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The week in charts: New pension scheme, GDP forecast, RIL-Disney merger
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 government has approved a new pension scheme, which promises government employees 50% of their last salary as a retiral payout, and other benefits. Meanwhile, India's economic growth may have slowed in April-June, according to a Mint poll.
Pension overhaul
The Union cabinet has approved a Unified Pension Scheme (UPS), effective 1 April 2025, combining features of the Old Pension Scheme (OPS) and the National Pension Scheme (NPS). The UPS guarantees an assured monthly pension of 50% of the last drawn salary before superannuation. Under this scheme, employees will contribute 10% of their salary, while the government will contribute 18.5%, including dearness allowance to account for inflation. Unlike the NPS, which lacked a guaranteed pension and did not account for inflation, the UPS addresses these shortcomings while being more cost-effective than the OPS.
Dealers v/s makers
A rift between car dealers and manufacturers is deepening over excessive inventory levels. The Federation of Automobile Dealers Associations (FADA) has reportedly written twice in two months to the Society of Indian Automobile Manufacturers (SIAM), accusing them of dumping stock on dealers. This tension arises amid lacklustre growth in motor car registrations, which saw a modest 1.8% increase year-on-year between May and July, according to an analysis by howindialives.com. This decline has impacted most carmakers, including the top four.
Slowing growth
6.85%: That's the estimated growth rate for India's economy in the April-June quarter of the current fiscal year, as per a median estimate of 25 economists polled by Mint. If these projections hold, it would mark the lowest GDP growth in five quarters. The slowdown is attributed to a lack of economic momentum during the general elections, muted government capital expenditure, and an uneven monsoon. Sector-wise, agricultural activity, which was weak in FY24, is expected to show improvement since the last quarter, although the uneven monsoon may still have an impact.
Debt restructuring
After the damning report by US short-seller Hindenburg last year, the Adani Group has been actively restructuring its debt and diversifying its funding sources. The conglomerate has successfully managed to reduce its debt growth to 6% in 2023-24 from much higher levels in previous two years, a Mint analysis showed. The group has also diversified its debt sources by reducing its exposure to domestic public and private banks in debt to just 15%, from 86% in 2015-16, while bond exposure jumped to 31% from 14%.
Policy adjustments
The likelihood of a US recession may prompt the Federal Reserve to cut interest rates in its September meeting scheduled on 17-18 September, as the current high rates are seen as detrimental to growth. At the Jackson Hole conference, Fed Chair Jerome Powell suggested that adjustments to policy might be imminent. Alongside the US, central banks in the EU, Canada, Indonesia, and Japan will announce their decisions soon. While the Bank of Japan may pause hikes amid political uncertainty, ECB is expected to continue with rate cuts.
Mega merger
₹70,350 crore: This is the total value of the merger deal between Disney Star and Reliance Industries-controlled Viacom18 which received approval from the Competition Commission of India (CCI) earlier this week. The deal is the largest one in India's media and entertainment sector. Reliance and its associates will own nearly 56% of the merged entity, while Disney will hold 36.84%, and the remaining 7.5% will go to Bodhi Tree. Now, Reliance is looking to secure final approvals from the government and the National Company Law Tribunal.
QIPs reign
Fundraising via qualified institutional placements (QIPs) reached a four-year high in 2024 so far, a threefold rise compared to last year, a Mint analysis showed. From January to August, 55 companies collectively raised ₹58,425 crore, with July alone accounting for ₹21,813 crore. Vedanta and Adani Energy Solutions have led the charge, raising ₹8,500 crore and ₹8,373 crore, respectively. Despite market fluctuations, the QIP pipeline looks healthy, with 73 companies planning to raise ₹1 trillion to fuel their growth and expansion.
Chart of the week: Capex funding
BJP-ruled Uttar Pradesh and Madhya Pradesh were the primary beneficiaries of the Centre’s Special Assistance for Capital Expenditure, receiving a significant portion of the ₹15,120 crore released to 11 states in April-July. A total of ₹1.5 trillion has been earmarked for the scheme for the entire fiscal year.
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