Motilal Oswal Financial Services

COPE

The Economy Observer

14 March 2024

India’s Quarterly Economic Outlook – 4QFY24



Strong growth and low inflation to push rate cuts by the RBI into 2025

For the third consecutive quarter, India’s real GDP posted better-than-expected growth of 8.4% YoY in 3QFY24, with

upward revisions in 1HFY24. We, thus, have upgraded our growth forecasts yet again. With the forecast of 5.9%/6.9%

YoY growth in real GVA/GDP in 4QFY24, we project 7.0%/7.9% growth in real GVA/GDP in FY24. Lower deflator has

helped real growth in FY24, which is expected to reverse in FY25. Accordingly, we forecast real GVA/GDP growth of

5.8%/6.4% in FY25, better than our previous projections. We have also upgraded nominal GDP growth forecasts to

9.1%/10.5% for FY24/FY25 from 8.2%/10.2% earlier. We also introduce our FY26 forecasts in this note.

Headline CPI-inflation has been contained for the past six months, with core inflation at the lowest level in 12 years

(since the new series began) in Feb’24. Going by the recent disinflation in core items, we have revised down our headline

forecasts to 5.4%/4.6% for FY24/FY25 from 5.6%/5.0% earlier. We expect this combination of strong growth and subdued

inflation to push rate cuts by the RBI into 2025, unless the US economy slows down materially this year.

Better-than-expected receipts could help the Government of India (GoI) to over-achieve its fiscal deficit target in FY24,

assuming that spending is in line with the revised estimates (REs). For FY25, our estimates suggest that total receipts

could again exceed the budget estimates (BEs) by INR700b, which means that the GoI could meet its deficit target of 5.1%

of GDP, even with an additional spending of INR500b. In any case, fiscal spending growth will be the lowest in 12 years

next year, which will hurt economic growth (as included in our forecasts).



Real growth:

We upgrade our real GVA/GDP growth forecasts to 7.0%/7.9% for FY24

(from 6.6%/6.7% earlier) and further to 5.8%/6.4% for FY25 (from 5.2%/5.4%). Just

like lower deflator has helped FY24 real growth, we expect it to hurt real growth in

FY25. Real GVA/GDP growth could be broadly unchanged at 5.9%/6.3% in FY26.

Rate cuts by the RBI would

be a 2025 story, unless the

US economy slows down

materially this year.

Changes in economic forecasts since

Dec’23

CPI inflation and interest rates:

Continuous disinflation in core items makes us

revise our headline inflation forecasts to 5.4%/4.6% in FY24/FY25 from 5.6%/5.0%

earlier. We forecast headline inflation at 4.7% in FY26. Accordingly, we argue that

rate cuts by the RBI would be a 2025 story, unless the US economy slows down

materially this year.

Fiscal deficit:

With better-than-expected receipts, the GoI could over-achieve its

deficit target in FY24, assuming that spending is in line with REs. For FY25, however,

we expect the GoI to meet its deficit target of 5.1% of GDP, aided by higher-than-

expected receipts and a 12-year low growth rate of <6% YoY in FY25 (vs. expected

13% YoY growth in FY24).

Exhibit 1:

Forecasts for key macroeconomic variables of the Indian economy

Macro indicators

Nominal GDP

Real GDP

Real GVA

Consumer price index

Repo rate (year-end)

USD:INR (average)

Current a/c balance

GoI’s fiscal deficit

Unit

YoY (%)

p.a. (%)

unit

% of GDP

FY21

(1.2)

(5.8)

(4.1)

6.2

4.00

74.2

0.9

9.2

FY22

18.9

9.7

9.4

5.5

4.00

74.5

(1.2)

6.7

FY24 Forecasts

FY25 Forecasts

FY26

FY23

MOFSL

Forecasts

Dec’23

Mar’24

Dec’23

Mar’24

14.2

8.2

9.1

10.2

10.5

10.3

7.0

6.7

7.9

5.4

6.4

6.3

6.7

6.6

7.0

5.2

5.8

5.9

6.6

5.6

5.4

5.0

4.6

4.7

6.50

5.75

6.25

5.75

80.4

82.9

82.8

84.5

83.9

85.0

(2.0)

(1.6)

(0.7)

(1.8)

(1.5)

(1.7)

6.4

5.9

5.8

5.1

4.5

Source: Central Statistics Office (CSO), Reserve Bank of India (RBI), MOFSL

Nikhil Gupta – Research Analyst

(Nikhil.Gupta@MotilalOswal.com)

Tanisha Ladha

– Research Analyst

(Tanisha.ladha@motilaloswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

GVA/GDP

Real GVA/ GDP

growth expected

at 7.0/7.9% in

at 7.0/7.9% for

FY24 and

5.8%/6.4% in

FY25

FY25F

Resilient

growth and

contained

inflation to

push rate cuts

into 2025

FY24/FY25 fiscal

deficit targets to

be met, aided by

higher tax

receipts

In this report, we provide our updated macroeconomic forecasts for India and

discuss the three key themes that are likely to play out in CY24/FY25.

