Economy
The week in charts: Rupee rattle, middle-class riddle, PM internship offers
Summary
Every week, Plain Facts publishes a compilation of data-based insights, with easy-to-read charts to help you delve deeper into the stories reported by Mint in the week gone by.
The Indian rupee has crossed the 87-per-dollar mark amid worries of more trade tariffs by US president Donald Trump. Meanwhile, the Indian government is planning formal talks with the US to address disputes around trade. And over 82,000 offers have been made under the Prime Minister Internship Scheme (PMIS) until January end.
Rupee rattle
The Indian rupee breached the 87 level against the US dollar after US President Donald Trump announced imposing 25% tariffs on Canada, Mexico and China, sparking fears of a trade war. The rupee weakened to 87.07 per dollar on Monday and continued its downward slide even as Canada and Mexico received a 30-day reprieve on tariff imposition. The currency has depreciated nearly 2% since the beginning of this year. On Friday, the central bank cut the repo rate by 25 basis points to 6.25%—the first in nearly five years.
Olive branch
Amid Trump's threats of tariffs on several countries, including India, the government is planning formal talks with the US to address disputes around trade, Mint reported. Concerns remain about potential future tariffs, prompting India to engage with the US Trade Representative (USTR) to push for an exemption. India could present a list of goods to the US, highlighting their impact on the latter’s exporters. It will also emphasize India’s crucial role as a trade partner, particularly in sectors like pharmaceuticals and IT, which are vital to US supply chains.
Insuring insurers
$12 billion: That is the amount of capital flow India’s insurance sector could see in the next five years, boosted by the decision to allow 100% foreign direct investment in the sector announced in the Union Budget, Mint reported. While increased competition might lead to specialised products and normalize premiums, foreign investment inflows may take time. Existing joint ventures (JVs) with Indian companies may need restructuring before foreign entities can operate independently. Previously, the FDI limit of 74% hindered global insurers due to the scarcity of suitable local JV partners.
Middle riddle
India’s “middle class" has become a topic of discussion since the Budget. However, there is very little existing data showing the middle class. As per household consumption expenditure survey, the middle 60% would be anyone whose monthly per capital expenditure is ₹2,665-9,080, while income tax returns data show the middle would be anyone filing returns between ₹3.5-9.5 lakh tax slab, a Mint analysis showed. The World Inequality Database shows the middle 60% earn a monthly income of ₹11,856 and ₹38,105.
Mixed trends
India’s manufacturing and services activity showed a divergent trend in January. The manufacturing Purchasing Managers' Index (PMI) rose to a six-month high of 57.7 from 56.4 in December, while the services PMI slowed to a 26-month low of 56.7 from 59.3 in the previous month. The manufacturing sector gained on the back of new export orders, while the services sector saw a loss in growth momentum due to slackening customer demand and a softer increase in sales and output.
Internship push
82,077:That is the number of internship offers given to candidates under the first round of the PM Internship Scheme (between 3 October 2024 and 29 January 2025), the government informed Rajya Sabha on Tuesday. The scheme, announced in the Budget last year, aims to provide internship opportunities to 10 million youth in the top 500 companies in five years. Companies in Tamil Nadu, Maharashtra and Gujarat offered maximum internships, the data showed. The scheme is currently in pilot stage and will likely change before it is officially launched.
Eye on AI
India is developing its own artificial intelligence (AI) chip ground-up to substitute Nvidia's processors, Mint reported. The ministry of electronics and information technology (Meity), in partnership with Centre for Development of Advanced Computing(C-DAC) and the National e-Governance Division, is leading the project, with the government targeting 2027 for domestic fabrication. The project aims to address the concerns about the lack of access to crucial AI technology since the US largely controls the semiconductor market. The ministry is currently working on the framework for the chip and an official announcement is expected later this year.
Chart of the week: AAP’s exit?
The Bharatiya Janata Party (BJP) could return to power in Delhi after 27 years, ending the Aam Aadmi Party’s 10 year rule, exit polls showed. The BJP could bag between 35 and 45 seats, while prediction for AAP is 25-37. The majority mark in Delhi Assembly election is 36.
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