The Jammu Kashmir Awami Action Committee (JAAC) has rejected an offer from the Pakistan-occupied Jammu and Kashmir (PoJK) government to reduce electricity prices by 50 percent per unit. According to ARY News, JAAC insists on rates that reflect the costs of hydropower generation. Government sources revealed that the proposal for a 50 percent reduction in electricity rates was swiftly dismissed by the Kashmir action committee, arguing that consumers should be billed according to the production costs of hydropower in PoJK.

Simultaneously, the government is preparing to subsidize flour prices. However, the Public Action Committee has declared a long march from Rawalakot to Muzaffarabad, rejecting the government’s stance on the matter. The protesters plan to halt in Kotli overnight during the long march. Committee member Umar Nazeer criticized the government’s lack of seriousness regarding their demands.

Earlier in the day, it was reported that the PoJK government had agreed to all demands of the Joint Awami Action Committee (JAAC) following negotiations between the JAAC delegation and the territory’s Chief Secretary at the residence of the Rawalakot Commissioner. Sources indicate that the government has also agreed to the committee’s demand for flour subsidies and to rescind the electricity bill hikes.

Violent clashes erupted between police and activists of a rights movement in PoJK amid a wheel-jam and shutter-down strike across the territory. The clashes resulted in the death of at least one police official and injuries to several others. Sub-inspector Adnan Qureshi succumbed to a gunshot wound in the chest in Islamgarh, where he was deployed to quell a rally for Muzaffarabad under the banner of the Jammu Kashmir Joint Awami Action Committee (JAAC).

The JAAC, led by traders in most parts of the state, has been advocating for electricity pricing aligned with hydropower generation costs in PoJK, subsidized wheat flour, and an end to elite-class privileges. Violent protesters vandalized multiple vehicles, including a magistrate’s car, on the Poonch-Kotli road. Additionally, markets, trade centers, offices, schools, and restaurants remained closed across PoJK, according to ARY News.

Amid a resumption of the march in Pakistan-occupied Jammu and Kashmir (PoJK), President Asif Ali Zardari and Prime Minister Shehbaz Sharif made pledges to address the ‘genuine demands’ of the protesters. However, despite efforts, an agreement between the Jammu Kashmir Joint Awami Action Committee and the PoJK government remained elusive, with the protest movement pressing forward with its march on Muzaffarabad, as reported by Dawn.

Following clashes that resulted in the death of a policeman, relative calm settled over the region, though business centers remained shuttered and public transport suspended in Muzaffarabad and Poonch divisions. Mirpur saw a partial strike, signaling the depth of sentiment driving the protests.

The impasse persisted even after talks between the JAAC core committee and PoJK Chief Secretary Dawood Bareach ended without progress in Rawalakot. A protester from Rawalakot accused the government of employing evasive tactics, exacerbating tensions further, as reported by Dawn. Participants in the discussions included figures from various regions, including Muzaffarabad, Rawalakot, Kotli, and Bagh. However, hopes for a breakthrough were dashed, as one participant, Sardar Umar Nazir Kashmiri, lamented the lack of tangible outcomes and accused the government.

The Indian government on Monday provided a budget support to Maldives in the form of a rollover of USD 50 million Treasury bill.

The Indian government extended budget support to the Maldives by rolling over a USD 50 million Treasury Bill for an additional year, as requested by Maldivian Foreign Minister Moosa Zameer. The State Bank of India subscribed to the Government Treasury Bill for another year upon maturity of the previous subscription. Under this unique Government-to-Government arrangement, SBI provides zero-cost (interest-free) subscriptions to the Government of Maldives, as stated by the Indian High Commission in Maldives.

“The continuation of subscription has been made at the special request of the Government of Maldives to secure budgetary support from the Government of India,” the statement read.

The Maldivian Foreign Ministry, in their statement, stated that the Indian government’s decision to roll over the T-Bill comes after Maldivian Foreign Minister Moosa Zameer requested the External Affairs Minister S Jaishankar during his official visit to India earlier this month.

The ministry further appreciated the Indian government’s support to the Maldives in the form of budgetary allocation.

“Large number of infrastructural developmental projects and High Impact Community Developmental projects are underway with the assistance from the Government of India, which consists of a notable part as grant assistance,” the statement stated.

The Maldivian government looks forward to continuing the collaborative partnership between the two countries for the mutual benefit and prosperity of their people, it added.

Union Home Minister Amit Shah, in an exclusive interview with a leading media channel on Monday, cautioned against drawing correlations between recent stock market fluctuations and the upcoming 2024 Lok Sabha elections. Shah, a pivotal figure in India’s political landscape, advised investors to consider purchasing stocks before June 4th, the date of the Lok Sabha election results. Expressing optimism, Shah forecasted a surge in the domestic stock market in the forthcoming period.