1) We expect real GVA/GDP growth to surprise positively in 4QFY24 as well;

therefore, we upgrade our FY24 forecast again to 7.0%/7.9%, better than the

CSO’s estimate of 6.9%/7.6%. Lower deflator has helped push real growth in

FY24, which is expected to reverse in FY25. Accordingly, we forecast real

GVA/GDP growth of 5.8%/6.4% in FY25, better than our previous projections.

Due to a downward revision in FY23, nominal GDP growth could be 9.1% this

year, which could pick up to 10.5% in FY25.

2) With better growth, the headline inflation has also been contained in the past few

months, with core inflation falling to the lowest level in 12 years in Feb’24. We

expect the headline CPI-inflation at a six-year low of 4.6% next year. This

combination of strong growth and easing inflation is likely to push rate cuts by the

RBI into 2025, unless the US economy slows down materially.

3) Lastly, we continue to believe that total receipts of the GoI would exceed the

BEs/REs by about INR800b/INR400b in FY24, which may help the GoI meet its

fiscal deficit target. It is again likely that gross taxes may exceed the BEs by

INR1.1t in FY25, helping the GoI achieve its fiscal deficit target of 5.1% of GDP.

However, as discussed in our last

QEO,

this would mean a 12-year low growth

rate of <6% YoY in the GoI’s primary spending (less interest and subsidies) in

FY25, which will pull down the growth.

1. Real GVA/GDP growth expected at 7.0%/7.9% and 5.8%/6.4% in FY25

After recent revisions, India’s real GDP grew by over 8% YoY for the third

consecutive quarter in

3QFY24,

pushing the full-year FY24 growth to 7.6%. If so, the

CSO estimates a growth of just 5.9% YoY in 4Q. We, however, believe that real GDP

growth could be as high as ~7% YoY in 4QFY24, partly led by higher net indirect

taxes, leading to another positive surprise. We, thus, expect real GVA/GDP growth

at 7.0%/7.9% in FY24, better than the CSO’s estimate of 6.9%/7.6%.

According to our in-house monthly estimates,

India’s Economic Activity Index (EAI)

grew strongly in Jan’24, confirming a strong start to 4QFY24. A look at the limited

available data for Feb’24 suggests that India's growth momentum slowed down, but

does not seem strong enough to pull down real GVA/GDP growth to below 6%.

Three key themes:

We expect real GVA/GDP

growth at 7.0%/7.9% in

FY24, better than CSO’s

estimate of 6.9%/7.6%.

Exhibit 2:

Contribution of various sectors to real GVA growth

Contribution to real GVA griowth (pp)

Agriculture

Industry*

9.4

3.9

3.5

-0.4

0.9

0.6

-0.1

-4.6

-4.1

FY20

FY21

FY22

FY23

FY24F

FY25F

4.9

3.8

0.8

Services

6.7

5.3

0.7

7.0

4.1

2.9

0.1

Real GVA

5.8

3.4

1.8

0.6

Exhibit 3:

Contribution of various sectors to real GDP growth

Contribution to real GDP growth (pp)

Consumption

Net exports

6.9

1.0

6.7

-4.9

Investments

Discrepancies

3.9

2.4

-2.3

FY24F

2.0

3.3

-0.5

-0.9

1.5

-3.1

-2.5

-1.8

FY20

FY21

2.0

0.5

4.8

-0.4

1.5

2.5

2.8

-0.4

FY22

FY23

FY25F

* Includes construction

F = MOFSL Forecasts

Source: CSO, MOFSL

14 March 2024

A look at the components of GVA and GDP

(Exhibits 2 and 3)

reveals some

interesting facts and influence our FY25 forecasts. Given below are key highlights:

Without FY23 revisions,

nominal GDP growth would

have been just 8% in FY24

(matching our non-

consensus forecast).

With better nominal growth

in the manufacturing and

construction sectors, a

normalization of deflator

will pull down real GVA

growth next year by >1pp.

NIT could grow strongly in

FY25 as well, which means

that real GDP growth could

be as much as 6.4%, beating

real GVA growth by 0.6pp.

