The latest data also highlighted a recovery in growth of new export sales across India’s service economy. File (Representational image)
| Photo Credit: Reuters

India’s services Purchasing Managers’ Index (PMI)recovered from its ten-month low in September to reach 58.5 in October supported by strong expansions in output and new business, which in turn boosted job creation, a monthly survey said on Wednesday.

The seasonally adjusted HSBC India Services Business Activity Index increased from 57.7 in September to 58.5 in October, as robust sales pipelines and strong demand conditions supported the upturn in business activity.

In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

“India’s services PMI recovered from its ten-month low in September to reach 58.5 last month. During October, the Indian services sector experienced strong expansions in output and consumer demand, as well as job creation, which achieved a 26-month high,” Pranjul Bhandari, chief India economist at HSBC, said.

The latest data also highlighted a recovery in growth of new export sales across India’s service economy, which survey respondents attributed to strengthening demand from clients in Africa, Asia, the Americas, the Middle East and the U.K.

In response to positive sales developments, and optimism regarding near-term prospects, firms recruited extra workers to the greatest degree in just over two years.

Moreover, capacity pressures also boosted job creation. Around 13% of panellists reported job creation, compared to 9% in September.

Input price inflation accelerated to a three-month high in October, with services companies mainly reporting higher food and wage costs. Companies shared part of their additional cost burdens with clients by continuing to lift selling prices.

Exactly one-quarter of the survey panel forecast higher output volumes over the coming year, linked to healthy demand trends, marketing efforts and new client enquiries. At the same time, 74% of firms foresee no change in business activity from present levels.

Meanwhile, the HSBC India Composite Output Index rose from September’s 10-month low of 58.3 to 59.1 as new business inflows also expanded at quicker rates in both the manufacturing and service sectors, boosting growth of sales and employment at the composite level.

Goods producers recorded stronger rates of increase in new business and output than service providers in October, but the latter led when it came to job creation.

On the price front, rates of input cost inflation were equal in the manufacturing industry and the service economy.

Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative size of the manufacturing and service sectors according to official GDP data.

Tough ties: U.S. had imposed tariffs on more than $360 billion of Chinese products during Trump’s previous term in office. File picture of U.S. President Donald Trump attending a bilateral meeting with China’s President Xi Jinping during the G20 leaders summit in Osaka, Japan, in 2019.
| Photo Credit: Reuters

The first time China faced Donald Trump in the White House, there was a trade war, a breach of protocol involving Taiwan’s former leader, and a President-to-President ‘bromance’ that turned sour.

As President-elect Mr. Trump prepares to start his second term in office, China is bracing for unpredictability in its ties with the United States and renewed tensions over trade, technology, and Taiwan.

Perhaps the biggest consequence for China — if Mr. Trump stays true to his campaign promises — is his threat to slap blanket 60% tariffs on all Chinese exports to the U.S.

Tariffs like that would be a blow to China’s already unstable economy, which is suffering from high youth unemployment, a lengthy property slump, and government debt. A 60% duty on Chinese imports could shave off 2.5 percentage points, or about half, of China’s projected economic growth, according to an analysis published earlier this year by UBS.

During Mr. Trump’s previous term in office, the U.S. imposed tariffs on more than $360 billion of Chinese products. That brought Beijing to the negotiating table, and in 2020 the two sides signed a trade deal in which China committed to improve intellectual property rights and buy an extra $200 billion of American goods. A research group a couple of years later showed China had bought essentially none of the goods it had promised. Outgoing President Joe Biden retained most of those tariffs and added fresh duties this year on imports including steel, solar cells, and electric vehicles.

Factoring into the trade talks could be Mr. Trump’s appeals to Chinese President Xi Jinping to help negotiate a resolution to the Ukraine war, which Mr. Trump has boasted he will be able to do quickly, without saying how.

