☀️ Summer time madness

Good morning. Team India for the win 🏏 🏅 

- Ruchirr Sharma & Shatakshi Sharmaa  

TABLE OF CONTENTS

• ☀️ Summer time madness

• 🏦 Is there a liquidity crunch?

• 🗞️ Bite-sized summaries

  • 🚢 Export challenges

  • 💰️ Not that crazy of a burn

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Indian stock market closed mixed. This marks the 10th consecutive day of losses for the Nifty 50, driven by adverse global cues and sector-specific corrections. Media and PSU Banks were top performers.

🌍️ International

• The US stock market closed lower. This downturn follows recent concerns about economic growth slowdown, although corporate earnings have provided some relief.

ENERGY

☀️ Summer time madness

As India gears up for one of the hottest summers it’s ever seen, the country is preparing to handle an unprecedented peak power demand of 270 gigawatts (GW).

The government, through the Central Electricity Authority (CEA), has laid out a comprehensive strategy to ensure uninterrupted power supply, particularly during critical months like April, May, June, and September-October.

Key Measures to Meet Demand

• Full Utilization of Coal Plants: The government has mandated that 17 GW of imported coal-based power plants run at full capacity until April.

• Increased Gas-Based Power Generation: Between 10 GW to 12 GW will be sourced from gas-based plants, with an additional 1.8 GW tie-up in progress.

• Hydropower Conservation: Hydropower plants have been directed to conserve water to manage peak demand efficiently.

• Expansion of Renewable Energy: Approximately 32 GW of renewable energy capacity has been added to supplement power supply.

Why does this matter? India's rapid industrialization, digitalization, and increasing urban energy consumption make power reliability a national priority. Any disruption in supply could impact industries, businesses, and essential services. The preparations ensure energy security, reduce dependency on emergency power cuts, and contribute to India's long-term energy sustainability goals.

Potential Implications

1. Economic Growth: A stable power supply directly supports industrial productivity, economic expansion, and employment generation.

2. Energy Security: Reducing power shortages strengthens India’s infrastructure resilience and minimizes dependency on costly short-term energy imports.

3. Climate Considerations: While coal remains a dominant energy source, the push for renewables signifies a gradual transition towards greener energy solutions.

4. Grid Stability: Proactive measures help prevent large-scale blackouts, ensuring reliable electricity for businesses and households.

Overall: The 5th edition of ‘Lineman Diwas’ highlighted the role of frontline workers in maintaining power infrastructure. The event, organized by CEA and Tata Power-DDL, honored linemen for their contributions in ensuring seamless electricity supply across the country.

As India progresses toward its vision of ‘Viksit Bharat 2047,’ a reliable power supply remains a cornerstone of economic and social development.

Read more: Economic Times

BANKING

🏦 Is there a liquidity crunch?

India’s banking system is facing a liquidity crunch, and a recent report by the State Bank of India (SBI) suggests that the Reserve Bank of India (RBI) may need to cut the Cash Reserve Ratio (CRR) to stabilize the situation.

But what does this mean for banks, businesses, and the general public?

Let’s break it down.

What is CRR and why does it matter?

• CRR is the percentage of a bank’s total deposits that it must keep with the RBI as reserves.

• This money cannot be used for lending or investments, making it a key tool for controlling liquidity in the banking system.

• When CRR is high, banks have less money to lend. If the RBI reduces CRR, banks get access to more funds, easing liquidity pressures.

Why is liquidity tight right now?

The SBI report highlights multiple reasons for the liquidity crunch:

• Declining Surplus: India’s banking system had a liquidity surplus of ₹1.35 lakh crore in November, but this turned into a deficit of ₹2.07 lakh crore by January.

• Open Market Operations (OMO) Gap: There is a projected shortfall of ₹1.7 trillion in the government securities market, requiring additional liquidity measures.

• Mahakumbh Withdrawals: With large sums being withdrawn for the Maha Kumbh, cash withdrawals by retail depositors spiked, and much of this money has yet to return to banks.

Implications of a CRR Cut

1. For Banks: More available funds mean increased lending capacity, which can boost economic activity.

2. For Businesses: Easier access to credit could help companies expand and invest.

3. For Consumers: Lower liquidity constraints could lead to better loan availability and possibly lower interest rates.

4. For the Economy: A well-managed liquidity supply ensures financial stability and smooth banking operations.

The report also suggests a broader reassessment of the RBI’s liquidity management strategies. If a CRR cut is implemented, it could provide immediate relief and help restore financial balance in the coming months.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

🚢 Export challenges - India's exports are facing new challenges as developed countries introduce stricter trade rules. Regulations like the EU’s carbon tax, deforestation laws, and industrial policies in the US and UK are making it harder for Indian goods to enter these markets. On top of this, high shipping costs and weak global trade connections add to the struggle. A major issue is the lack of export credit, which is expected to widen further by 2030. To help businesses, the Indian government is creating support schemes for MSME exporters, offering easier loans and alternative financing. It is also launching BharatTradeNet, a platform to simplify trade paperwork and funding.

💰️ Not that crazy of a burn - Zepto CEO Aadit Palicha challenged Zomato CEO Deepinder Goyal’s claims about Zepto’s cash burn, calling them “verifiably untrue.” In an interview with ET, Goyal stated that the quick commerce industry burns ₹5,000 crore per quarter, with Zepto responsible for more than half. Palicha disputed this, saying Zepto’s financial filings would prove otherwise. Goyal also claimed Blinkit contributes just 2-3% of the industry's cash burn while holding a 40-45% market share. Palicha acknowledged Goyal as a role model but stood by his rebuttal. A Citi report estimates Blinkit’s market share at 41%, with Zepto and Swiggy Instamart closely competing.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• Blackstone out of race for Haldiram's over valuation.

• AstraZeneca Pharma India gets CDSCO approval to import, sell cancer treatment medicine.

• Adani Wilmar to acquire GD Foods Manufacturing at Rs 603 crore.

• Auto component industry targets $100 bn from exports in next 7-8 years.

• Nissan Motor India total sales up 44.76% at 8,567 units in February.

• Sharp re-enters India air-condition market, launches products.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• King of the chase: Virat Kohli rises again to guide India into Champions Trophy final.

• LeBron James named the Western Conference Player of the Month for February, making him the oldest player in NBA history to achieve this feat 🐐 

• Tamannaah Bhatia and Vijay Verma call it quits after two years of dating.