1) We have upgraded our FY24 nominal growth forecast to 9.1% from 8.2% earlier.

Interestingly, this is more a result of downward revision in FY23 (to 14.2% from

16.1% earlier) rather than anything else. Without FY23 revisions, nominal GDP

growth would have been just 8% in FY24 (matching our

non-consensus

forecast).

2) During the past 12 years (FY13-FY24E), the contribution of ‘discrepancies’ to real

GDP growth has averaged 0.1 percentage points (pp). However, from a positive

average contribution of 0.7pp between FY13 and FY18, it deducted 1.5pp – on

an average – between FY19 and FY23. More worryingly, ‘discrepancies’

deducted as much as 4.9pp (with real GDP growth of 9.7%) in FY22 (for which

the final estimates were recently published) and is estimated to have added

about 4pp (half of GDP growth) in FY24E. It indicates that it is becoming

increasingly difficult for the CSO to estimate consumption and investments

more accurately.

3) As we have highlighted in the past four QEO versions, lower deflator has helped

push real GVA/GDP growth higher, keeping nominal growth extremely subdued.

This trend is likely to reverse in FY25.

4) Lower GVA deflator (due to decline in WPI) pushed real industrial and services

sectors’ GVA much higher in FY24. Assuming better nominal growth in the

manufacturing and construction sectors, a normalization of the deflator will pull

down real growth next year, deducting more than 1pp from GVA growth in

FY25.

5) Similarly, despite better nominal growth in ‘trade, hotels & transportation’ and

‘financial, real estate and professional services’, real GVA growth would drag

down overall GVA growth by 0.5pp. This would weaken further as reflected by

weak fiscal spending growth next year.

6) A part of this would be offset by a normalization in the farm sector, which we

expect to grow by ~4.5% YoY next year, aided by a very low base in FY24E.

Overall, we expect real GVA growth to weaken to 5.8% in FY25

(Exhibit 2).

Nominal GVA growth is projected to pick up to 10.2% from 8.3% earlier.

7) Like FY24, the budget documents indicate that ‘net indirect taxes (NIT)’ could

grow strongly in FY25 as well, which means that real GDP growth could be as

much as 6.4%, beating real GVA growth by 0.6pp

(Exhibit 3).

Nominal GDP could

grow by 10.5% in FY25 from 9.1% in FY24.

8) Since PFCE deflator is based on CPI (rather than WPI), we do not see much

change in PFCE deflator next year. However, with better nominal income

growth, higher nominal PFCE growth could push real PFCE growth higher in FY25

(to 4.8% YoY from 3.8% in FY24).

9) This would be in contrast to investments (i.e., gross fixed capital formation),

where the deflator is based on WPI. Thus, we expect real GFCF to grow 7% in

FY25 from 10.8% in FY24, despite better nominal growth.

10) Of course, based on the Interim Budget estimates, we expect fiscal spending to

have a negative impulse next year.

14 March 2024

Interestingly, Mr. Shaktinkanta Das, RBI’s Governor, has already hinted that real

GDP growth could be ~8% in FY24, implying a growth of 7-7.5% in 4QFY24. However,

our FY25 forecasts are very different from the RBI’s projections

(Exhibit 4).

Although

we have upgraded our FY25 real GVA/GDP growth forecasts to 5.8%/6.4%

(Exhibit 5)

from 5.2%/5.4% earlier, it is still lower than the RBI’s projection of 7% growth

(published last in early Feb’24 before 3QFY24 data, and thus, subject to revisions).

Exhibit 4:

Comparison of MOFSL’s quarterly real GDP

forecasts vs. RBI’s

Real GDP growth forecasts (% YoY)

7.3

6.9

6.2

RBI

7.2

6.8

6.4

MOSL

7.0

6.9

6.2

-5.8

4QFY24F*

1QFY25F

2QFY25F

3QFY25F

4QFY25F

FY20

-4.1

FY22

FY23

FY24F

FY25F

6.8

Exhibit 5:

We expect a slowdown in real GVA/GDP growth

to 6.4%/5.8% next year

(% YoY)

Real GDP growth

9.7 9.4

3.9 3.9

Real GVA growth

7.9 7.0

7.0 6.7

6.4 5.8

FY21

* Based on the Governor’s comments

Source: RBI, CSO, Bloomberg, MOFSL

2. Resilient growth and contained inflation to push rate cuts into 2025

After surging to >7% YoY in Jul-Aug’23, the headline CPI-inflation has subsided to a

more tolerant level of 5-5.5% YoY in the past six months (Sep’23-Feb’24). Headline

inflation has been stable at 5.1% in the last two months and other details are also

encouraging:

1) Core inflation (all items excluding food & beverages and fuel & light) eased to a

record low of 3.3% YoY in Feb’24 since the new series began in 2012, a sharp

drop from 6.2% a year ago.