Mr. Trump previously sought Mr. Xi’s help in dealing with North Korea’s leader Kim Jong-un. That dynamic could repeat itself, with Mr. Trump weighing trade grievances against seeking China’s support in global crises, according to Wang Huiyao, founder of the Beijing-based think tank Center for China and Globalization.

“China is the largest trading partner of both Russia and Ukraine,” Mr. Wang wrote in a recent commentary. “These close economic ties give China a unique opportunity to play a greater role in peace-making efforts.”

Case of Taiwan

There is one scenario in which Mr. Trump has threatened to impose even higher tariffs — 150% to 200% — on Chinese goods: if China invades Taiwan, a self-ruled democracy that Beijing claims as its own.

The U.S. does not recognise Taiwan as a country, but is its strongest backer and biggest arms provider.

Mr. Trump angered Beijing in December 2016 by taking a congratulatory call from Taiwan’s then-President Tsai Ing-wen in a breach of diplomatic protocol. No U.S. President had spoken directly to a Taiwanese leader since Washington and Beijing established ties in 1979.

As for China’s repeated threats to annex Taiwan, Mr. Trump told The Wall Street Journal last month that he would not have to use military force to prevent a blockade of Taiwan because Mr. Xi “respects me and he knows I’m (expletive) crazy.”

On the campaign trail, Mr. Trump sometimes talked up his personal connection with Mr. Xi, which started exuberantly during his first term but soured over disputes about trade and the origins of the COVID-19 pandemic.

But Mr. Trump has also said that Taiwan should pay the U.S. for defending it against China, likening the relationship to insurance. Taiwan spends about 2.5% of its GDP on defence, and purchased hundreds of millions of dollars’ worth of U.S. weapons this year.

In a congratulatory message to Mr. Trump after his victory, Mr. Xi called for the U.S. and China to manage their differences and get along in a new era, according to Chinese state media. History has shown that both sides gain from cooperation and lose from confrontation, Mr. Xi said.

The Department of Commerce building in Washington D.C. File
| Photo Credit: Reuters

The story so far: The government is still gauging the impact of a decision by the U.S. Treasury department to impose sanctions on 19 Indian entities among nearly 400 companies, mainly for supplying “dual-use” technologies to Russia. In addition, the Bureau of Industry and Security run by the U.S. Commerce Department added 40 companies including five from India for re-exporting goods and parts to Russia that were imported from the U.S.

Why are recent U.S. sanctions significant?

Since April 2021, when U.S. President Joe Biden passed an executive order (E.O. 14024) on “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation”, the U.S. has sanctioned hundreds of companies from more than 20 countries worldwide for supplies and sales to Russia, including some from India. But on October 30, the U.S. Department of Treasury invoked the E.O. to sanction 19 Indian entities, including companies and individuals for providing “dual-use” technologies to Russia and other deals with Russian companies calling them “Third-Country Sanctions Evaders”. The companies, mostly based in Delhi, Uttar Pradesh, Bengaluru and Hyderabad, are reputable, well-established companies dealing in technological manufacturing, with some even holding government contracts. These companies will now be on a U.S. “blacklist”, have assets or funds in the U.S. frozen, and face travel bans.

How has the Indian government responded?

The Ministry of External Affairs (MEA) has been fairly muted on the action by the U.S., which is likely to cost Indian companies millions of dollars in contracts and legal appeals. When asked during a briefing, Ministry of External Affairs spokesperson Randhir Jaiswal said that the MEA had “seen reports of U.S. sanctions”, but declined to comment on whether this was discussed between U.S. National Security Adviser Jake Sullivan and NSA Ajit Doval, who spoke a day later. The MEA said the companies were “not in violation of Indian laws”, and pointed out that the government was trying to “clarify issues”. “India has a robust legal and regulatory framework on strategic trade and non-proliferation controls,” Mr. Jaiswal said, referring to India’s membership of key non-proliferation export control regimes such as the Wassenaar Arrangement, Australia Group and the Missile Technology Control Regime.

What else can India do?