“I can’t anticipate stock market moves. But normally whenever a stable government is formed at Centre, the market sees a rally. I see 400-plus seat wins for the Bharatiya Janata Party [BJP], a stable Modi government coming, and thus market rising,” Shah told NDTV.

Shah’s remarks came amidst the ongoing fourth phase of the general elections and a recent downturn in the benchmark Nifty index, which witnessed declines in six out of the last seven sessions. Despite prevailing market uncertainties surrounding the election results, Shah remained steadfast in his outlook.

Nomura India, in the financial realm, pointed out the likelihood of a BJP victory based on recent opinion polls, anticipating policy continuity post the 2024 general elections. According to Nomura, the government may focus on politically contentious reforms concerning land, labor, capital, judicial systems, and tax administration, among others.

MUFG Bank offered a nuanced perspective, acknowledging the prevailing consensus regarding a robust BJP performance while also highlighting increased uncertainty due to lower voter turnout in the initial phases of the elections. The bank suggested that market sentiment should remain positive over time if the BJP secures a majority of seats, with expectations of policy continuity in critical areas.

Mirae Asset highlighted the importance of the July Budget in the event of a BJP victory, emphasizing potential changes in taxation policies and agricultural schemes. The firm stressed long-term strategies, focusing on infrastructure development, agricultural reforms, and employment generation to stimulate demand from rural India.

Lastly, PhillipCapital identified a potential market rally in the event of the BJP-led National Democratic Alliance (NDA) surpassing the 400-seat target. The brokerage firm advised investors to closely monitor subsequent election phases, recognizing their potential impact on market dynamics.

“If a lower 300-330 seats for the NDA results in a knee-jerk market reaction [a fall], we would treat it as a buying opportunity. A further worsening of voter turnout in the following election phases could have a bearing on election outcome and equities – so we would keep a close watch,” the domestic brokerage said in its note.

Overall, amidst the evolving political landscape and market fluctuations, stakeholders in India’s financial markets are closely observing the ongoing Lok Sabha elections, anticipating their impact on policy continuity and market sentiment in the coming period.

Amitabh Kant, India’s G20 Sherpa and former CEO of Niti Aayog, highlighted several positive macroeconomic indicators and forecasted that India is poised to surpass Japan and become the world’s fourth-largest economy by 2025. Currently, India ranks fifth in terms of GDP size, following the US, China, Germany, and Japan. India surpassed the UK in 2022 to attain this position. Just ten years ago, India’s GDP ranked eleventh globally. Presently, India’s GDP is estimated at approximately USD 3.7 trillion.

Some highlights of India’s journey to the top 5 economies of the world in 2024 from Fragile 5 in 2013, according to Kant, among others, record GST collection, over 8 per cent GDP growth in the past three quarters, trading in Indian currency Rupee with various countries (to be precise 27), inflation at manageable levels.

The term Fragile 5 was coined by a Morgan Stanley analyst in 2013 and refers to a set of five emerging countries, including India, whose economy was not doing well back then. The other four countries were Brazil, Indonesia, South Africa, and Turkey. Double-digit growth in the steel, cement, and automobile manufacturing sectors; global leader in digital public infrastructure, with e-transactions surging to 134 billion, accounting for 46 per cent of all global digital payments; accounts opened under Jan Dhan, Aadhaar and Mobile trinity have over Rs 2.32 lakh crore as current balance; average annual inflation between 2013-14 and 2022-23 declined to 5 per cent from 8.2 per cent between 2003-04 and 2013-14 are some other things he attributed to India’s firm growth.

Firm GDP growth forecasts, inflation at manageable levels, political stability at the central government level, and appreciable central bank monetary policy, have all contributed to painting a bright picture for the Indian economy in recent quarters. India’s GDP grew at a massive 8.4 per cent during the October-December quarter of the financial year 2023-24, and the country continued to remain the fastest-growing major economy and is poised to maintain its growth trajectory going ahead.

India is set to remain the fastest-growing among major economies in 2024, according to the latest International Monetary Fund’s World Economic Outlook. IMF, in its latest outlook, raised India’s growth projections for 2024 from 6.5 per cent to 6.8 per cent. India’s economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22, respectively.

Pakistan aims to rollover $12 billion debt from key allies and negotiate new financing from China to address its external financing gap, as disclosed by Finance Ministry insiders.

Pakistan has decided to seek a rollover of approximately $12 billion in debt from key allies like China in the upcoming fiscal year of 2024-25 to bridge a significant $23 billion gap in its external financing. The aim is to meet budget targets before the anticipated arrival of an International Monetary Fund (IMF) team to address the country’s financial challenges.