2) Services inflation (weight of 23%) decelerated to 3.1% YoY in Feb’24, the lowest

on record since 2015. Core services (weight of 13%, excluding housing) posted a

record-low inflation of 3.2% last month.

However, ‘food’ inflation – led by cereals, pulses and vegetables – remained high at

8.6% YoY last month, which has been very volatile in recent months (ranging from

2.9% to 11.5% YoY in the past 12 months). Thus, GDP growth has been better than

expected in the past few quarters and CPI inflation has also been tamed in recent

months, with core inflation moving comfortably below 4%.

We forecast headline

inflation to ease below 4%

YoY in 2QFY25, before

reversing to 4.6% YoY in

2HFY25.

Going forward, we expect food inflation to rise in the next quarter, before easing

sharply in Jul’24. Accordingly, we forecast headline inflation to ease below 4% YoY in

2QFY25, before reversing to 4.6% YoY in 2HFY25

(Exhibit 6).

Overall, we expect the

headline inflation to average around 4.5% YoY in FY25, the lowest in six years and

compared to 5.5% in FY24. Although it is extremely difficult to predict food inflation,

normal monsoon could help ease it to 5% YoY next year from 7.5% this year. Core

inflation is likely to average 4.2% YoY in FY25 from 4.4% in FY24.

A comparison of our headline CPI forecasts with the RBI’s projections confirms that

there are no major differences

(Exhibit 7).

Unlike growth, where we believe that the

14 March 2024

RBI is very optimistic, it also expects headline inflation at 4.5% YoY in FY25, similar to

our forecasts. In fact, there are no significant differences in our quarterly forecasts.

Exhibit 6:

Headline inflation could be <4% in 2QFY25; only to

revert to ~4.5% in 2HFY25

8.0

6.5

5.0

3.5

2.0

Mar-23

Headline CPI

(% YoY)

FORECASTS

Exhibit 7:

There is not much differences in our FY25 inflation

forecasts vs. RBI’s

CPI inflation projections (% YoY)

RBI

5.0 5.2

5.0

5.4

4.0 3.8

MOSL

4.6 4.7

4.7 4.5

Core CPI#

Sep-23

Mar-24

Sep-24

Mar-25

4QFY24F

1QFY25F

2QFY25F

3QFY25F

4QFY25F

# excluding food & beverages (F&B) and fuel & light (F&L)

Source: RBI, MOFSL

We don’t see any reasons

for a rate cut by the RBI in

CY24.

Therefore, while headline inflation is expected to be at 4% or less YoY in 2QFY25, it

is clear that this is unlikely to sustain at those levels. If so, it would be too optimistic

to assume the RBI will cut rates based on those forecasts. Further, if the growth

projections remain in line with the RBI projections (or the market consensus), we do

not see any reasons for a rate cut by the RBI in CY24. In contrast, even if our growth

forecasts turn out to be true, we do not think it amounts to a significant slowdown

to warrant a rate cut anytime soon.

However, there are two major events to look out for.

First,

with the inclusion of

India’s sovereign bonds into major global bond indices, we expect the RBI to be agile

to restrict the downward pressure on bond yields (effectively meaning monetary

easing), along with an appreciation bias in INR. It needs to be seen whether these

foreign capital inflows will be handled through a more durable sale of government

securities by the RBI or an overnight facility such as variable reverse repo (VRR)

auctions or the RBI uses some other instrument(s).

Second,

if the US economic slows

down materially in mid-2024, the US Federal Reserve will cut policy interest rates

faster than currently anticipated (to the tune of 75-100bp in 2024). This will

obviously change the course of monetary policy in India as well. However, if there is

no major slowdown in the US economy, then 2-3 rate cuts by the US Fed in 2024

may fail to force the RBI to follow suit.

The monetary easing by the

RBI, thus, could be an early-

2025 story, unless the US

economy slows down more

than predicted in 2024.

Accordingly, with contained inflation and resilient growth, we do not see any rate

cuts by the RBI in 1HFY25, even if the US Fed delivers its first rate cut in Jun’24. The

monetary easing by the RBI, thus, could be an early-2025 story, unless the US

economy slows down more than predicted in 2024, pushing the US Fed to ease

more aggressively. For the next few quarters, the RBI could remain focused on the

domestic financial sector’s stability and follow up on the recent measures with more

nuanced steps.