India does not recognise unilateral sanctions by the U.S. or any other country, following only those sanctions imposed by the UN. However, as India-U.S. high-tech trade increases, the U.S.’s strictures will have an increasing impact on both Indian companies and the government’s moves. According to the MEA, Indian agencies are already “sensitising” Indian companies on the new measures being implemented by the U.S. that could impact them. The government could also increase measures to sanction-proof those Indian companies doing business with Russia, by building more structural banking mechanisms, and facilitating payments in national currencies, as have been explored for refineries procuring Russian oil, diamond processing units and other sectors where the U.S. and EU sanctions have been the most stringent. Eventually, rejecting any U.S. decision will come at the cost of bilateral ties, and the government will have to evaluate the cost-benefit calculus on whether to accept U.S.’s moves, or to react more strongly to sanctions.

Will the Trump victory make a difference?

While a new U.S. administration after Donald Trump’s electoral win is expected to pursue a softer line on Russia, it is unlikely that these sanctions will be removed anytime soon, say analysts. During his campaign, Mr. Trump has consistently side-stepped any criticism of Russia’s war in Ukraine, saying that once he comes to power, he would “end the war within 24 hours”. This has been seen as an indication that the Trump administration would not impose further sanctions on Russia. However, the U.S. Congress has frequently taken very tough positions on Russia, and in 2017, virtually forced Mr. Trump’s hand during his first tenure into signing the CAATSA law (Countering America’s Adversaries Through Sanctions Act) that threatened sanctions against countries for procuring major Russian military hardware, including the S-400 missile defence systems that India has signed a deal for. While Mr. Trump has led the Republican party to a majority in the Senate, it is unlikely that he will reverse any of the sanctions already imposed on Russia.

Women walk out from a fashion boutique near a display promoting the upcoming China popular e-commerce sales, the “Singles’ Day” global online shopping festival, at a shopping mall in Beijing, Monday, Nov. 4, 2024.
| Photo Credit: AP

Merchants and consumers alike found the Singles’ Day shopping festival Monday less shiny than in years past as e-commerce firms look abroad for growth.

The annual event named by the numeric form of its Nov. 11 date was started by e-commerce platform Alibaba, which offered attractive discounts to entice shoppers to spend big. The extravaganza has since expanded to other platforms like JD.com and Pinduoduo in China as well as abroad.

While Singles’ Day was previously a one-day event, shopping platforms in China now kickstart the festival weeks ahead to drum up sales volume. The festival has also traditionally been regarded as a barometer of consumer sentiment.

But amid China’s lagging domestic economy, dragged down by a real estate crisis and deflationary pressures, consumers no longer go all out on purchases during the shopping extravaganza.

“I only spent a few hundred yuan on daily necessities,” said Wang Haihua, who owns a fitness center in Beijing.

‘Prices not cheaper, all tricks’

Wang said that the prices offered on e-commerce platforms during Singles’ Day are not necessarily cheaper than usual.

“They’re all tricks and we’ve seen through it over the years,” she said.

Zhang Jiewei, a 34-year-old who runs a barber shop in Xi’an city, echoed Wang’s sentiments, saying that he no longer trust Singles’ Day promotions as some merchant tend to raise the usual price of a product before offering a discount, giving consumers the illusion they are getting a deal.

“I used to buy a lot two or three years ago and I even purchased a mobile phone (during Singles’ Day),” he said.

“I stopped doing that following the pandemic because of less income. I am not going to buy anything this year,” Zhang added.

Some experts say that Beijing’s recent stimulus measures have had little impact to boost consumer confidence.

“People are not interested in spending and are cutting back on big-ticket items,” said Shaun Rein, founder and managing director of China Market Research Group in Shanghai. “Since October 2022, the weak economy means that everything has been on discount year-round, 11.11 is not going to bring in more discounts that the month before.” Rein said he expects low growth for the Singles’ Day shopping festival as consumers tighten their spending in anticipation of difficult economic times ahead.

