato's board has approved for raising funds via a qualified institutional placement (QIP). The move aims to strengthen Zomato's position against rivals like Swiggy and Zepto. The company's cash balance decreased to ₹10,800 crore at the end of the September quarter from ₹14,400 crore when it launched its initial public offering (IPO) mainly due to the acquisition of Paytm’s ticketing business for ₹2,014 crore in August. The move is aimed at bolstering the company’s balance sheet.
Under the wraps
India has delayed the release of a crucial report detailing automakers' compliance with fuel efficiency standards, Mint reported. Eight auto majors, including Hyundai Motor India, Kia India and Mahindra & Mahindra, failed to meet the Corporate Average Fuel Efficiency (CAFE-II) norms in 2022-23. The government's hesitation to publish the report stems from concerns over the severe penalties outlined for non-compliance, which is ₹50,000 per car sold. Maruti Suzuki, Tata Motors, and MG Motors, on the other hand, stayed within the legal limits.
Wealth erosion
Investors in small-and-mid-sized companies or smids have seen their wealth decline by ₹26 trillion between 20 September and 22 October, Mint reported. The top 10 firms also lost ₹5.58 trillion during the same period. According to experts, small investors have been hit the hardest and expect the downturn to continue for weeks. Factors like weak macroeconomic indicators, FPI outflows, and rising bond yields have intensified market uncertainty. The smids typically outperform large caps in a rally and underperform during a pullback or a correction.
Parking penalties
100%: That is the percentage increase in Delhi’s parking fees for indoor and off-road facilities to tackle air pollution. The New Delhi Municipal Council (NDMC) made the announcement earlier this week amid deteriorating air quality in the capital and adjoining areas. It is part of the second stage of the Centre's Graded Response Action Plan (GRAP), which aims to address the capital city's poor air quality index. However, the increased parking charges will not apply to on-street parking sites and monthly pass holders.
Gold gap
With gold prices hitting new highs this year, the demand for yellow metal could be hit for the first time in four years during the crucial Diwali season, Mint reported. Gold prices are inching towards the ₹80,000-mark per 10 gm from ₹56,000 during this period last year, according to data from MCX. The prices have mainly been driven by uncertainty related to the US elections and conflict in West Asia. This has led to customers trimming gold purchases and shifting to the exchange of old jewellery.
Chart of the week: Class conundrum
Over 88% of urban Indians identify themselves as middle class when asked to describe their family’s financial situation, shows the latest round of the YouGov-Mint-CPR Millennial Survey. Since there is no official definition of income classes in India, over 50% of those who earn a monthly income of ₹2.5 lakh and above also identify as middle class.
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