14 March 2024

3. FY25 deficit target to be met; aided by higher receipts and slower spending

growth

During the first 10 months of FY24 (Apr’23-Jan’24), the GoI has utilized 64% of its

FY24 fiscal deficit target, the third lowest on record in the past 26 years (excluding

FY11 and FY22) and less than 68% achieved in the corresponding period last year. In

post-Covid years, the GoI’s receipts in the first 10 months have been much better

(vs. BEs), while total spending has been similar to what it was in the previous years.

Consider this fact, total receipts of the GoI were 81.7% of REs in Apr’23-Jan’24,

exceeding the 80% mark for the fourth consecutive year. However, this achievement

was witnessed only once in the previous 23 years (FY98-FY19) in FY11, led by huge

non-tax receipts. In contrast, total spending was 74.7% of BEs in the first 10 months

of FY24, compared to the average of 74.4% in the past three years and long-term

average of 76%.

If the GoI meets its FY24REs

spending target, then the

fiscal deficit could be 5.8%

of GDP, better than the

revised target of 5.9%.

It is very likely that the GoI’s total receipts will exceed the REs for the third

consecutive year in FY24. Compared to higher receipts totaling INR287b and

INR238b in FY22 and FY23, respectively (vs. REs), we expect total receipts to exceed

FY24REs by INR373b. This would be possible only because we expect gross taxes to

exceed FY24REs by about INR1.1t, which will be partly offset by lower non-debt

capital receipts. Therefore, if the GoI meets its FY24REs spending target, then the

fiscal deficit could be 5.8% of GDP, better than the revised target of 5.9% of GDP. In

contrast, even if the spending is INR200b more than FY24REs, the fiscal deficit would

be 5.8% of GDP this year.

The next year could be no different. For the fourth successive year, our estimates

suggest that total receipts could exceed FY25BEs by INR700b. This could be largely

led by an expected over-achievement of gross taxes, which we expect to exceed BEs

by INR1.1t in FY25. However, due to some shortfall in non-tax receipts, total receipts

could exceed BEs by about INR700b.

It means that the GoI could meet its deficit target of 5.1% of GDP, even with an

additional spending of INR500b. This is assuming a nominal GDP growth of 10.5%

YoY in FY25, following 9% growth in FY24.

For the fourth successive

year, our estimates suggest

that total receipts could

again exceed FY25BEs by

INR700b

Primary spending, thus, will

grow ~6% YoY next year,

which will be the slowest

growth in 12 years

If so, our calculations suggest that fiscal spending could grow 6.8% YoY in FY25,

better than 6.1% growth targeted by the GoI. In any case, fiscal spending growth will

be the slowest growth in a decade. Primary spending (total excluding interest

payments and subsidies), thus, will grow ~6% YoY next year, which will be the

slowest growth in 12 years. This would undoubtedly hurt economic growth (as

included in our forecasts).

14 March 2024

Detailed economic projections

Exhibit 8:

Detailed projections of economic growth

Macro indicators

Nominal variables

Gross domestic product at market prices (GDP

)

GDP

Private consumption expenditure (PCE)

Government consumption expenditure (GCE)

Gross capital formation (GCF)

GFCF + change in stocks

Exports of goods and services

Less:

Imports of goods and services

Gross Value Added at basic prices (GVA

)

Agriculture and allied activities

Industry

Unit

USD b

YoY (%)

% of GDP

YoY (%)

% of GDP

YoY (%)

FY20

2,836

6.4

60.9

11.0

30.1

29.1

18.7

21.2

7.0

18.3

26.9

14.7

7.5

54.8

3.9

5.2

3.9

(2.6)

(2.1)

(3.4)

(0.8)

3.9

6.2

(1.4)

(3.0)

1.6

6.4

6.6

3.6

3.0

(0.8)

7.7

3.6

FY21

2,675

(1.2)

61.1

11.6

28.9

27.5

18.7

19.1

(0.9)

20.4

27.4

15.4

7.5

52.3

(5.8)

(5.3)

(0.8)

(7.4)

(8.7)

(7.0)

(12.6)

(4.1)

4.0

(0.4)

3.1

(4.6)

(8.4)

(7.6)

(5.6)

(5.2)

(8.5)

2.5

(2.0)

FY22

3,167

18.9

61.0

10.5

32.1

30.5

21.4

24.0

18.8

18.9

28.9

15.7

8.5

52.2

9.7

11.7

0.0

21.1

20.6

29.6

22.1

9.4

4.6

12.2

10.0

19.9

9.2

7.5

10.3

10.8

11.4

13.8

7.2

FY23

3,353

14.2

60.9

10.7

33.0

31.8

23.2

26.8

14.0

18.2

27.6

14.3

8.8

54.2

7.0

6.8

9.0

5.5

6.9

13.4

10.6

6.7

4.7

2.1

(2.2)