Categories such as sportswear and fitness, however, have been doing well as customers “trade down a Gucci bag for Lululemon sportswear,” he said.

Platforms like JD.com and Alibaba, which operates e-commerce platforms Taobao and Tmall, previously used to publish the value of transactions made during the festival, but have since stopped revealing the total figure. While yearly growth used to be in the double digits, estimates of recent figures have dwindled to low single-digit growth.

Syntun, a data provider, estimated that last year’s gross merchandising volume sales across major e-commerce platforms grew just 2% to 1.14 trillion yuan ($156.40 billion), a far cry from double-digit growth before COVID-19.

High advertising fees: merchants

Merchants who typically take part in the Singles’ Day shopping festivals say the costs of participation no longer pay off, amid high advertising fees and unsatisfactory sales.

Zhao Gao, who owns a garment factory in eastern Zhejiang province, said that after paying advertising costs to e-commerce platforms he would only break even after sales.

“The platforms have so many rules for promotions and customers have become more skeptical,” he said. “As a merchant, I no longer participate in the Singles’ Day promotions.”

Another merchant, Du Baonian who runs a food company processing mutton in Inner Mongolia, said that overall sales in the past year have fallen 15% as consumers downgraded and reduced consumption.

Du said that while he still takes part in the Singles’ Day promotions, the higher expenses do not typically generate returns because of sluggish sales.

“We are seeing shrinking revenue, but advertisement on the platform can help us to maintain our leading sales position,” he said, adding that he was considering advertising on more e-commerce platforms to target more consumers.

Meanwhile, e-commerce platforms grappling with a slowing domestic market have also turned to overseas markets to seek new growth, offering promotions like global free shipping and allowing merchants to sell globally with ease.

Alibaba, for example, said in a blog post on its Alizila site that some 70,000 merchants saw sales double with global free shipping. In markets like Singapore and Hong Kong, new customers also doubled, Alibaba said.

The rupee may depreciate 8-10% against the U.S.. dollar during the Trump 2.0 regime, said a SBI research report, even as the local currency hit its all-time low on Monday (November 11, 2024).

The report, titled U.S. Presidential Election 2024: How Trump 2.0 Impacts India’s and Global Economy, emphasised that the rupee can have a brief spell of depreciation against the U.S. dollar, followed by appreciation.

Also read | What’s at stake for global markets in a Trump presidency

Donald J Trump’s historical comeback as the 47th President of the United States adds a morphine shot to the markets and select asset classes even as the focus is now shifting to wider economic ramifications and supply chain realignments, the report said.

“Trump’s victory introduces a mix of challenges and opportunities for India. While the potential for increased tariffs, H-1B restrictions, and a strong dollar could bring short-term volatility…But it also presents India with long-term incentives to expand its manufacturing, diversify export markets, and enhance economic self-reliance,” it added.

It further said the 10-year yield shows no obvious trends, and the effect will be context-sensitive, going ahead.

“USD/INR has shown range bound movement, and the rupee can have a brief spell of depreciation followed by appreciation…Volatility in Indian equity markets showing signs of reduction,” the SBI’s study said.

Declining for the fourth straight session, the rupee dropped 2 paise to hit a new lifetime low of 84.39 (provisional) against the US dollar on Monday, weighed down by persistent foreign fund outflows and a muted trend in domestic equities.

Forex traders said the rupee is likely to remain under pressure unless there is a softening in the dollar index or a slowdown in foreign fund outflows.

The report emphasised that “the fear” that the rupee will depreciate sharply is unfounded.

During the Trump 1.0, it said, the rupee depreciated by 11 per cent, less than it depreciated during the Joe Biden term.

While a stronger dollar might result in short-term capital outflows for short-term as investors flock to dollar-based assets, on a positive note, a lower rupee might provide an export advantage, potentially boosting revenues in sectors like textiles, manufacturing, and agriculture, the research report said.

“Still, we expect a depreciation of 8-10 per cent during Trump 2.0,” the SBI research report said.

