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MARKETS

Markets: The Nifty ended a tad lower on February 1 after a volatile day of trade during which finance minister Nirmala Sitharaman presented the interim budget 2024, which eschewed populism and remained firm on fiscal consolidation.The Nifty started the budget day on a positive note at 21,781 but remained choppy through the day and closed 28 points down at 21,697.

BUSINESS

Interim Budget Unveiled by FM Sitharaman

What Happened

Finance Minister Nirmala Sitharaman presented the Interim Budget in the Lok Sabha, highlighting the government's focus on women, youth, the poor, and farmers. The budget emphasised structural reforms, with achievements such as pulling 25 crore people out of poverty in the past decade and providing free food to 80 crore people. Significant allocations were made to various schemes, including the PM Jan Dhan Yojana, the Skill India Mission, and the PM Vishwakarma Yojana for artisans.

Why It Matters

The budget outlined key features, including fiscal consolidation, infrastructure development, and support for various sectors such as railways, electricity, and tourism. While maintaining tax rates, Sitharaman announced a corpus of ₹1 lakh crore for long-term financing in the solar sector.

The focus on technology, Ayushman Bharat, and housing schemes demonstrated the government's commitment to inclusive growth. With the fiscal deficit target for FY25 at 5.1% of GDP, the budget set a roadmap for economic stability, innovation, and sustainable development.

Zoom Out

Beyond the fiscal fireworks, the budget is a canvas painting India's positive economic transformation. Reflecting achievements over the last decade and addressing challenges faced in 2014. The budget aligns with the government's vision for the next five years, emphasising development, democracy, demography, and diversity.

With a commitment to 'net zero' by 2070, the budget lays down measures for green growth, infrastructure, and technology advancements. The fiscal consolidation, investment promotion, and policy priorities set the stage for sustained economic growth, positioning India as a global player in innovation and development.

BIG MONEY MOVES

India's digital payments revolution clocks record growth in January 2024

In January 2024, UPI transactions in India surged over 42% YoY, reaching INR 18.41 Lakh Cr, with transaction volume rising by 52% to 1,220 Cr, as per NPCI. The move aligns with NPCI's target of 10,000 Cr monthly transactions. Innovations like credit line access, offline NFC-based payments, and conversational payment solutions were introduced. NPCI is also considering integrating Bhashini, an AI-powered translation platform, to enable conversational payments in Indian languages. UPI is expanding globally, including partnerships with Google Pay and Flipkart introducing UPI offerings to users.

Wiz Freight raises ₹125 Crore in series B round, aims for global expansion

Wiz Freight, a Chennai-based startup, secured ₹125 crore in a Series B funding round led by SBI Investment and Nippon Express Holdings. The funding, at a post-money valuation of ₹1,400 crore, will aid Wiz Freight's global expansion plans across Southeast Asia, the Middle East, and the US. The startup, profitable at an Indian entity level, anticipates group-level profitability this year. Founded in 2020, Wiz Freight digitizes the export-import journey for businesses. The funding is part of a larger round targeting ₹250 crore, with plans to conclude the remaining portion later this year.

BUSINESS

Paytm Grapples with RBI Restrictions

What Happened

Paytm faces a regulatory setback as the Reserve Bank of India (RBI) imposes significant business restrictions on Paytm Payments Bank. The central bank, citing persistent non-compliance concerns, restricts further deposits, credit transactions, and top-ups in customer accounts. The aftermath? Paytm's stock takes a 20% dive.

Why It Matters

The RBI's stringent measures evoke a strong reaction within the fintech industry, with founders expressing solidarity with Paytm and criticizing the regulator's approach. 

• Brokerages respond by downgrading Paytm's stock, emphasising reputational risks and potential long-term impacts on revenue and profitability.

• The implications of the RBI ban are seen as serious, with potential long-term effects on Paytm's ability to retain customers and offer payment and loan products. 

• The regulatory move has prompted a reevaluation of Paytm's relationships with lending partners, adding an element of uncertainty to its future operations.

As Paytm reassures users that their deposits in savings accounts, wallets, FASTags, and NCMC accounts remain unaffected, the financial industry closely monitors the unfolding scenario.

Zoom Out

Paytm's encounter with regulatory challenges becomes a pivotal moment in shaping the fintech regulatory landscape in India. The incident prompts reflections on how regulatory frameworks are navigated and adhered to by major players.

Beyond Paytm's immediate concerns, the episode holds significance for establishing clearer norms and expectations in the evolving relationship between regulators and fintech entities, impacting the entire industry's future course.

BIG PICTURE

🛒 Walmart plans 150+ new stores in $9 Billion investment for modernization

Walmart unveils plans to open more than 150 stores over the next five years, investing over $9 billion in a comprehensive strategy to modernize operations, enhance technological integration, and widen product selections. The retail giant aims to revamp 650 stores across 47 states and Puerto Rico, anticipating significant job creation. CEO John Furner highlighted the first two stores set to open in Spring 2024 in Santa Rosa Beach, Florida, and Atlanta, Georgia, with one location transforming into a Walmart Supercenter.

🔧 India's engineering exports to Russia soar amid trade in rupees, projected to hit $1.5 billion

India's engineering exports to Russia have surged, doubling to over $1 billion in the first nine months of FY24. Trade in local currencies has gained traction amid sanctions on Moscow, with Russia making deals with countries like India. The Engineering Export Promotion Council anticipates payments in rupees from Russia to exceed $1 billion by fiscal year-end. Despite challenges like the Red Sea shipping crisis, India's engineering exports to Russia, including auto parts and machinery, are projected to reach $1.5 billion by March 31, reflecting an 88% YoY growth in December and a 130% jump in April-December.

BUSINESS

ITDC Stocks Soar 20% as Government Puts Tourism in the Spotlight

What Happened 

Nirmala Sitharaman's budget had ITDC stocks saying, 'Pack your bags, we're going places. Shares of India Tourism Development Corporation (ITDC) witnessed a 20% surge. The rise followed the government's emphasis on tourism development in the Interim Budget for FY25. 

In her budget speech, Sitharaman highlighted plans to encourage states to develop iconic tourist centres, offering long-term interest-free loans for the purpose. Even tourists don't get such generous deals on souvenirs. 

Why It Matters 

The Finance Minister's announcement underscores the government's commitment to promoting tourism as a key driver of economic growth. The budget aims to stimulate local entrepreneurship and create business opportunities by providing financial support to states for tourism development.

ITDC, as a major player in the tourism sector, stands to benefit from increased demand for its services, including hotels, restaurants, and transport facilities. This marked a 67% increase in ITDC's stock price over the past month, reflecting positive investor sentiment. The budget's focus on infrastructure development and the creation of job opportunities aligns with broader economic goals, particularly in the tourism, infrastructure, and technology sectors.

Zoom Out

The Interim Budget's initiatives extend beyond the tourism sector, encompassing an 11% increase in infrastructure capital expenditure to ₹11.11 trillion in FY25. The emphasis on logistics, infrastructure, and technology, coupled with the creation of a ₹1 lakh crore corpus for research and innovation, sets the stage for economic growth, job creation, and technological advancement.

The budget's strategic investments, even in its interim nature, signal a commitment to fostering growth in key sectors, providing a conducive environment for both domestic and international investors. 

MIRCH MASALA

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