9.4

10.0

8.9

7.1

6.7

5.3

13.3

5.9

FY24F

3,551

9.1

60.5

10.4

33.9

32.5

22.0

24.0

8.3

17.5

27.7

14.3

8.9

54.8

7.9

3.8

1.9

10.9

10.7

1.3

10.9

7.0

0.4

9.5

10.0

9.8

7.5

7.6

8.2

8.4

6.0

8.8

4.2

FY25F

3,877

10.5

60.0

9.8

34.3

33.0

21.3

24.0

10.2

17.4

27.6

14.1

8.9

55.0

6.4

4.8

1.0

6.8

7.2

1.1

2.5

5.8

4.5

5.7

6.3

6.2

6.0

10.1

5.4

FY26F

4,220

10.3

59.8

9.4

34.4

0.0

20.7

23.8

10.2

17.2

27.5

13.9

9.0

55.4

6.3

5.2

1.9

7.3

7.4

2.6

4.1

5.9

4.0

6.1

6.2

6.4

6.3

5.8

6.2

6.3

6.2

9.8

5.0

Manufacturing

Construction

Services

Real variables

Real GDP

PCE

GCE

GCF

Gross fixed capital formation (GFCF)

Exports of goods and services

Less:

Imports of goods and services

Real GVA

Agriculture and allied activities

Industry

Manufacturing

Construction

Services

Community services, etc.

Non-agriculture GVA

Non-agriculture non-community GVA

Other real sector

Index of industrial production (IIP)

Nominal personal disposable income (PDI)

Real PDI

Incremental capital-output ratio (ICOR)

unit

8.93

(5.74)

3.57

5.16

4.62

5.75

5.86

Industry includes mining and quarrying, manufacturing, electricity, and construction;

Nominal PDI deflated by PCE deflator;

The ratio for last two years’ investments (as a percentage of GDP) and GDP growth

–

it is calculated using real-term data

Source: RBI, CSO, CEIC, MOFSL

14 March 2024

Exhibit 9:

Detailed projections of prices, rates, and money & banking

Macro indicators

Price measures

GVA

deflator

GDP

deflator

PCE deflator

Consumer price index (CPI)

Food and beverages

Fuel and light

Core CPI

Unit

YoY (%)

% p.a.

unit

USD/bbl

FY20

3.0

2.4

3.9

4.8

6.0

1.3

4.0

1.7

6.8

(1.8)

0.3

(0.4)

6.9

9.4

8.9

7.9

6.1

76.4

60.3

4.40

70.9

60.7

FY21

3.2

4.6

4.4

6.2

7.3

2.7

5.3

1.3

1.7

(8.0)

2.7

2.2

4.0

18.8

12.2

11.4

5.6

72.4

37.4

4.00

74.2

44.6

FY22

8.6

8.4

6.2

5.5

4.2

11.3

6.1

13.0

10.3

32.6

11.1

11.0

6.7

13.0

8.8

8.9

8.6

72.2

69.7

4.00

74.5

78.9

FY23

7.0

7.1

6.6

6.7

10.3

6.3

9.4

10.0

28.1

5.6

5.8

6.3

7.8

9.0

9.6

15.0

75.8

113.0

6.50

80.4

93.7

FY24F

1.2

4.4

5.4

7.0

1.6

4.4

(0.7)

3.3

(4.4)

(1.6)

(1.4)

3.0

6.4

9.9

12.0

15.0

77.8

94.7

6.50

82.8

82.4

FY25F

4.1

3.8

4.4

4.6

4.9

4.6

4.3

3.7

4.6

6.5

2.6

2.7

4.2

7.7

9.6

10.0

12.0

79.2

93.4

6.25

83.9

85.0

FY26F

4.1

3.7

4.6

4.7

4.8

5.1

4.7

4.2

4.7

5.9

3.5

4.4

8.6

10.2

10.4

11.0

79.7

83.8

5.75

85.0

Wholesale price index (WPI)

Primary articles

Fuel and power

Manufactured products

Non-food manufactured products

Food items (raw + processed)

Money and banking (end-period)

Reserve money (M0)

Broad money supply (M3)

Bank deposit

Bank credit

Credit-to-deposit ratio

Incremental credit-to-deposit ratio

Key rates

Policy repo rate (end-period)