It also noted that the depreciation of the rupee may increase the import cost of oil and other commodities.

“As per our estimate, a 5 per cent decline in rupee will increase inflation by 25-30 bps. So, the impact will be very less on inflation,” it said.

According to the report, India may see shifts in foreign direct investments (FDIs) during Trump 2.0. The Trump 1.0 administration saw significant regulatory changes aimed at attracting investments back to the US, and this was reflected in data also.

“However, India is no longer dependent on the traditional sources of FDI inflows… unlike the recent past, FDI is now coming in many new sectors like non-conventional energy, sea transport, medical and surgical appliances, etc,” it said.

This trend could continue, thus offsetting the possibility of a decline in FDI flows in traditional sectors in Trump 2.0, if any.

The SBI report further said if the Trump administration opts to limit work visas, particularly the H-1B visa programme, Indian IT and ITeS sectors may see increased costs.

H-1B visa restrictions can lead to decreased labour mobility, affecting the hiring capabilities of Indian IT companies operating in the US.

This, the report said, may result in Indian firms to allocate resources towards hiring locally in the US at a higher cost, which could strain margins for companies.

During Trump 1.0 the non-immigrant visas issued by the U.S. largely stagnated around 10 lakh per year. However, in 2023, about 14 lakh Indians received non-immigrant visas, the report said.

Net direct tax collection grew 15.41% to ₹12.11 lakh crore between April 1 and November 10.

This include net corporate tax of ₹5.10 lakh crore and non-corporate taxes (including taxes paid by individuals, HUFs, firms) of ₹6.62 lakh crore. Other taxes (which include Equalisation Levy and gift tax) worth ₹35,923 crore were mopped up.

As per the Central Board of Direct Taxes (CBDT) data, the gross collection of direct tax stood at ₹15.02 lakh crore, up 21.20%, during April-November 10.

Refunds worth ₹2.92 lakh crore was issued during the period, a 53% jump over year-ago period.

After adjusting for refunds, net direct tax collection (which include corporate, non-corporate and other taxes) stood at about ₹12.11 lakh crore, a 15.41% growth over ₹10.49 lakh crore mopped up in the same period last fiscal.

The government has budgeted to collect ₹22.12 lakh crore in the current fiscal from direct taxes (personal income tax, corporate tax and other taxes), up 13% over previous fiscal.

The Chancay port near Peru’s capital Lima which is being built by China’s state-owned Cosco Shipping.
| Photo Credit: Reuters

In South American copper giant Peru, the incoming Donald Trump administration in the U.S. will find itself already on the losing side in a trade battle with China, part of a bigger power realignment around the resource-rich region in Washington’s backyard.

Peru, the world’s second largest copper exporter, is set to host Asia-Pacific Economic Cooperation leaders this week, with China’s President Xi Jinping expected to attend and inaugurate a major new Chinese-built port in the country. Outgoing U.S. President Joe Biden is also on the guest list.

Peru reflects a wider challenge for the White House around South America, where China’s presence has grown rapidly given its huge appetite for the region’s main exports: corn, copper, soy, beef, and battery-metal lithium.

That has made Beijing the go-to trade partner from Brazil to Chile and Argentina, eroding Washington’s regional political clout, a trend that widened under Mr. Trump’s ‘America First’ inward turn during his first administration and again under Mr. Biden.

“The strategic value is that this is the U.S.’s backyard,” said Li Xing, professor at the Guangdong Institute for International Strategies, adding it helped counter U.S. presence around the Indo-Pacific and offset trade war risks.

“China cannot start by building military bases there because it is too sensitive and will make China’s conflict with the United States too pronounced… So it has made inroads with economic ties first.”

Dramatic shift

Peru demonstrates the dramatic shift. China’s trade lead there over the United States widened to $16.3 billion last year, UN Comtrade data show, a stark reversal of just a decade ago when Washington was the dominant player.

