The rural unemployment rate increased sharply to 7.8% in February from 5.8% in January, while urban unemployment rate fell from 8.9% to 8.5% during the same period.

The country’s formal labour market witnessed a slowdown in February, with fewer fresh jobs being created, the latest payroll data released by the Employee Provident Fund Organisation (EPFO) showed on Saturday. The number of new monthly subscribers to the Employees’ Provident Fund (EPF) declined nearly 3.7 per cent in February to 777,717 from 807,865 the previous month. This is crucial, as only the formal workforce enjoys social security benefits and is protected by labour laws. By comparison, 764,106 subscribers had joined the EPF in February 2023.

In what suggests some robustness, 516,619 of the total new EPF subscribers in February (nearly 67 per cent) belong to the 18-28 age group, a cohort mostly comprised of new entrants to the labour market. The share of women in total new subscribers increased slightly to 26.4 per cent (205,386), compared with 25.32 per cent (204,569) the previous month.

Meanwhile, net payroll additions — calculated by considering the number of new subscribers, those that exited, and the old subscribers who returned to the social-security organisation — also declined by 3.4 per cent to 1.54 million in February from 1.60 million in January. Net monthly payroll numbers, however, are provisional in nature and are often revised sharply the next month. So, the new EPF subscriber figure is considered more reliable than net additions.

“The payroll data highlights that about 1.8 million members exited and subsequently rejoined EPFO. These members switched their jobs and rejoined the establishments covered under the EPFO and opted to transfer their accumulations instead of applying for final settlement, thus safeguarding their long-term financial well-being and extending their social security protection,” the labour ministry said in a statement.

According to Centre for Monitoring Indian Economy (CMIE), a private agency that conducts its own Consumer Pyramids Household Survey (CPHS), the labour markets deteriorated in February as the unemployment rate increased to 8 per cent from 6.8 per cent the previous month on the back of an increase in unemployment in rural areas. The rural unemployment rate increased sharply to 7.8 per cent in February from 5.8 per cent in January, while urban unemployment rate fell from 8.9 per cent to 8.5 per cent during the same period. The labour force participation rate (LFPR) climbed to 41.4 per cent in February, from 40.6 per cent the previous month. The monthly EPF subscription data released by the labour ministry is part of the government’s effort to track formal job creation in the country by using payrolls as a measure.

Foreign portfolio investors (FPIs) have shifted their stance in the Indian markets, transitioning from net buyers to net sellers as the momentum of their buying diminished with the onset of the new fiscal year 2024-25 (FY25). This shift follows a period of robust inflows reported during the previous fiscal. However, experts express skepticism regarding the continuity of these inflows in the near term, citing concerns related to the India-Mauritius tax treaty and prevailing weak global cues.

According to data from the National Securities Depository Ltd (NSDL), FPIs have divested ₹5,254 crore worth of Indian equities, contributing to a total outflow of ₹8,982 crore as of April 19. This outflow encompasses various asset classes including debt, hybrid instruments, debt-VRR (Voluntary Retention Route), and equities. The data further reveals that the total debt outflows have amounted to ₹6,174 crore thus far in the month.

The shift in FPI sentiment underscores a cautious approach adopted by foreign investors amidst evolving market dynamics and regulatory developments. The onset of the new fiscal year appears to have prompted a reassessment of investment strategies, leading to a reduction in buying momentum and subsequent divestment activities.

Analysts point to several factors contributing to the cautious stance adopted by FPIs. The ongoing uncertainty surrounding the India-Mauritius tax treaty has raised concerns among investors regarding the tax implications of their investments in Indian markets. The impending changes in tax regulations and potential impact on investment returns have prompted foreign investors to adopt a wait-and-see approach, refraining from aggressive buying.

Furthermore, weak global cues, including geopolitical tensions and economic uncertainties, have added to the apprehensions surrounding investment prospects in emerging markets like India. The prevailing volatility in global financial markets, exacerbated by factors such as inflationary pressures and monetary policy tightening measures in major economies, has led investors to exercise caution and reevaluate their risk exposure. The outflow of FPI investments across various asset classes reflects a broader trend of risk aversion and portfolio realignment among foreign investors. While Indian equities have witnessed significant divestment, the debt segment has also experienced notable outflows, signaling a repositioning of investment portfolios in response to changing market conditions.