USD:INR (period-average)

Crude oil price (period-average)

Gold price (period-average)

USD/ounce 1,462

1,823

1,819

1,804

1,978

2,000

2,050

CPI excluding ‘food and beverages’, ‘pan, tobacco, and intoxicants’, and ‘fuel and light’

Source: RBI, CSO, CEIC, MOFSL

14 March 2024

Exhibit 10:

Detailed projections for the external sector

Macro indicators

Current account balance

Merchandise

Invisibles

Total credit

Merchandise

Petroleum products

Valuables

Invisibles

Services

Total debit

Merchandise

Petroleum products

Valuables

Invisibles

Services

Capital and Financial account

Foreign direct investment (FDI)

Foreign portfolio investment (FPI)

Financial derivatives

Other investment

Non-resident Indians (NRI) deposits

Change in forex reserves

Non-oil

Non-oil non-valuables

Forex reserves

Savings

–

Investments

National savings

Households

Net financial savings

Physical savings

Corporate sector

General government

Domestic investments

Households

Corporate sector

General government

% of GDP

29.6

19.1

7.7

11.4

13.2

(2.8)

30.4

11.2

14.3

3.6

29.1

22.7

11.7

11.0

13.1

(6.7)

28.2

10.8

12.9

3.9

Unit

USD b

% of GDP

FY20

(24.6)

(157.5)

133.0

642.1

320.4

41.9

43.3

321.7

213.2

666.7

477.9

129.9

53.4

188.8

128.3

84.2

43.0

1.4

4.1

35.7

8.6

(59.6)

(0.9)

2.2

4.1

(2.1)

FY21

24.0

(102.2)

126.2

603.5

296.3

25.6

41.5

307.2

206.1

579.5

398.5

82.4

54.3

181.1

117.5

64.7

44.0

36.1

(4.8)

(10.6)

7.4

(88.7)

0.9

3.0

5.0

(3.3)

FY22

(38.7)

(189.5)

150.8

798.7

429.2

67.5

40.2

369.6

254.5

837.4

618.6

161.8

80.4

218.8

147.0

85.9

38.6

(16.8)

(6.4)

70.5

3.2

(47.2)

(1.2)

1.8

4.3

(1.5)

31.2

20.1

7.3

12.8

14.1

(3.0)

32.4

12.6

14.1

FY23

(68.7)

(267.0)

198.3

920.2

454.4

91.6

35.8

465.8

325.3

988.8

721.4

205.7

71.0

267.5

182.0

59.0

28.0

(5.2)

(5.4)

41.5

9.0

9.7

(2.0)

1.4

3.5

0.3

30.2

18.4

5.3

13.2

14.1

(2.3)

32.2

12.9

14.8

FY24F

(26.4)

(238.1)

211.7

930.0

441.9

76.5

27.0

488.1

341.5

956.4

680.0

177.5

74.2

276.4

176.3

95.6

14.7

38.3

0.0

42.6

13.3

(69.2)

(0.7)

2.1

4.2

(1.9)

32.9

18.4

5.3

13.1

15.4

(0.8)

33.7

12.9

14.7

FY25F

(58.7)

(277.6)

218.9

975.5

462.5

79.6

37.2

513.0

365.0

1,034.2

740.1

201.7

82.3

294.1

194.2

91.8

25.0

24.0

0.0

42.8

16.0

(33.1)

(1.5)

1.6

3.8

(0.9)

32.3

18.6

5.5

13.2

14.2

(0.5)

33.9

13.0

15.0

FY26F

(72.3)

(295.3)

223.0

1,029.0

485.0

84.0

40.2

544.0

389.0

1,101.2

780.2

198.3

89.0

321.0

215.0

98.0

27.0

20.0

0.0

51.0

15.0

(25.7)

(1.7)

1.0

3.1

(0.6)

32.3

18.4

5.6

12.7

14.2

(0.3)

34.0

12.5

15.7

Current account balance (CAB)

3.8

4.1

5.0

5.1

5.0

Valuables include items related to gold or any other precious metal

Source: RBI, CSO, CMIE, MOFSL

14 March 2024

Exhibit 11:

Detailed projections for central government finances

Macro indicators

Total receipts

Unit

INR b

YoY %

% of GDP

Revenue receipts

Gross taxes

Net tax collection

Direct tax receipts

Indirect tax receipts

Non-tax collection

Non-tax receipts

Non-debt capital receipts

Disinvestment

Total expenditure

INR b

YoY (%)

INR b

YoY (%)

INR b

YoY (%)

INR b

YoY (%)

INR b

YoY (%)