That has come hand-in-hand with investment from energy to mining.

China overtook the United States in 2015 on trade with Peru, widening the gap under Mr. Trump’s previous administration from 2017-2021, and again under Mr. Biden.

“China has entered the region aggressively, is learning quickly, and is prepared to remain for the long term,” said Eric Farnsworth, a former State Department official now at the Council of the Americas and Americas Society.

“Unless the United States meaningfully prioritises regional economic policy in a new and more effective way, the region will continue to tilt toward Chinese interests.”

The U.S. embassy in Lima did not respond to a request for comment.

Washington officials have repeatedly warned publicly that Chinese investment in the region comes with strings attached and said the United States is a more reliable partner.

A beacon of the change is a new megaport 80 kilometres north of Lima in Chancay.

It is being built by China’s state-owned Cosco Shipping and promises to shorten sea routes to Asia both for Peruvian and Brazilian goods.

The Chinese-controlled port, set to be inaugurated by Mr. Xi when he is in Peru, has sparked concern from the United States over regional security, but more importantly will turbocharge the region’s trade highway to China.

“We will have direct routes to Asia, particularly to ports in China, which will be cut by 10, 15, 20 days depending on the route,” Peruvian Minister of Transport and Communications, Raul Perez Reyes said.

He added that it would compete with Mexico’s Port of Manzanillo and eventually Long Beach in California. “Our aim is to become the Singapore of Latin America.”

A 10.9% spike in food prices lifted India’s retail inflation to a 14-month high of 6.2% in October, from 5.5% in September, with prices of vegetables and edible oils escalating at a sharp pace not seen in recent years. 
| Photo Credit: Sushil Kumar Verma

A 10.9% spike in food prices lifted India’s retail inflation to a 14-month high of 6.2% in October, from 5.5% in September, with prices of vegetables and edible oils escalating at a sharp pace not seen in recent years.

October’s price rise pace marked a breach of the Reserve Bank of India’s (RBI’s) upper tolerance limit for inflation, with rural India facing a sharper uptick of 6.7%, while urban consumers encountered an inflation of 5.6%, scotching any hopes of an interest rate cut from the RBI in its December monetary policy review.

Rural food prices were 10.7% higher, while food inflation in urban India was even higher at 11.1% this October, with prices rising nationally at the fastest clip since July 2023. Vegetables Inflation bounced up from 36% in September to a 57-month peak of 42.2% in October, while edible oil prices shot up 9.5%, the highest spike in nearly two years, from about 2.5% in the previous month.

Fruit prices also hardened by 8.4%, although pulses inflation eased to 7.4%, after 17 months of double-digit rise in prices. Spices prices dropped 7%. In October, households also faced a sharp 11% rise in costs of personal care and effects, up from 9% in September.

Terming the consumer price inflation pace shocking, Bank of Baroda chief economist said food inflation has spread to oils, and the basket of cereals, pulses, fruits, vegetables and oils are the problem areas.

“Inflation may recede albeit gradually for cereals and pulses but will take longer for vegetables. Core inflation also has upward bias with personal care products showing higher inflation as input costs are transmitted,” he pointed out, stressing that this will ensure that a December rate cut is out of consideration.

The RBI had projected an average inflation of 4.8% for the October to December quarter or the third quarter (Q3) of 2024-25, before declining to 4.2% in the final quarter. However, for that arithmetic to hold after October’s CPI spike, price rise would have to soften to about 4.1% through this month and December.

Core inflation that excludes food and energy prices, also saw a mild rise from September’s estimated nine-month high of 3.8%, but remained under 4% for the 11th successive month, economists reckoned.

“The surge in edible oil inflation in October was driven by a steep 27% rise in global prices due to supply disruptions in Southeast Asia. Though non-food inflation remains benign around 3%, the recurring flare-up in food inflation has kept headline inflation elevated and creates an upside risk to the inflation trajectory – restricting the easing in monetary policy,” said Crisil chief economist Dharmakirti Joshi.