Amidst the prevailing uncertainties, market participants remain vigilant about the potential implications of FPI activity on Indian markets and the broader economy. The evolving investment landscape underscores the importance of policy measures aimed at fostering investor confidence and promoting stability in the financial markets.

Looking ahead, the trajectory of FPI flows will likely hinge on a multitude of factors, including developments related to the India-Mauritius tax treaty, global economic trends, and domestic policy initiatives. While near-term uncertainties may dampen investor sentiment, the long-term fundamentals of the Indian economy remain resilient, presenting opportunities for investors to capitalize on the growth potential of the market.

In conclusion, the recent shift in FPI sentiment and the resultant outflow of investments underscore the dynamic nature of global capital markets and the need for adaptive investment strategies in response to changing market dynamics. As India continues on its path of economic recovery and structural reforms, maintaining a conducive investment environment will be crucial in attracting foreign capital and supporting sustainable growth in the years to come.

India’s export landscape for the financial year 2023-24 witnessed notable strides, particularly in markets like China, Russia, Iraq, UAE, and Singapore. According to data from the commerce ministry, India’s overall exports, encompassing both merchandise and services, stood at an estimated USD 776.68 billion for the fiscal year, maintaining stability compared to the previous period. However, the breakdown reveals a nuanced picture, with merchandise exports experiencing a marginal decline of 3.1 percent to USD 437.06 billion, while services exports recorded a 4.4 percent growth, reaching USD 339.62 billion.

In March 2024, despite a slight dip, the figures remained substantial, with merchandise exports totaling USD 41.68 billion, down by 0.7 percent, and services exports at USD 28.54 billion, marking a 6.3 percent decrease. Comparatively, the preceding financial year (2022-23) showcased robust growth, witnessing a remarkable surge of over 14 percent, amounting to nearly USD 100 billion annually.

Moreover, imports for the financial year 2023-24 witnessed a decline of 4.8 percent, settling at USD 854.80 billion. In March 2024 alone, both merchandise and services imports experienced a downturn, declining by 5.41 percent and 2.46 percent, respectively.

The surge in exports can be attributed to several factors, including enhanced trade relations with key partners and strategic initiatives implemented by the Indian government. Notably, India’s exports to countries like China, Russia, Iraq, UAE, and Singapore have seen substantial growth, albeit from a comparatively low base. These nations, along with others like the UK, Australia, Saudi Arabia, the Netherlands, and South Africa, constitute the top 10 export destinations for India.

The Indian government’s proactive measures, such as the implementation of the Production Linked Incentive (PLI) scheme across various sectors, have played a pivotal role in driving export growth. The PLI scheme aims to bolster India’s manufacturing capabilities, foster global competitiveness among domestic producers, attract foreign investments, stimulate export growth, integrate India into the global supply chain, and reduce dependency on imports. By incentivizing production in sectors like electronic goods and others, the PLI scheme has encouraged manufacturers to enhance their productivity and efficiency, thereby boosting exports. This strategic approach aligns with India’s broader economic agenda of promoting self-reliance, fostering innovation, and positioning the country as a global manufacturing hub.

Despite the challenges posed by global economic uncertainties and fluctuations in trade dynamics, India’s export performance has remained resilient. The consistent growth in exports, particularly in services, underscores the country’s growing prowess in sectors like IT, software services, business process outsourcing (BPO), and others.

Looking ahead, India aims to sustain and further enhance its export momentum by continuing to implement strategic policies, fostering innovation and technological advancements, diversifying its export basket, and strengthening trade partnerships with both traditional and emerging markets.

In a nutshell, India’s export trajectory for the fiscal year 2023-24 reflects a blend of resilience, strategic foresight, and proactive policy interventions. With concerted efforts from both the government and industry stakeholders, India is poised to consolidate its position as a key player in the global trade landscape and drive sustainable economic growth in the years to come.

Speaking about inflation, she said it never crossed the tolerance band, except for one month, under the Narendra Modi government, whereas before that (pre-2014) the economy was in a bad shape and inflation was in double digits.

Union Finance Minister Nirmala Sitharaman on Saturday said the Centre has tailored policies to make India an attractive destination for manufacturing and services, and the aim was to produce not just for the domestic market but for exports as well. She was responding to a query on American tech billionaire Elon Musk postponing his meeting with Prime Minister Narendra Modi.