% of GDP

Primary spending

Revenue spending

Interest payments

Subsidies

Defense

Pensions

Capital spending

Defense

Railways

Roads and Highways

Fiscal balance

INR b

YoY (%)

INR b

YoY (%)

INR b

YoY (%)

INR b

FY21

16,897

(3.4)

8.5

16,321

(2.9)

20,249

14,240

5.2

9,264

(10.7)

10,984

13.2

2,657

2,081

576

329

35,098

30.7

17.7

20,718

14.3

30,835

31.2

6,799

7,582

2,057

4,263

27.0

1,343

299

923

(18,201)

FY22

22,093

30.7

9.4

21,699

33.0

27,093

18,048

26.7

14,083

52.0

13,010

18.4

4,045

3,651

394

146

37,938

8.1

16.1

24,844

19.9

32,009

3.8

8,055

5,039

2,286

1,989

5,929

39.1

1,380

1,173

1,168

(15,845)

(6.7)

FY23

24,549

11.1

9.1

23,828

9.8

30,537

20,973

16.2

16,575

17.7

13,963

7.3

3,576

2,854

722

460

41,932

10.5

15.6

26,867

8.1

34,531

7.9

9,285

5,779

2,562

2,416

7,400

24.8

1,429

1,593

2,060

(17,382)

(6.4)

FY24RE

27,557

12.3

9.3

26,997

13.3

34,372

23,239

10.8

19,450

17.3

14,922

6.9

4,318

3,758

560

300

44,905

7.1

15.1

29,945

11.5

35,402

10.6

10,554

4,405

2,987

2,380

9,502

60.3

1,572

2,400

2,645

(17,348)

(5.9)

FY25BE

30,803

11.8

9.4

30,013

11.2

38,308

26,016

11.9

21,988

13.1

16,320

9.4

4,787

3,997

790

500

47,658

6.1

14.5

31,656

5.7

36,547

3.2

11,904

4,097

2,828

2,396

11,111

16.9

1,720

2,520

2,722

(16,855)

(5.1)

FY24F

27,930

13.8

9.5

27,680

16.2

35,109

23,970

14.3

20,430

23.3

14,679

5.1

3,960

3,710

250

150

45,105

7.6

15.3

30,345

12.9

35,602

3.1

10,354

4,405

2,787

2,630

9,502

28.4

1,620

2,420

2,722

(17,174)

FY25F

31,462

12.6

9.7

30,762

11.1

39,406

26,754

11.6

23,086

13.0

16,319

11.2

4,707

4,007

700

500

48,158

6.8

14.8

32,156

6.0

37,047

4.1

11,904

4,097

2,828

2,396

11,111

16.9

1,944

2,783

3,131

(16,696)

% of GDP

(9.2)

BE=Budget estimates, RE=Revised estimates, F=forecasts

Primary spending = Total spending less interest and subsidies

(5.8)

(5.1)

FY24RE growth is over FY23

Source: Union Budget documents, CSO, MOFSL

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

14 March 2024

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall be within following

30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,

is engaged in the business of providing Stock broking services, Depository participant services & distribution of various financial products. MOFSL is a listed public company, the details in

respect of which are available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is

a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National

Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository

Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development

Authority of India (IRDA) as Corporate Agent for insurance products.

Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf

MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell

the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a

market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of

interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the

analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in

some of the stocks mentioned in the research report.

MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware

that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment

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https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

A graph of daily closing prices of securities is available at

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Research Analyst views on Subject Company may vary based on Fundamental research and

Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity

and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use

would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.

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and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal

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is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to

professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer

or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state

laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934

Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by

MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as

defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on

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The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered

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In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co. Reg. NO. 201129401Z) which is a holder of a capital markets services

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Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

********************************************************************************************************************************

The associates of MOFSL may have:

financial interest in the subject company

actual/beneficial ownership of 1% or more securities in the subject company at the end of the month immediately preceding the date of publication of the Research Report or date of the

public appearance.

received compensation/other benefits from the subject company in the past 12 months

any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though

there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

14 March 2024

be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)

discussed herein or act as an advisor or lender/borrower to such company(ies)

received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

Served subject company as its clients during twelve months preceding the date of distribution of the research report.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider

demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not

considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research

analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

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This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be

altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is

based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from

publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made

as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not

constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers

simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.

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The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or

in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be

used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal,

accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this

report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This

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an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to

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options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied,

is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is

provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The

Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and

the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform

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Registration details of group entities.: Motilal Oswal Financial Services Ltd. (MOFSL): INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:

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14 March 2024