Mr. Joshi expects the RBI’s Monetary Policy Committee to cut rates towards the end of 2024-25, with food inflation likely to recede due to the healthy kharif sowing and fresh stocks of vegetable prices entering the market.

“High food inflation in October, 2024 is mainly due to increase in inflation of vegetables, fruits and oils and fats,” the National Statistical Office said, while noting a “significant decline in inflation” in Pulses, Eggs, Sugar, and Spices.

Compared to September, the CPI rose 1.3%, with a slightly higher uptick of 1.42% in rural India. However, the Consumer Food Price Index (CFPI) was up 2.6%, with rural and urban areas facing the same spike in costs.

India’s city dwellers are cutting spending on everything from cookies to fast food as persistently high inflation squeezes middle class budgets, threatening the country’s brisk economic growth.

Slowing urban spending over the past three to four months has not only hurt the earnings of largest consumer goods firms, it has raised questions about the structural nature of India’s long-term economic success.

Also read | Meal costs are rising faster than earnings: Data

Since the end of the pandemic, India’s economic growth has been driven in large part by urban consumption, however, that now seems to be changing.

“There is a top end – the people with money are spending like that is going out of style,” Nestle India Chairman Suresh Narayanan said.

“There used to be a middle segment, which used to be the segment that most of us fast moving consumer goods (FMCG) firms used to operate in, which is the middle class of the country, that seems to be shrinking.”

Nestle India, which makes Kit Kats and other well-known goods, reported its first quarterly revenue drop since the COVID-hit June quarter in 2020.

While there is no officially defined income bracket for Indian middle class households, they are broadly estimated to account for a third of India’s 1.4 billion people. They are considered a key demographic both economically and politically, with middle class frustration seen as a significant factor behind Prime Minister Narendra Modi’s weaker election performance this year.

Asia’s third-largest economy is expected to expand 7.2% in the financial year ending March 2025, the fastest among its major peers.

Belying those rosy projections, however, are signs of a sharp slowdown in the household sector.

Indian urban consumption hit a two-year low this month, according to an index published by Citibank that captures indicators such as airline bookings, fuel sales and wages.

“While some of the fall could be temporary, the key macro drivers remain unfavourable,” Citi’s chief India economist Samiran Chakraborty said.

Growth in inflation-adjusted wage costs for listed Indian firms – a proxy for earnings of urban Indians – has remained below 2% for all the three quarters of 2024, well below the 10-year average of 4.4%, data from Citi showed. Chakraborty cites this as a key factor impacting urban consumption, along with declining savings and tighter rules for personal loans. Headline inflation has averaged 5% over the past 12 months, but food inflation has held above 8% as weather shocks elevated prices of vegetables, cereals and other essential foods. In October, retail inflation hit a 14-month high of 6.2% while food prices jumped to 10.9%.

Anecdotal data suggests retail sales rose close to 15% year-on-year during the 2024 festive season, which runs from August to November, Nomura said in a note last week, about half last year’s pace.

“During this festival season, we have not spent at all,” said Rajwanti Dahiya, 60, who survives on her husband’s monthly pension of 30,000 Indian rupees ($356.76).

“Savings are low, barely there.”

A ‘SHRINKING’ MIDDLE

India’s central bank expects 7.2% GDP growth for the fiscal year ending March 2025 on the back of improved rural demand and a strong services sector.

Higher government investment could also support demand, said Rahul Bajoria, head of India and ASEAN economic research at Bank of America.

“If government spending kicks in, that probably does have some multiplier effects on private consumption spending as well,” said Bajoria, who expects GDP growth at 6.8% in the current financial year.

Some are less optimistic with Citi and IDFC First Bank economists expecting GDP growth in the July-September quarter to miss the central bank’s projected 7%, weighed by slower urban consumption.

That pessimism has hit consumer stocks with the Nifty FMCG index declining 13% since Oct. 1, compared with a 7.4% drop in the benchmark Nifty 50.