“Policies have been made to attract investments. We want manufacturers and investors to come and produce not just for India but also for exports. We will try to attract manufacturers and investors through policies,” she told reporters. Tesla CEO Musk on Saturday said his visit to India has been delayed due to the company’s heavy obligations.

“When big companies show interest to come to India, we will do everything to make it attractive for them to come and invest. In that process, if there is anything to discuss, we will certainly discuss. But whatever we have done, we have done it through policy,” Sitharaman added.

Asserting the Union government’s approach has helped especially after China plus one started being a concern for many industry experts, she said policies have been tailored in such a way so as to make India an attractive destination for manufacturing and for services.

Speaking about inflation, she said it never crossed the tolerance band, except for one month, under the Narendra Modi government, whereas before that (pre-2014) the economy was in a bad shape and inflation was in double digits. “At that time (pre 2014) nobody had any expectations from the country.

After much hard work, we have emerged as the world’s fifth largest economy and are confidently saying we will be third in the next two to two-and-half years,” the Union minister said. On employment, Sitharaman said there was lack of complete data from both the formal and informal sectors, but asserted initiatives of the Centre have ensured jobs to lakhs. “The data is inadequate. I am not saying this pride but while accepting its weakness. All I can say regarding employment is that the money given to people and startups through different schemes…people in crores have availed support. Between October 2022 and November 2023, through the Rozgar Mela, Modi has given government jobs to 10 lakh people,” she said.

When asked about the rule that requires larger companies to pay Micro, Small and Medium Enterprises (MSMEs) within 45 days of receiving goods or services, Sitharaman said the law has been existence since 2007-08 and is not new. “Later MSMEs themselves came and said the 45-day payment is not happening within that financial year. But within that financial year, this amount is shown as expenditure and to that extent tax is not being paid. All that we have done through the Finance Act that was passed in Parliament on February 1, 2023,” she said. “We just said tax treatment remains the same. Make a claim in the year you pay to the MSMEs. How can you claim when you have not made payment?” she asked.

Queried about the Indian rupee weakening against the US dollar, she said the fluctuation was due to global uncertainty, wars as well as uncertainty in supply of crude oil from the Middle East. Earlier, addressing industry leaders from Gujarat on ‘Viksit Bharat -2047’, she said 28 per cent of total capital under Production Linked Incentive (PLI) scheme has come to the state, which has shown remarkable alertness in the last 10-12 years. So semiconductor manufacturing for India comes first in Gujarat, which has a policy as well as government and ecosystem ready for manufacturing for Viksit Bharat 2047, she said.

“The IFSC at GIFT City in Gandhinagar is a big gateway for services to grow in Gujarat. A world-class financial services centre very close to Ahmedabad is just the key for India to reach that kind of global market for attracting more investment and more financial operations,” Sitharaman said. She also said Gujarat was in third position in attracting FDI in manufacturing.

With escalation of tensions in West Asia following attack by Iran on Israel, experts see an upward bias in crude prices in the near term despite the decline in crude price in the last one week. Any worsening of the situation between Israel and Iran may lead to a spike in crude prices, according to Hardik Shah, Director, CareEdge Ratings. “Crude prices were on an increasing trend since the start of calendar year 2024,” says Shah.

However, according to Shah, India still has a decent share of supply of Russian crude which comprises 30 per cent of India’s total imports by end FY24, and it should help to keep India’s import bills for crude oil under check. In another insight, S&P Global Ratings cautions that the medium-term trajectory remains fraught with risk, given the enormous challenges in finding a de-escalatory pathway. Energy prices are one of those key transmission channels, exposed to the conflict that could affect credit conditions and will continue to be monitored closely, the report says.

Major equity indices opened lower as oil prices jumped more than 3 per cent overnight on signs of escalating tensions in the Middle East, following reports of Israeli strikes on Iran, points out Avdhut Bagkar Technical and Derivatives Analyst, StoxBox. However, as Sriram Iyer, Senior Research Analyst at Reliance Securities notes, international and domestic crude oil futures eased marginally on Thursday weighed down by a stronger dollar. “Crude also has a negative carryover from Wednesday, when the EIA reported that crude inventories rose more than expected to a 10-month high. Lingering geopolitical risks between Iran and Israel are limiting the downside in crude prices,” says Iyer.