Finance Ministry insiders disclosed that Pakistan plans to rollover $5 billion from Saudi Arabia, $3 billion from the UAE, and $4 billion from China. Additionally, the estimated budget for the next fiscal year includes new financing from China, with negotiations expected to commence in mid-May ahead of the budget presentation in June.

The federal government aims to achieve budget targets prior to the IMF review mission’s arrival, instructing ministries to complete set targets before negotiations on the new loan program. The details will be provided to the IMF delegation once these targets are met. Furthermore, the budget strategy paper is set to be approved by the federal cabinet before the IMF review mission’s visit.

The Finance Ministry has initiated preparations for the budget, outlining targets for debt repayment, defense budget, and tax collections. Additionally, development and ongoing budget targets will be determined as part of the budget preparation process.

Pakistan has long grappled with meeting its external liabilities, relying on remittances, export proceeds, and foreign loans. However, exports have not kept pace with imports, and avenues for foreign aid have diminished, straining the economy and essential imports. Last year, Pakistan narrowly avoided default through a short-term loan agreement with the IMF, providing $3 billion over nine months. Now, the country seeks a fresh loan to address its economic challenges.

Remittances from Pakistani workers abroad have been a significant source of support, with the country receiving the second-highest remittances of the ongoing fiscal year at $2.8 billion in April 2024. According to the State Bank of Pakistan, remittances increased by 3.5 percent to $23.8 billion in the first 10 months of FY24 compared to the same period last year. Remittance inflows in April 2024 were primarily from Saudi Arabia, the United Arab Emirates, the United Kingdom, and the United States. These remittances peaked near $3 billion in March 2024, marking a 23-month high.

Separately, Pakistan is engaging with Chinese leadership to revive over 1800-megawatt hydropower projects and attract investment from new Chinese companies in the transmission and distribution network as part of the second phase of the China-Pakistan Economic Corridor (CPEC). A high-level delegation led by Planning Minister Ahsan Iqbal is currently in China to pursue existing investors and financial institutions and tap into more firms in the transmission and distribution network.

In his meeting, Iqbal sought China’s continued cooperation in the early implementation of hydropower projects. Both sides agreed to hold the next round of the Joint Working Group meeting on Energy soon.

In summary, Pakistan’s efforts to address its financial challenges involve seeking debt rollovers, securing new financing, and leveraging remittances from overseas workers. Additionally, the country is pursuing collaboration with China to advance key infrastructure projects under the CPEC. These measures aim to stabilize Pakistan’s economy and pave the way for sustainable growth.

Pakistan’s financial landscape reflects a complex interplay of domestic and international factors, where strategic alliances, economic policies, and global partnerships intersect to shape the nation’s economic trajectory. Amidst the ongoing challenges, the country’s leadership remains focused on addressing fiscal deficits, meeting external financing requirements, and fostering economic resilience.

The decision to seek a rollover of debt from key allies like China underscores Pakistan’s efforts to navigate its external financing gap and stabilize its economy. By engaging with strategic partners, Pakistan aims to alleviate immediate financial pressures and create a conducive environment for sustainable growth. The reliance on debt rollovers reflects the intricacies of managing external liabilities while balancing fiscal obligations and developmental priorities.

At the heart of Pakistan’s financial strategy lies the imperative to achieve budget targets and address structural imbalances before the anticipated arrival of an IMF team. The proactive approach adopted by the federal government underscores a commitment to fiscal prudence and proactive economic management. By setting clear targets and mobilizing resources, Pakistan aims to strengthen its financial position and bolster investor confidence.

The forthcoming negotiations with the IMF represent a critical juncture in Pakistan’s economic trajectory, offering an opportunity to realign policies, implement reforms, and chart a path towards sustainable development. The willingness to engage constructively with international financial institutions reflects a recognition of the importance of external support in addressing economic challenges and unlocking growth potential.

Against the backdrop of economic reforms and financial restructuring, Pakistan’s reliance on remittances emerges as a crucial lifeline, providing vital support to the economy amidst external pressures. The resilience of remittance inflows underscores the resilience of Pakistan’s diaspora community and their enduring commitment to the country’s development. By harnessing the potential of remittances, Pakistan can diversify its funding sources, reduce dependency on external loans, and promote inclusive growth.

The engagement with China under the auspices of the China-Pakistan Economic Corridor (CPEC) represents a cornerstone of Pakistan’s economic agenda, offering a transformative vision for infrastructure development, energy security, and regional connectivity. The revival of hydropower projects and investment in transmission and distribution networks signal a renewed commitment to advancing strategic initiatives that stimulate growth, create employment opportunities, and enhance energy access. The ongoing dialogue with Chinese leadership underscores the depth of the bilateral partnership and the mutual commitment to realizing shared objectives. By leveraging China’s expertise, resources, and technology, Pakistan can accelerate the pace of infrastructure development and unlock the full potential of the CPEC. The collaboration between the two countries exemplifies the principles of South-South cooperation and the potential for mutually beneficial partnerships in driving sustainable development.