Of the FMCG index’s 15 constituent firms, only one reported a pickup in sales volume growth in the September quarter.

Consumers in large cities are swapping branded items from hair oil to tea for cheaper unbranded alternatives, reflected in the first sales volume decline in 11 quarters for the foods and refreshment group at Hindustan Unilever.

“We see the growth in big city standing down, although in smaller cities and in rural the growth continues to be good,” Hindustan Unilever chief executive Rohit Jawa said last month, after reporting lower than expected earnings.

Consumers are also cutting back on dining out.

Fast-food chains such as McDonald’s, Burger King, Pizza Hut and KFC posted same-store sales declines, earnings showed.

While people are still coming, they are choosing cheaper meals, Rajeev Varman, CEO at Burger King operator Restaurant Brands Asia said after posting a 3% drop in quarterly same-store sales.

“We prefer budget-friendly stores that give good deals and discounts to manage our monthly expenditure,” said 37-year old Avinash Crasto, a Mumbai marketing and sales executive who has a family of four and identifies as middle class.

नई द‍िल्‍ली. अगर आप ब‍िहार में रहते हैं और आप BSNL नेटवर्क यूजर हैं तो आपके ल‍िए खुशखबरी है. बीएसएनएल ने ब‍िहार में 2000 नए टावर लगाए हैं, ज‍िसके बाद अब बीएसएनएल यूजर्स 4G सेवा का भरपूर लाभ उठा पाएंगे. बता दें क‍ि ब‍िहार के करीब 200 गांवों में टावर न होने के कारण गांव वाले हाई स्‍पीड इंटरनेट का लाभ नहीं उठा पा रहे थे.

इन टावरों के लगने के बाद बीएसएनएल यूजर्स 4जी सेवा का उपयोग कर पाएंगे. सरकारी दूरसंचार कंपनी बीएसएनएल के इस कदम का उद्देश्य हाई-स्पीड कनेक्टिविटी देने के साथ निजी दूरसंचार की बढ़ती कीमतों के बीच अधिक उपयोगकर्ताओं को आकर्षित करना है.

यूजर्स को पसंद आ रहे BSNL के क‍िफायती प्‍लान
प्राइवेट टेलीकॉम सर्व‍िस देने वाली नीजी कंपन‍ियों जैसे क‍ि Jio, Airtel और Vi ने टेर‍िफ की कीमतों में बढोतरी की है. ऐसे में BSNL ने र‍िचार्ज प्‍लान में कोई बदलाव नहीं क‍िए हैं और अपने दाम पहले जैसे ही रखे हैं. क‍िफायती कीमत पर उपलब्‍ध होने के कारण प‍िछले कुछ समय में BSNL के यूजर्स की संख्‍या में इजाफा देखा जा रहा है. प्राइवेट कंपन‍ियों के लाखों यूजर्स अब बीएसएनएल की तरफ रुख कर रहे हैं. इसके साथ ही कंपनी ने अब 4G नेटवर्क को भी बढाना शुरू कर द‍िया है.

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200 गांवों में पहुंचा 4G
बिहार के रोहतास, गया, कैमूर, औरंगाबाद, मुंगेर, नवादा और जमुई जैसे ज‍िलों के करीब 200 गांवों में कनेक्टिविटी नहीं थी, लेकिन अब वे 4जी कनेक्टिविटी का आनंद ले सकते हैं. इन दूरदराज के क्षेत्रों को कवर करने के लिए कुल 74 मोबाइल टावर लगाए गए हैं.

हालांक‍ि BSNL केवल बिहार में ही नहीं, बल्‍क‍ि देश के और भी ह‍िस्‍सों तक अपनी पहुंच बढा रही है. कंपनी अपने नेटवर्क कनेक्टिविटी से जुडी समस्याओं का समाधान कर रही है और हाल ही में उसने पूरे भारत में 10,000 4जी साइटें स्थापित की हैं.

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