Placing the oil volatility in perspective, a Prabhudas Lilladher report points out that regions like India and Africa which account for barely 10 per cent of global petrol/diesel consumption are the last citadels of high growth. In light of this, the report suggests global petrol/diesel demand to taper off soon. This would widen glut in refining capacity amidst large capacity additions in China (1.5mnbopd), India (1mnbopd) and Middle East (0.9mnbopd). Despite the upcoming glut, different regions continue to add capacities. India alone has 1mnbopd of refining projects ongoing while just three projects in China account for 1mnbopd out of total 1.5mnbopd addition through 2028. Middle East also appears to be adding 0.9mnbopd.

Just these 3.5mnbopd would add 1.75mnbopd of petrol and diesel, which in stagnate or degrowing market could severely hamper petrol and diesel cracks unless large scale closures take place.

Notably, climate damages have been on an upward trajectory, with annual losses averaging $500 billion, equivalent to 2% of the United States’ GDP, since 2016.

Climate change poses a formidable threat to the global economy, with researchers projecting annual losses amounting to a staggering $38 trillion by the year 2049. This ominous forecast comes from the esteemed Potsdam Institute for Climate Impact Research (PIK), which highlights the devastating impact of extreme weather events on agricultural yields, labor productivity, and critical infrastructure.

The dire consequences of planetary warming are further elucidated in a recent study published in Nature. According to this research, global income is expected to plummet by 19% by mid-century compared to a scenario where climate change isn’t a factor. Drawing upon data spanning over 1,600 regions worldwide across the past four decades, the study provides a comprehensive assessment of the future ramifications of a warmer planet on economic growth.

Leonie Wenz, a prominent scientist at PIK leading the study, issues a stark warning, emphasizing that unless emissions are drastically curtailed, economic losses will escalate exponentially. Wenz underscores the urgency of immediate action, asserting that failure to address emissions will culminate in even graver economic repercussions, potentially reaching a staggering 60% reduction in global income by the year 2100.

Attributed largely to human-made greenhouse gas emissions, the world has experienced an average temperature increase of 1.1°C since pre-industrial times. This uptick has precipitated a surge in extreme weather events, collectively costing a monumental $7 trillion over the past three decades, as reported by Bloomberg Intelligence.

Notably, climate damages have been on an upward trajectory, with annual losses averaging $500 billion, equivalent to 2% of the United States’ GDP, since 2016. Regrettably, developing nations, despite contributing minimally to global warming, bear the brunt of these losses and damages.

In light of these grim projections, researchers advocate for stringent measures aimed at emissions reduction and limiting global warming to a maximum of 2°C by the century’s end. Such measures, they argue, represent the most cost-effective approach to mitigating further climate-induced damages. Leonie Wenz emphasizes the economic rationale behind climate protection, stressing that the financial savings accrued from emission reductions far outweigh the costs, even without factoring in the invaluable non-economic benefits such as safeguarding life and preserving biodiversity. However, achieving these goals will necessitate heightened adaptation efforts.

Alarmingly, countries deemed least culpable for climate change are poised to suffer disproportionately severe economic losses, with projected income reductions 60% greater than their higher-income counterparts and 40% greater than nations with higher emissions. Compounding this disparity is the glaring lack of resources available to these vulnerable nations for adapting to the prevailing impacts of climate change.

Despite the pervasive belief that only developing nations will bear the brunt of climate-induced economic losses, Leonie Wenz asserts that the repercussions will reverberate globally, affecting even highly developed nations like Germany, France, and the United States. Wenz also underscores a grim reality – only regions situated at very high latitudes stand to benefit from warmer temperatures, further exacerbating the unequal distribution of climate impacts.

Central to the severity of projected economic losses is the comprehensive nature of the assessment, which factors in not only temperature increases but also additional climate variables such as extreme rainfall and the manifold impacts of extreme weather events on agriculture, labor productivity, and public health.

In advocating for a paradigm shift towards renewable energy systems, Anders Levermann, a co-author of the study, emphasizes the imperative of structural change for ensuring global security and averting catastrophic consequences. He warns against the perils of maintaining the status quo, stressing the urgent need for proactive measures to mitigate the impending crisis.

In summation, the prognosis is dire – unless decisive action is taken to curb emissions and mitigate the impacts of climate change, the global economy faces a bleak future characterized by unprecedented economic losses and irreparable damage.