As Pakistan navigates the complex terrain of economic reform and restructuring, the imperative of inclusive growth and social development remains paramount. The commitment to inclusive policies, poverty alleviation, and social protection underscores a holistic approach to economic governance that prioritizes the well-being of all citizens. By investing in human capital, social infrastructure, and equitable opportunities, Pakistan can lay the foundation for long-term prosperity and resilience.

In a nutshell, Pakistan’s economic journey reflects a multifaceted tapestry of challenges, opportunities, and strategic imperatives. By embracing a proactive approach to fiscal management, engaging constructively with international partners, and harnessing the potential of remittances and strategic alliances, Pakistan can chart a course towards sustainable development and prosperity. The path ahead may be fraught with obstacles, but with resilience, determination, and strategic vision, Pakistan can overcome challenges and realize its full potential on the global stage.

India’s factory output, measured by the Index of Industrial Production (IIP), in March 2024 posted 4.9 per cent year-on-year growth, moderating from 5.6 per cent in February 2024 and ending fiscal 2024 on a sober note. The IIP growth was led by a robust expansion in electricity even as manufacturing growth rose to a five-month high, albeit on a very low base.

The growth rate of the mining sector for the month of March 2024 over March 2023 was 1.2 per cent, manufacturing grew 5.2 per cent yoy while the growth rate of electricity for the month of March 2024 was 8.6 per cent more than that in March 2023, as per Government data on Friday. Within the manufacturing sector, the top three positive sectoral contributors to the growth of IIP for the month of March 2024 are ‘basic metals with 7.7 per cent growth, pharmaceuticals, medicinal chemical and botanical products with growth of 16.7 per cent and manufacture of other transport equipment with growth of 25.4 per cent.

Dharmakirti Joshi, Chief Economist, CRISIL notes that the slowdown in March was driven by infrastructure and construction goods, which reflects moderating government capital expenditure at the end of the fiscal. “Among consumer products, while durables slowed, non-durables revived this month, hinting at a moderation in urban demand and a revival in rural demand,” says Joshi.

According to CRISIL, the IIP had increased to 5.7 per cent on-year in February from 4.1 per cent in January, boosted by healthy performance in both consumption and industrial sectors. Meanwhile, January’s reading was revised up from the previous estimate of 3.8 per cent as IIP growth picked up in all three subsectors of manufacturing, mining, and electricity.

Aditi Nayar, Chief Economist, ICRA sees the dip in IIP growth on expected lines as the leap-year effect faded. Nayar observes that the yoy growth in a majority of the available high-frequency indicators witnessed an uptick in April 2024, including vehicle registrations, generation of GST e-way bills, petrol sales which zoomed to a 22-month high of above 14.1 per cent from above 6.9 per cent, partly owing to increased movement in the run-up to General Elections), output of Coal India and electricity generation to a six-month high of more than 9.6 per cent from more than 8.1 per cent, owing to rise in temperatures. “In contrast, the yoy performance of diesel sales to more than 1.4 per cent from more than 3.1 per cent, cargo traffic at major ports to more than 1.3 per cent from more than 3.6 per cent and finished steel consumption to more than 9.4 per cent from more than 9.6 per cent, albeit remaining quite robust deteriorated in April 2024 relative to March 2024.

Government data also shows cumulative growth rate for the period of April-March 2023-24 over the corresponding period of the previous year at 5.8 per cent. The cumulative growth rate of mining for the period of April-March 2023-24 over the corresponding period of the previous year is 7.5 per cent, manufacturing growth was 5.5 per cent and electricity growth, yoy, for the period of April-March 2023-24 was 7.1 per cent.

Joshi foresees a likely slowdown in gross domestic product (GDP) with growth averaging 4.9 per cent in the fourth quarter, compared with 6.2 per cent in the third. On the positive side, as Joshi points out, rural demand, which was a key drag for consumption last fiscal, could revive this fiscal. While early weather forecasts predict a normal monsoon this year, the lagged impact of the Reserve Bank of India’s rate hikes and regulatory tightening of credit could have a moderating impact, especially for urban consumption,” says Joshi.

“A lower fiscal impulse this year is further expected to dial down the capex support to growth in fiscal 2025 as government targets reducing fiscal deficit to 5.1 per cent of GDP from 5.8 per cent of GDP previous fiscal. A pickup in private capex is critical to sustain the investment momentum,” suggests Joshi.

Due to these factors, CRISIL expects gross domestic product growth to moderate to 6.8 per cent in fiscal 2025 over 7.6 per cent estimated for the past year.